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InContext / An inside look at the business of digital content

Can automated advertising save America’s newspapers?

January 11, 2022 | By Luke Insoll, Content Marketing Manager – DanAds@DanAdsSelfserve

The steady decline of print and exponential growth of digital media has turned many industries on their heads. Few have been hit harder than traditional news media. The combined advertising revenues of U.S. newspapers peaked in 2006, at around $50 billion. Less than 15 years later, in 2020, they were estimated below $9 billion – an 80% drop. In that same period, the total number of newsroom employees more than halved from 75,000 to 30,000. And in 2020 something interesting happened: newspaper advertising revenue dipped below circulation revenue for the first time in recorded history.

The unavoidable takeaway is that newspapers are losing the battle for ad spend. The clear winners are big tech providers. From 2008 to 2018, Facebook’s ad revenue increased by 7000%—from $764 million to $55 billion. In other words, the ad revenue of a single company is now higher than the combined ad revenue of all U.S. newspapers at their historical peak. As one local journalist interviewed by The Tow Center for Digital Journalism put it, “The advertising dollars are going away and not coming back. Google and Facebook have just eviscerated the business.”

With these staggering numbers in mind, the prognosis for newspapers looks bleak. Can anything halt the attrition of ad spend?

Innovation hesitation

Arguably, one of the failures of traditional media has been their reticence towards adapting to new technologies. In a recent Tow Center study, researchers found a marked contrast between the way that editors and reporters use technology in their own lives and how they implement it in their work. Only a small minority of respondents (15%) had undertaken training in new tools or platforms paid for by their employers.

From the report: “half of respondents indicated low levels of interest in learning about chat apps such as WhatsApp or Facebook Messenger. Only a small minority (3.4%) are “very interested” in this technology. This comes at a surprise given that WhatsApp has two billion users around the world and Facebook Messenger reaches more than 133 million people in the U.S. and 1.3 billion globally.

Furthermore, more than four in ten respondents indicated a low level of interest for learning more about tools such as automation. This seems to be a particularly egregious oversight given that automation is one of the most powerful tools in big tech’s arsenal. Automation allows them to scale revenue-generating activities exponentially.

Automation education

This brings us to an age-old question: Does automation kill or create jobs? It might seem logical to assume that automating tasks removes the need for a human employee and thus contributes to a removal of jobs. In the short-term and in certain industries this may well be true.

In news media, however, it may be that the unwillingness to embrace automation has had the opposite effect. We see clearly that the number of newsroom employees has more than halved while the tech companies that have embraced automation keep growing.Editors and journalists may fear new technology. However, they should really be more concerned about the ongoing impact of relying on old technology.

One powerful way in which newspapers may find salvation in automation is in the sale of their ad inventory. Historically, newspapers established tight and long-lasting relationships with large, corporate advertisers. These relationships were maintained over lunches, cocktails, and many hours of manual work and negotiation. Think Mad Men. Of course, the Golden Age of Advertising has long since passed. Today, the name of the game is ease of access, efficiency, and iteration.

One of the reasons that companies like Facebook have been able to snatch ad revenue away from news media is that their main ad sales model is entirely automated. Although not the first to do so, Facebook set the standard for an e-commerce approach to selling advertising.

Self-service adoption

Today, most social platforms offer some type of campaign manager inspired by the Facebook for Business marketing platform. LinkedIn, Instagram, Google, TikTok, Snapchat, and Reddit are just some of the tech companies that have fully adopted self-serve advertising as their primary model. While the phrase is beyond cliched, self-serve platforms really do cut out the middleman.

That’s not to say that the news media has entirely missed the bus on self-serve. The Washington Post, Bloomberg, The Atlantic, News Corp, New York Post, and Mail Metro Media are some of the publishers that have built or are building their own self-serve ad platforms. At present, most of them channel only a very small proportion of their ad sales through their self-serve platforms.

As the benefits of scale, speed and automation become impossible to ignore, however, I predict a wholesale self-serve revolution in the newsrooms of the world. Perhaps the age of newspaper advertising isn’t over. Rather, it is entering a promising new phase.

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