Thursday, December 22, 2016

"Economist Digital Strategy Chief: 'We expect display advertising to have disappeared by 2025'"

From the Press Gazette:

Economist deputy editor and digital strategy head Tom Standage on why news publishers need to say goodbye to advertising…

The majority of our revenue (65 per cent and rising) comes from circulation.

We expect display advertising to have pretty much vanished by 2025. We are sorry to see it go – print advertising had very high margins in the past, and extra print pages were almost pure profit for publishers. But those days are never coming back.

Many publishers seem unwilling to accept this, though. They hope to find a way to replace declining print revenues with online advertising.

This is a fantasy, and incumbent print publishers who try to move to a digital-ad model are mostly doomed to failure.

Some digital-publishing startups have managed to sustain themselves from digital advertising revenue – Gawker managed it for a while, for example – but it’s difficult. When Verizon bought AOL it emerged that the Huffington Post was not profitable, for example, and it’s a pure-digital news operation that doesn’t even have to pay for a lot of its content.

So if it can’t support itself from digital advertising alone, that bodes ill for others trying to do the same thing.

And the situation is even worse for incumbent publishers (e.g,, the Guardian) trying to switch to this model, because they have far higher costs as a result of their print legacies: larger newsrooms, pension liabilities, physical assets such as printing presses, and so on....MUCH MORE