The Rise of E-Advertising and Its Impact on Print Media

The rise of e-advertising, or online advertising has had a huge impact on traditional print media. The newspaper industry in particular is under increasing pressure to compete in this age of new communication technologies as advertisers move from print to online. This pressure can be seen through the increase in online advertising and the decline in print advertising. Newspapers have responded to the loss in advertising revenue in different ways from converging with digital mediums to create non-news sites to win back business lost to other classified advertising platforms, offering online sites with packages for print and online advertising or through cutting jobs, closing or merging with other newspapers. Through identifying the impact that online advertising has had on the newspaper industry it is apparent that in an effort to stay profitable, it is imperative for newspapers to embrace convergence to gain shares in the increasing online advertising expenditure.

Print newspapers generate their revenue from advertising and circulation with advertising being the most dominant source of the two (Turow 2009, p.317). On average, 80 percent of daily newspaper's revenue and 90 percent of weekly newspaper's revenue is from advertising (Turow 2009, p.317). As advertising is what sustains all newspapers (Hirst & Harrison 2007, p.94), the newspaper industry is finding itself under increasing pressure to compete in the digital age. This pressure has been mostly due to the rise of online advertising. Online advertising has created a new source of competition for newspapers as they begin to see their "advertisers are following their target audiences to the Internet and taking money that traditionally has gone to newspapers and using it for online advertising" (Turow 2009, p.320). Advertisers are increasingly moving to online and in 2007, the top 100 advertisers in the United States, "who represent 41 percent of the total advertising spending, shifted about $1 billion [...] from TV and newspapers to the Web" (Schonfeld 2008).

Online advertising has experienced quick growth since its inception in 1993. In the early years of the last decade, at a time when competitive challenges were being presented by online and other new media, newspapers were becoming increasingly dependent on advertising spend (Ward 2003, p.131) despite the fact that their biggest threat in the emergence of new media was the loss of this revenue source. According to a report by the Internet Advertising Bureau and PricewaterhouseCoopers, it was found that newspapers were first challenged for advertising spend in 2006 when there was a surge in online advertising (Williams 2010, p.240) totaling more than $16 billion in the United States (Pavlik 2008, p.156). In Australia income from online advertising increased by $597 million dollars in a five year period, from $135 million in 2001 to $732 million in 2006 (Quinn & Lamble 2008, p.7). The global estimation of revenue from advertising was $21.1 billion a year later, during 2007 (Bidgoli 2010, p.452).

This trend has since continued and despite the fact that, most recently due to online advertising, the advertising industry as a whole has been growing strongly over the past decade, there has been a declining share of advertising going to print newspapers (OECD 2010, pp.60-61). It is apparent, by contrast, that the decline of advertising in newspapers is related to the upward momentum of online advertising (Williams 2010, p.240).

As of 2008 online advertising expenditure accounted for 10-15% in Australia. In the period between 1st July and 30th September 2010 there was more than a $100 million increase in online advertising (Triandos 2010). The rise of online advertising since 2004 has come at the expensive of print media including newspapers and magazines with a further rapid decline in share for these traditional mediums predicted in the future (OECD 2010, p.61). It has been forecasted that while for online newspapers advertising spend will increase, "global print advertising in newspapers will decline during the next years and will average a 7.9% compound decrease to USD 24.3 billion in 2013 (from USD 36.7 billion in 2008)" (OECD 2010, p.63).

Loss of advertising revenue due to advertisers moving to online mediums is the most important loss of revenue as on a "global level circulation has remained fairly steady over the last years [for newspapers...] showing it is less volatile that the more cyclical advertising revenues" (OECD 2010, p58). As revenue levels from circulation have not resulted in a loss of revenue for print newspapers, the effect the rise of online advertising is having on the decrease on print media advertising becomes more apparent. For newspapers to stay profitable they must find ways to monetise on the spend going to online mediums.

There are four different areas in which advertising in newspapers refers to: retail advertising, classifieds, national advertising and inserts (Turow 2009, p.317). A major area of concern for newspapers, in relation to the rise of online advertising, is the classifieds area, which Maynard (2000, p.120) describes as "the heart and soul of print advertising". The classifieds have traditionally been relied upon as a major source of revenue for newspapers (Pavlik 2008, p.154) and amounted to "18.6 billion in 1999, about 40% of all newspaper advertising revenue" (Maynard 2000, p.120). This classifieds area could include advertisements in the careers, automotive, real estate and general classifieds section of the newspaper.

The reason these advertisements provided such a large source of revenue for the paper was that they provided a relatively effective way, and probably the most effective way in the analogue age, for persons to advertise their goods and services to a large centralised (based on newspaper circulation areas) group of other people and connect with other newspaper readers that would like to purchase or utilise these goods or services.

Trends now show that this once clear revenue-producing winner for newspapers is proving to be problematic due to online advertising (Harcup & Cole 2010, p.188). Online sites dedicated solely to classified advertising have been growing dramatically over the years and in the process have taken away much newspaper revenue (Pavlik 2008, p.155). In Australia these sites include Craigslist, SEEK and Gumtree. These sites not only impact advertising revenue for newspapers through the loss of classified advertisers but also effect the sales revenue as readers move online and do not buy print editions of the newspapers for the classified sections. These impacts were felt even prior to the surge of online advertising in 2006. In August 2005, the Union Tribune of San Diego, CA began offering