The Good News For Newspapers Is that More People Than Ever Before Are Reading Their Online News Sites. The Bad News Is that One of Their Major Advertising Sectors – Automotive – Is Moving Much Of Its Spend to The Web, Too, But Not Necessarily To Newspaper Sites

Philip M. Stone - February 6, 2006

US newspaper web sites continued to attract web crowds in record numbers during Q4, 2005 as some 35% of all active US web users spent time on a newspaper site. But that is about the only thing newspapers can find to celebrate, and with print circulations still in decline, and revenues basically flat there is now the added dose of bad news that newspaper classified automobile advertising has taken a nosedive, and all the signs are things will get worse, not better.
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Just as Craigslist has taken a huge bite out of newspaper classified advertising, the auto industry believes it is achieving better value for its spend via online. Auto makers are finding their own sites very popular, and local dealers are also enjoying great Internet success.

Figures from the Newspaper Association of America (NAA) show how devastating the ad drop is. Auto revenue in Q2, 2004 was $1.16 billion, but a year later it had dropped to $1.01 billion for Q3, 2005 with indications the spend has continued down for this year.

And a study by the Polk Center for Automotive Studies has issued statistics explaining why automakers and auto dealers are looking away from traditional media advertising. “Traditional media has been rendered nearly obsolete among first time vehicle buyers,” according to the Polk study.

Polk interviewed 366 first-time vehicle buyers ranging in age from 18 –30 – the category that on general principle prefers the Internet to any other information source.  According to the poll 35% of first time vehicle buyers use the Internet the most as their car information tool, compared to 8.2% for television, 4.4% for magazines, only 3.6% for newspapers and at the bottom, radio, with 1.1%

The poll is really bad news for traditional media because if this prized age group acts in this fashion when buying an automobile, then it stands to reason that the figures will be similar for other big-ticket items, too. It seems the Internet rules the advertising roost for this age group.

First time buyers are big business for automakers – it is estimated that some four million first time car buyers will hit the US market each year through 2010. But if they are not going to be looking at newspaper ads, then those ad dollars will go where those first-time buyers go

Auto advertising usually accounts for around 30% of a newspaper’s classified revenue – it was worth a total of  $16.6 billion in 2004, and significant cuts are going to hurt, just as some newspapers had started to recover some classified revenues.

What also has newspapers on edge is how the huge restructuring that General Motors and Ford have recently announced, will affect marketing – cutbacks in the advertising spend or spending even more in an ever more competitive market?  Anyone who lives in or has visited America knows that one reason for the thickness of the Sunday paper is the several sections of classified car ads.

“The Internet’s relevance in the 18-30 year age group has reached critical mass, and is completely reconfiguring how car companies need to reach out to first time buyers,” according to Lonnie Miller, managing director of the Polk Center for Automotive Studies. He says that retailers and manufacturers “need an aggressive interactive strategy” to court the age group.

“Generation Y is tuning out traditional advertising, and watching what they want, when they want. Creating breakthrough content and developing relationships with customers through emerging media technologies will separate the winners from the losers in the next five years,” according to Miller.

But with newspaper web sites enjoying increased popularity for local information – and for major events when the occur – a newspaper can still remain in the new car classified business, even if means offering combo print/online ad deals.

 

 

 

 

 

 

Display ads still doing OK

In Q4 2005, the monthly unique newspaper web audience averaged more than 53.6 million, some 35.2% of all active web users. Visits averaged 42 minutes a month.

“It’s clear that online newspapers are becoming a staple for readers that rely on the Web for information, just as the core newspaper is for the print consumer,” according to John Kimball, NAA chief marketing officer. If that is the case then combos, offering interactivity on the web, would seem a perfectly good response.

And in a sign of how multi-platform newspapers may need to become to ensure their survival, the San Francisco Chronicle – probably the newspaper hardest hit by Craigslist – has now started its own 30 minute classified ad TV program three times a week on a local TV station.

Airing at 5:30 a,m., “Chronicle Jobs TV” will run 30-second classifieds Monday through Wednesday and also stream the ads on its web site for a one-week period.

The Chronicle is not the first newspaper to try this – there are about 100 newspapers in the US having similar TV programs and some of them have extended the ad categories to automotive.

It shows, at least, that newspapers are trying to come up with new answers to combat the power of the Internet alone. Print/TV and the Web make for a pretty powerful combo, and mobile phones can’t be far behind.

Maybe this is what they really meant by multimedia?

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Online Auto Ad Spend To Double Within Two Years - February 20, 2006

A new report from eMarketeer confirms the worst fears of newspapers that auto advertising is heading to the Internet. eMarketeer says online spending by automakers will nearly double in 2007 to $2.7 billion from the $1.4 billion spent in 2005.

eMarketeeer predicts a 35% growth in auto online advertising this year on top of last year’s 38.2% growth.

One reason automakers are emphasizing more sizable online spends is because, according to a study by Experian Automotive, consumers are increasingly beginning their automobile buying cycle online.