News Sites Struggle with Digital Advertising | INA Global

News Sites Struggle with Digital Advertising

Article  by  Dovilé DAVELUY  •  Published 08.03.2012  •  Updated 12.03.2012
[NEWS] Digital advertising is rapidly conquering the advertising market. A report on digital advertising released by the Pew Research Center found that news websites are still struggling with digital ads, and remain reluctant of taking advantage of possibilities that they may provide.

Summary

The study examined over 5,000 advertisements on 22 different news websites, including 11 newspapers, four magazines, three cable news outlets, three commercial network broadcasts and two online-only outlets. In addition to online ad analysis, researchers measured websites’ degree of ad customization, and compared the online ads to the ads in the traditional platforms of corresponding news outlets. The article examines the key findings of the report.

News websites fall short of generating revenues from digital advertising

Forrester Research predicted in 2009 that digital advertising spending would increase by 21% in next five years, while overall advertising budgets would not grow much, if at all. VP Principal Analyst at Forrester Research Josh Bernoff, warned back then that advertisers “better learn to speak digital, because that’s the way the world is going.” These trends are confirmed by the newest data. In January 2012, eMarketer announced that US online advertising spending is expected to grow an additional 23.3% to $39.5 billion in 2012, up from $32 billion in 2011, surpassing declining spending in print advertising.

eMarketer’s forecast also pointed out that digital revenues are “a sole bright spot” for the declining newspaper industry. According to its estimates, US digital ad revenues for newspapers are expected to grow by 11.4% to $3.7 billion in 2012, up from $3.3 billion in 2011. Print advertising revenues at newspapers are expected to plunge an additional 6%.

The Pew Research Center’s report, however, does not confirm eMarketer’s predictions for newspapers. It rather suggests that across the 22 news sites analyzed, the single biggest advertiser remains the news organization itself with newspapers and magazines placing most “in-house” ads. Among studied print outlets, at the top was the online version of Time magazine with 56% of self-promoting ads, and the Wall Street Journal led among newspapers with 50%. The researchers concluded that these findings may indicate “the inability of the industry to draw advertisers – and thereby ad revenue – to their online space.”

The second biggest category of advertising is the financial industry with 18% of ads. Abcnews.com had the greatest share of financial ads at 44.6%.



The study also found that the dominance of financial ads was limited to the Web; other types of ads prevailed on traditional platforms. Despite divergences among the different media platforms, all showed significant discrepancies between their online and traditional environments. For example, for cable TV outlets, about 26% of online ads studied were financial, but on cable news television, financial advertising represented only 9% and ranked 5th, surpassed by movies, telecom, cars and insurance.
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News websites show low levels of customer targeting

The growth of digital advertising can be largely explained by the opportunities for marketers to customize their ads and target consumers based on the data collected from the latter’s online activities. University of Pennsylvania Media Professor Joseph Turow, details in his new book, “The Daily You: How the New Advertising Industry is Defining Your Identity and Your Worth,” how, by using sophisticated and pervasive spying software, companies are gathering information about Internet and mobile device users to serve them “personalized ads.” Turow gave an example of an e-card for Valentine’s Day recently sent to his wife that contained trackers from 15 separate companies.

Online-only platforms like Google and Facebook are leading this personalized ad revolution. eMarketer announced  that Facebook currently dominates the US display ad market, with 2011 revenues of $1.73 billion , but Google is expected to surpass its competitor by 2013 in what is becoming a “two-horse race.”

The Pew Research Center’s report, however, found that just three out of 22 news websites studied showed high levels of such targeting (defined as at least 45% of the differentiation of ads from one user to another): CNN, Yahoo News and the New York Times. The three other sites – CBS, USA Today and MSNBC – exhibited moderate levels of targeting, with the rest of the sites showing minimal usage of targeted ads. The researchers observed that the sites with higher levels of targeting were larger, more nationally oriented sites that have more diverse audiences. Furthermore, they also found some evidence of targeting according to a news story, especially well-suited to the news portals, rather than according to a user.
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News websites stick to more traditional forms of digital advertising

Digital advertising allows for more interactivity and innovative formats. Video ads and social media-enabled advertising are expected to continue to grow in the future. According to the data from eMarketer, currently the paid search[+] NotePaid search is a type of contextual advertising where advertisers pay a fee to have their website or product-related information displayed in top placement on search engine result pages.X [1] is still the dominant form of advertising on the Web in terms of money spent, followed by the traditional static banner ads, which represented $14.38 and $7.61 billion respectively in ad spending in the US in 2011. Yet, eMarketer estimates that video ads in the US will grow by an annual rate of 38% in next five years, making it the fastest-rising category in online ad spending. 


The report found that static banner ads were the most common ads used on the studied news sites, representing 46% of overall ads, followed by sponsored links, 38.1%, and rich media ads, 14.3%. Static banner ads were most prevalent on magazine and newspaper websites, although with some exceptions. For instance, on the online version of The Atlantic, rich media ads made up almost half of the ads, and the Washington Post used sponsored links more than any other outlet studied – 66%. Video ads were most popular on cable news websites, but they still accounted for only 2.5% of ads on these websites and for only 1.3% on overall sample of outlets. These findings suggest that the news sites still rely heavily on the traditional forms of advertising and show little interest, for reasons to be further explored, in exploiting more innovative formats of digital advertising.


In conclusion, despite overwhelming evidence that the Web is soon to become the dominant advertising platform, the Pew Research Center’s Project for Excellence in Journalism report suggests that the studied news websites still experience difficulties in making advertisers move from traditional platforms online. Neither do they fully exploit the possibilities digital platforms provide in terms of customer targeting and innovative advertisement formats.


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Photo credits:
-campra / flickr.
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  • 1. Paid search is a type of contextual advertising where advertisers pay a fee to have their website or product-related information displayed in top placement on search engine result pages.
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