This Chart Explains Why the Paper is So Thin

Today’s WSJ told a sad story, see chart at the left.

“There are several reasons why newspapers so far have failed to crack this market. Because online ads are far less expensive than print ads and thus offer lower commissions, it’s difficult to get salespeople to focus on selling the digital products.

Also, the types of ads that newspaper companies are selling — typically banner ads — don’t correspond with the needs of a local merchant. And much of the potential local online ad revenue growth comes from small and medium-size local businesses, a market segment that newspaper companies have typically ignored.

Some publishers say rising competition from everyone from Google to local bloggers has made it tough to offset newspapers’ sliding share of local online ad revenue. “At the moment we’re just trying to retard it as much as we can,” says Dan Shorter, president of digital media for the Minneapolis Star Tribune.

The cannibalization of print ad revenues is also a problem. One common scenario is that a trusty local print advertiser — a car dealership, say — that used to spend $20,000 a year on advertising might now spend a quarter of that with the newspaper online and nothing in the print product. Thus, the newspaper company is now selling more digital ads, but the new sale is taking away from its bottom line.

Some papers, like the Scripps chain, are starting to give sales people more motivation to sell online ads. At Scripps’s Corpus Christi Caller-Times paper in Texas, for example, the online audience is about a third of the size of the print circulation. As a result, the paper is in the process of tying a third of the salespeople’s commissions to their sales of online ads. The digital goals will increase sharply each year, forcing the sales teams to sell more digital ads to continue to maintain their monthly commissions.

“Unless you take practices that have been in place for 50 years and shake the dust off the rugs, you’re not going to move the needle,” says Mark Contreras, senior vice president of Scripps newspaper division.