NEW DELHI, August 24: Online revenues of newspapers in the US will skyrocket by an estimated 36 per cent to reach $1.4 billion this year. This rise in revenues is going to continue for the next few years by 23 per cent next year, 16 per cent in 2007, and 18 per cent in 2008. The predictions have been made by eMarketer in its report "Online Publishing: Focus on Newspapers." The predictions have been based on newspapers' published financial results and ad spending data from the Interactive Advertising Bureau and PriceWaterhouseCoopers.
The report, authored by eMarketer Editorial Director Ezra Palmer, pointed to several factors driving the growth of online newspapers' advertisement revenues. In addition to benefiting from a stronger US economy, the report said that newspapers have seen gains because more consumers are going online to read news, and marketers are increasingly placing ads on the Web. "The biggest advertisers are cautiously shifting their budgets online," said Palmer.
"Online publishers are posting consistently strong – indeed, extraordinary – financial results. Among the strongest are the online operations of traditional newspapers," said Palmer. "Although the US online population is growing only marginally, and time online per user appears to be flattening out, consumption of online news is rising," he said. This is partly due to broadband adoption, but just as important is a behavioral shift among consumers, who now see online news as a commonplace, and commonly used, information source.
Meanwhile, newspapers are benefiting from the healthy online advertising market. eMarketer estimates that online ad spending represented 3.6% of total ad spending in 2004. eMarketer projects this share will grow to 4.6% this year and rise to 7.5% by 2009. Given these shifts by consumers and advertisers, eMarketer projects healthy year-over-year gains for online newspapers for the next several years.
Newspaper companies have rallied to recapture online classifieds. "Many publishers seemed blindsided by the rapid rise of online classified sites, but now they appear to be putting up a stronger fight classified ads make up the majority of online ad revenues at most companies," the report said
The proportion of dollars spent online will climb from 4.6 per cent this year $12.9 billion of the $277.5 billion total media ad spend 7.5 per cent in 2009, when $22.3 billion will be spent in US online advertising out of a total ad media spend of $298 billion.
However strong these gains may appear, Palmer said, they are important to keep in perspective. "The $1 billion mark is no small achievement," he said, "but it was passed long ago by portals –Yahoo!, Google, AOL and MSN alone generate more than eight times as much advertising revenue as the entire online newspaper industry."
