BoSacks Speaks Out: Ad Revenues Plunge of 50%

BoSacks Speaks Out: Ad Revenues Plunge of 50%
www.bosacks.com

I am about to dive into an old rant. I do it because it is an important concept and because I have almost a thousand new subscribers since I last vented about this subject. Everybody who reads this newsletter knows or should know that I am a magazine guy through and through. So, it's not unusual that I am continually barraged with questions like; "Bo, why do you keep such a strong focus on the newspaper industry?"

I have a dozen reasons why I think it is an important industry to track, not the least of which is my canary in the mine shaft theory. I used to explain this more often to my readership than I do now, and I believe that it has been at least a year since I have done so. I will now attempt to correct that oversight, because I still deem it a very important industry for magazine professionals to track.

Simply put, the newspaper industry has been a forecaster of magazine trends for over 60 years. I believe that the newspaper industry still acts for the magazine industry just like the vulnerable little canaries that coal miners carried into the coal mines in times past. When there was little clean air, the canaries "fainted" first, warning the miners of pending trouble. A similar process could/should be said for newspapers being more sensitive and vulnerable in the publishing world in these times of economic stress and business model upheavals. It is the newspapers who are "fainting" first, months, perhaps years, before the same conditions hit the magazine industry. But make no mistake, it is a very similar mineshaft that we are in. If they are fainting and croaking, we had best pay close attention and know the reasons why.

We all know that many of the old business models have changed. Newspapers and magazines have changed dramatically. Surely, the advertising community has changed in, if nothing else, the many different and new venues to spend advertising dollars in. Not to mention their obsessive search for accountability. Add into that volatile mixture the apparently unstoppable oncoming recession and you have a tsunami media/magazine advertising event.

So, yes, I track the newspaper industry pretty damn closely and only send out a fraction of what I read and know about it.

The newspaper industry is a media brother or sister. We have almost the same genetic code. They are us in different clothing. When they get mugged, we are next in line in the alley. We are in the same boat riding on a very similar platform.

Today's news about the ad revenue plunge is very important. Because newspapers are dailies, they more closely reflect the economy and the insights and wisdom, or lack thereof, of advertising spending. Whatever the trend is going to be, up or down, it is reflected first in newspapers and second in magazines.

With all this off my chest, I still think we are headed for a great second golden age of publishing (information distribution). Yes, it will be different. Yes, our business models will have to change. But if we are smart we will notice that what we can and do still provide is exactly what people have always wanted. They want information. They want information in the form of news or entertainment, or crafts or fashion, or culture or any of a thousand niche subjects. That is what we do best and will continue to do. We just need to be where the information seekers are and provide great content worth reading.


"We cannot live only for ourselves. A thousand fibers connect us with our fellow men; and among those fibers, as sympathetic threads, our actions run as causes, and they come back to us as effects."

Herman Melville (American short-story Writer, Novelist and Poet. Best known for his novels of the sea, including his masterpiece, Moby Dick. 1819-1891)


NAA Reveals Biggest Ad Revenue Plunge in More Than 50 Years By Jennifer Saba Published: March 28, 2008 12:55 PM ET
NEW YORK The newspaper industry has experienced the worst drop in advertising revenue in more than 50 years. According to new data released by the Newspaper Association of America, total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006 -- the most severe percent decline since the association started measuring advertising expenditures in 1950. The drop-off points to an economic slowdown on top of the secular challenges faced by the industry. The second worst decline in advertising revenue occurred in 2001 when it fell 9.0%.Total advertising revenue in 2007 -- including online revenue -- decreased 7.9% to $45.3 billion compared to the prior year. There are signs that online revenue is beginning to slow as well. Internet ad revenue in 2007 grew 18.8% to $3.2 billion compared to 2006. In 2006, online ad revenue had soared 31.4% to $2.6 billion. In 2005, it jumped 31.4% to $2 billion. As newspaper Web sites generate more advertising revenue, the growth rate naturally slows. The NAA reported that online revenue now represents 7.5% of total newspaper ad revenue in 2007 compared to 5.7% in 2006.That growth could not stave off the losses in the print however. National print advertising revenue dropped 6.7% to $7 billion last year. Retail slipped 5% to $21 billion. Classified plunged 16.5% to $14.1 billion."Even with the near-term challenges posed to print media by a more fragmented information environment and the economic headwinds facing all advertising media, newspapers publishers are continuing to drive strong revenue growth from their increasingly robust Web platforms," John Sturm, president and CEO of the NAA, said in a statement.

Brothers and Sisters Be Warned

BoSacks Speaks Out: In 1995 I coined the expression EL-CID, Electronically Coordinated Information Distribution. In this article you will read about one aspect and the power of El-CID. We are in it now, but we are going deeper and deeper. The net is going to get stickier and more all-encompassing. Your refrigerators, toasters, and MP3 players all on the same connected grid. Your car that has Easy Pass (RFID) and your GPS-locate-me-anywhere cell phone, not to mention your inter-connected networked home and the new cars that talk to you and tell you where you are and where to go.

Oh yes, my friends, we are just putting our toes into the EL-CID matrix and it effects us all. Doesn't matter if you are a steel worker, gardener, belly dancer or publisher, we are all connected to EL-CID.

Like it or not, believe it or not, it is an advertiser's dream come to fruition. Direct contact and meaningful dialog with the exact client any time and any where they choose.

George Orwell almost got it right, when he wrote 1984 about Big Brother. Well, he forgot about Big Sister, and Giant Uncle, not to mention, the rest of the overly interconnected, oversight family. EL-Cid is really here and we are all related now. Welcome to the family.

"Big Brother isn't watching. He's singing and dancing. He's pulling rabbits out of a hat. Big Brother's busy holding your attention every moment you're awake. He's making sure you're always distracted. He's making sure you're fully absorbed."
Chuck Palahniuk (American freelance Journalist, Satirist and Novelist. b.1961)

In media, the new mantra of dialogue
Buyers be warned: The era of pushing ads is fast ending
By Kevin Downey
http://www.medialifemagazine.com



Media buying agencies just don't get it. They'd better start getting it pretty soon.

How people use media is changing dramatically, and the era of force-fed commercials is nearing an end.

What's taking its place--and has been for several years at least--is a dialogue between advertiser and consumer, and more and more the consumer is in charge.

Media buying agencies need to become part of that dialogue. They need to learn how to spark that exchange. Those that fail to do so will face extinction. Or that's the clear warning in a new study from Forrester.

"Today's agencies fail to help marketers engage with consumers, who, as a result, are becoming less brand loyal," writes Peter Kim, a senior analyst at Forrester and author of the report.

"To turn the tide, marketers will move to the connected agency, one that shifts from making messages to nurturing consumer connections."


The forces killing off the old system are twofold, and one is the explosion of media options that make no one medium a must-have experience. It's the end of mass media in which advertisers could push out their message and consumers were forced to accept that message as the price of admission.

Nobody's a captive audience anymore, argues Kim. Expensive ad campaigns across mass media no longer work in this new media landscape.

Pushing out messages has become particularly ineffective in reaching a generation that's grown up with social networking sites, videogames, interactive television and video-on-demand. They use those media as they please, often skipping commercials.

The other major force of change is the internet experience that allows consumers to respond and react to those messages. Though initially threatening--do we want our competitors to know how little folks think of our product?--it wasn't long before shrewd marketers saw how this backtalk could be harnessed for good.
In listening to these voices, they saw that some voices stood out. They were the ones others listened to, the influencers. In effect, the internet created for marketers a listening post from which, for the first time, they could listen in on what's long been recognized as the most powerful form of advertising of them all, word of mouth.

As Kim sees it, the new model is all about media agencies capturing the hearts of these influential people--bloggers, for example--who can help them create ad messages that resonate with their friends.
Kim suggests agencies need to become something of a hangout where agency people and regular Joes talk about products and ads.


This is not a new idea. It's been around since the early days of the internet.

Putting it to work will prove to be a huge challenge, going as it does against the fundamental notions of mass-market advertising. Agencies make their money creating ads and spending great bundles to buy ads across many media.

But as Kim observes, while it benefits agencies, it isn't doing much for advertisers, and that failure to deliver will force agencies to change.
"The talent and processes [in] creative and media agencies focus on delivering work efficiently for above-the-line media with large audiences and large budgets," writes Kim. "As new media grows and asks for agility and speed, agencies can't expect a quick fix of widening capability gaps."

BoSacks Speaks Out: Fastest-Growing Ad Medium?

BoSacks Speaks Out: Fastest-Growing Ad Medium?


Does anyone on this list think that advertising in the Cinema is not an absolute abominable intrusion?

How would you feel if you paid for Broadway tickets to see Phantom of the Opera and before the Curtain rises for your expensive evening's entertainment, you had to sit through 10 or 15 minutes of advertising? Why should going to the movies be considered any different?


My reaction is pure disgust. We now have a situation where it costs over $10.00 per person to see a movie, and then I get the privilege of getting assaulted by unwanted advertising before my paid for entertainment starts. I must admit that I like the coming attractions, which is of course a style of advertising, but that is okay with me. It is consistent with the evening's expectations and agenda. But being forced to watch generalized consumer advertising is wrong, and I shutter to think, as the article below suggests, that it will be growing at a faster pace then the Internet, TV or magazine advertising.

We better get a consumer watch group started right now, and at the very least put a legal limit on cinema advertising. How about this -- five years from now the ads can't play for a longer time than the actual movie runs? Does that seem fair to you? 50% advertising and 50% movie? If not that, where should we draw the line?


BoSacks
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