Borrell: Newspaper Revenue To Rise In 2013

Newspaper print ad revenue is expected to grow, though slightly, in 2013, while online ad revenue for the industry is expected to rise 30% next year, Gordon Borrell, CEO of Borrell Associates, said today during NetNewsCheck’s "Prioritizing Digital in 2013: Maximizing New Revenue Streams” webinar.
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The newspaper industry’s print ad revenue will finally start to grow again, albeit slowly, Gordon Borrell, CEO of Borrell Associates, said today during NetNewsCheck’s "Prioritizing Digital in 2013: Maximizing New Revenue Streams” webinar.

For the industry overall, print revenue is predicted to rise 0.5% in 2013, Borrell said. Most of that growth will come from small papers. Mid-sized papers, those in the 50,000 to 100,000 circulation range, are expected to see mixed results, with revenue staying mostly flat.

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It will be a different story at large metro papers, which Borrell predicts will continue to see declines in the 4% to 6% range.

Borrell had been predicting newspapers’ turnaround for nearly two years. “At the time — even until earlier this year — people thought we were nuts,” Borrell said earlier.

The outlook was unclear for preprint ads. The U.S. Postal Regulatory Commission’s negotiated service agreement with Valassis earlier this year could shift some of that money to the direct mailer and negate any growth the industry might see.

“If that goes away,” Borrell said of the preprint money, “all bets are off.

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“But that’s a big question mark. That could throw our forecast for newspaper advertising stabilizing into a tailspin,” he said.

Borrell predicted that most markets will see local online ad revenue rise 30% in 2013. Targeted banner ads — those related to content readers care about — and video will be the primary drivers behind the rise, increasing 105% and 43% respectively. The targeted display category is expected to continue growing at a blistering pace for the next five years, rising from under $5 billion in 2012 to more than $35 billion in 2017, according to Borrell.

Borrell attributed the rise of video ads to a shift in how users consume their online content from “reading the Internet” to “watching the Internet.” The increase of broadband speeds and the growing popularity of tablet computers have made online video more reliable and more attractive.

And video use is “just going to grow and grow and grow as the Internet becomes much more of a video medium,” Borrell said.

"Ad agencies and the major marketers do most of their exciting marketing in video — made for television — and that usually translates down to a five- to 10-second preroll,” Borrell said. “A lot of that is coming online just as the nature of the Internet becomes more video-centric.”

Revenue for other digital categories is flattening out, according to the forecast. However, at newspapers with dedicated digital sales teams, online sales continue to grow, Borrell said.

Sales of bundled print and digital ads are slowing down across the industry, likely an indication that newspapers have saturated their current customer base, Borrell said.

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