News consumption on rise despite ad challenges

Newspapers will survive into the future despite the continuing fall of print advertising investment and the challenges of monetising digital audiences, according to a media forecast by PricewaterhouseCoopers.

The report, released today, also found that publishers are taking steps to diversify their business and maintain the value of their news brands.

“Reports of the newspaper industry’s death have been greatly exaggerated,” the PwC Australian Entertainment & Media Outlook says.

“While print sales continue to decline, the aggregate consumption of print and digital news is increasing.”

The challenge for publishers will be to deal with the predicted continued fall in print advertising revenue. According to the report, advertising in print will drop from 79.3 per cent of the total newspaper advertising market in 2014 to 56.7 per cent in 2019.

Meanwhile, digital newspaper advertising will rise from 20.7 per cent in 2014 to 43.3 per cent in five years.

The report’s editor Megan Brownlow said publishers should focus on upskilling their sales team so they can offer more than basic display ads.

“[They should] get their salespeople to a point where they can have conversations with media buyers and advertisers, where they are creatively solving problems, coming up with stories, coming up with creative content that can be used in the native advertising area,” Ms Brownlow said.

“We’re out of a world now where they’re just selling spots and dots and banner ads.”

Ms Brownlow said that in future the advertising market would be split between content marketing and native advertising at the premium end, and transactional, programmatic exchanges at the bottom end. “Publishers will need both,” she said.

Digital circulation revenues from Australian readers will also flow to international publishers, which means domestic news organisations must invest in aggregate content discovery services like Apple News and Facebook Instant Articles, Ms Brownlow said, despite the loss of brand ownership and data that comes with that.

“The brand value and trust created over decades by traditional mastheads will protect their readerships to some extent and attract others who become dissatisfied with free content,” the report states.

“The question remains, however, can Australian publishers diversify their business models to make them less reliant on the decreasing pool of paying readers?”

The report points to the launch of the APEX advertising exchange by Nine Entertainment and Fairfax as supporting the argument that publishers are forming joint ventures and taking steps to secure their future.

“As readers of news continue to switch between platforms, brands must focus on maintaining their identity across multiple platforms by ensuring they are framed by consistent content, a challenge APEX is well-placed to meet,” the report says.

Traditional platforms still central: Reuters Institute report

Established platforms like newspapers and television are key to news consumption, while the number of customers dissatisfied with online advertising and using ad blocking software will pose a challenge to publishers online, a report by the Reuters Institute for the Study of Journalism has found.

“This year’s data see a quickening of the pace towards social and mobile news, a decline in desktop internet and significant growth in video news consumption online,” the report’s Digital News Report’s executive summary says.

“At the same time, we see the continued centrality of traditional platforms … and ever more stark country-based and generational divides over the way news is found, consumed and distributed.”

The report found that smartphones are the primary way of accessing news for a quarter of respondents while news access on tablets is slowing and desktop news reading is declining.

However a key challenge for publishers will be readers’ distaste for web advertising, with 47 per cent of US respondents and 39 per cent of British respondents using ad blocking software to stop online advertising from appearing on their screens. This is a major reason for the rise in native advertising, the report finds.

Trust in news media varies significantly country-to-country, with 68 per cent of Finnish respondents saying they trust the news they read compared to just a third in the US. Thirty nine per cent of Australians say they trust the news they consume.

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