Earlier this year, when the Oracle of Omaha said that newspapers are toast, he wasn’t kidding.
“They’re going to disappear,” the Oracle said. He didn’t know that COVID-9 was about to make a bad situation much worse, but he did know that the industry was hanging by the thinnest of threads. In the United States, we have lost almost 1,800 papers since 2004, including more than 60 dailies and 1,700 weeklies.
Today, to complicate matters, advertisers are pulling back on their spending, and many are refusing to allow their ads to be placed next to stories that report on the pandemic. Craig Silverman, a reporter for BuzFeedNews is concerned. “While journalists may be performing an essential business, the business of journalism is facing an extinction-level threat,” he wrote.
This reminds me of something that legendary journalist, A.J. Liebling once said. He said, “The function of the press in society is to inform, but its role in society is to make money.”
More Readers and Far Fewer Ads (Sounds Good from a Distance)
“Virtually all entertainment advertising is gone, and restaurants, gone. Automobile advertising is starting to get impacted,” Alan Fisco, the president and CFO of The Seattle Times, said.
The free fall in advertising comes amid a precipitous rise in readership. The paper’s “online traffic has been at times off the charts,” according to Fisco, and subscriptions — which account for more than 60% of the company’s revenue — are rising.
But those revenues don’t make up for the nearly total collapse of local ads. It’s unclear if or when they will return to pre-pandemic levels.
Keyword Blockers Now Working Overtime
Advertisers have no interest in direct sponsorship of COVID-19 coverage. This has led to keyword blocking to stop their ads from showing up next to articles about the coronavirus. As a consequence, publishers can’t turn the surging traffic into revenue as easily.
The result is a greater reliance on programmatic advertising, which typically yields lower CPMs than direct-sold advertising for news, said Tom Swierczewski, the programmatic media director at Cramer-Krasselt.
So the move to protect clients inadvertently hurts media companies.
Nandini Jammi, a cofounder of the Sleeping Giants digital advocacy group, said, “In my experience, brand marketers aren’t even aware that brand safety companies are making life-and-death decisions for the news industry through their ad budgets.”
Fewer Ad Placements = Fewer Ad Makers
“It’s a very challenging time for talent working in the marketing communications sector, both full-time teammates, marketers, brand managers and all the thousands of freelancers whose livelihoods have depended on this industry,” said Scott Goodson, founder and CEO of StrawberryFrog. “We all need to do what we can to secure these positions and our teammates.”
I agree with Goodson and I appreciate the upbeat attitude. Time will tell how this plays out. Columbia Sportswear CEO, Tim Boyle, cut his salary to $10K. That’s a bold move and the right move for a multi-millionaire who employs thousands of people.
The ad industry also has a handful of multi-millionaires who employ thousands of people. But 99 out of 100 leaders of ad agencies do not have this kind of bankroll. The ad agency business is dominated by small businesses, and small businesses are looking—directly and/or in disbelief—at a world of hurt, right now.