Digital Ad Revenues Smaller Than Expected for Media Firms

Digital may be a less lucrative proposition for traditional media companies than originally anticipated, according to 2012 figures that indicate legacy avenues remain primary ad revenue drivers. For the first nine months of 2012, digital advertising only accounted for about 15 percent of total newspaper ad sales, despite an increase in online readership. Additionally, radio posted digital ad revenues of $561 million for the same period, a mere 4.6 percent of the $12 billion the industry generated in total ad dollars.

“This comes as spot advertising, the mainstay of the radio business, delivers flat growth for the year-to-date,” reports MediaPost. “Traditional radio broadcasters are also lagging behind in attracting digital audiences.”

Popular digital platforms include Clear Channel’s iHeartRadio, which has attracted another 10 million registered users since May 2012, and Pandora, which has grown from 150 million to 175 million users. However, Pandora has yet to successfully monetize its audience and digital music royalties. “But in terms of sheer numbers, Pandora’s audience is almost 10 times as large as the most popular digital offering from the nation’s largest broadcast radio group,” notes the article.

“Newspapers are in even worse shape. For the first three quarters of 2012, total online advertising revenues came to $2.4 billion — up just 2.4 percent from $2.3 billion in the same period of 2011, according to the Newspaper Association of America. The 2012 figure is also just 14.9 percent of total newspaper ad revenues — around $16 billion.”

While digital’s contribution is a larger proportion than in 2007, much of the increase is a result of the continuing decline in overall newspaper ad revenues. “The anemic growth rate is especially noteworthy considering the strong growth in newspapers’ digital audiences over the same period,” adds MediaPost. “In the third quarter of 2012, newspaper Web sites attracted an average 107 million unique visitors, according to comScore — up from around 68 million in the third quarter of 2008, the last presidential election year, per Nielsen.”