
According to the Newspaper Association of America, advertising revenue dropped 6% in 2012. Total revenue was down 2% to an estimated $38.6 billion.*
That’s the doom-and-gloom story.
The one that’s not making any waves that I can see is this: the $3.4 billion in digital ads reported by NAA is more than the $2.6 billion in display ad revenue reported by Google last year.
However, over at Newsosaur, Alan D. Mutter compares newspaper ad revenue ($22.3 billion) to Google ad revenue, calling the disparity a “stunning reversal of fortune for the newspaper industry.”**
I think Mutter is waving a red herring.
First, Craigslist, Monster.com and eBay have decimated classified ad sales.
For 2012, NAA estimates that classified ads continued the downward spiral, declining another 9% compared to 2011. In 2012, classifieds accounted for only 18% of total ad sales. In 2000? That was 40%.
It’s not like newspaper leadership was unaware of impending digital disruption. In the mid-1990s, NAA economist Miles Groves “warn[ed] the newspaper industry of the growing challenge to its monopoly on classified advertising. ‘Newspapers had time to take control of the digital world and be the owner of that franchise,’ he says, ‘and we didn’t do it’.”
Second, display ads account for a nominal part of Google’s revenue, only $2.6 billion. A display ad sits alongside editorial content, contrasted with a search ad that appears on search results pages.
That $2.6 billion is about one-tenth of newspaper ad revenue (82% of which is from display ads).
Google’s total revenue for 2012 was $50 billion. Most of that is coming from a business — search — that did not exist (directly) prior to the World Wide Web. There were directory services, of course. The Yellow Pages guided us to businesses, and librarians directed us to information.
In 2012, businesses invested $6.9 billion in Yellow Pages ads, which is a fraction of Google and Microsoft’s search ad revenue. Yellow Pages revenue peaked in the mid-2000s at less than $15 billion. What will finally send that paper directory cum doorstop to the ultimate dump: local mobile ads, which are projected to ring up $9.1 billion within four years. That’s where Google is jousting with Facebook.
Third, Google isn’t the only competitor for ad dollars. And TV is bigger than Google.
TV ad spending was up in 2012 compared to 2011, probably due to the Presidential election. It was a staggering $74 billion, about 50% more than Google’s total revenue.
Total U.S. digital ad sales for 2012, according to eMarketer, hit $37.31 billion.
But Mutter writes:
As illustrated in the green line in the chart above, the digital sales at newspapers and Google started out almost even in 2003 at $1.2 billion for newspapers and $1.5 billion for Google. Google’s sales doubled in 2004, handily outstripping newspapers, and then kept compounding to the point that Google’s sales were nearly 15 times greater than newspaper digital revenues in 2012.
You can’t argue with the data but you can argue with his implication.
Total ad spending for 2012 was $140 billion, according to Kantar Media. Google accounts for about 40% of the total online ad market. There are a lot of businesses in a lot of channels competing for those dollars.
Google and newspapers are not in the same business.
Using Google’s gross revenue as a benchmark is a worse choice than picking television , but even the comparison with TV is flawed.
Ostensibly, most of the content in a newspaper (print or online) is news. Yes, some news is entertainment, but the content isn’t, in the main, fictional. Most of the content on TV is made-up. News — particularly reporting — is a teeny fraction of total air time for any network except sports, if you were to call a live sporting event “news.”
Mutter continues his flawed framing:
Instead of investing in the technology necessary to gather customer data and target advertising on the emerging digital platforms, legacy publishers and broadcasters – whether for want of insight, resources, skill or conviction – ceded the opportunity to Google and a host of other digital natives who understand that targetable customer data – not masses of unknown and undifferentiated eyeballs – is the Holy Grail of digital publishing.
Google isn’t a publisher.

Yes, it’s trying to be a publisher of sorts with Google+. But Google’s core business is delivering advertising around search results.
Google helps us find relevant “published” material — words, images, moving pictures, sound — in an information space that dwarfs the combined output of US newspapers and includes content by current and former newspaper advertisers.
But Google is not the publisher.
Mutter is correct that Google’s founders figured out how to make targeted ads profitable. But first they developed a product that millions of people wanted.
It’s not possible to “save” your way to profitability, but too many newspaper publishers seem to have forgotten that.
In 2012, we had fewer than 40,000 full-time professional employees in the newspaper newsroom, the smallest number in 35 years. And it matters. According to the 2013 State of the News Media report:
Nearly a third of U.S. adults, 31%, have stopped turning to a news outlet because it no longer provided them with the news they were accustomed to getting.
I call it a lack of local relevance.
I don’t know how newspapers will be able to remain solvent until they figure out a new business model. But we won’t get there by thinking of Google as either the whipping boy or as the road not taken.
* NAA methodology: projections based on data provided by 17 public and privately-held companies representing approximately 40% of the weekday print circulation in the United States (about 330 papers) and almost half of all U.S. newspaper media revenue.
** No explanation as to why Mutter’s claim for Google’s ad sales exceeds the estimated industry total by 25%. This IAB report from 2011 reinforces eMarketer’s data (pdf).
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I was wrong. They are a publishing company – they bought Zagat’s and Frommer’s last year.
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