Research & Analysis for Business
and Investment Clients
Can an internet search company (Google) take down a $60 Billion (see Figure 3) dollar advertising industry (as many journalists at traditional print media companies including The New Yorker & The Atlantic believe)? Unlikely.   Here's a reasoned analysis.
Extreme language sparks strong sentiment. "Don't be Evil", Google's corporate motto, suggests some corporations are, to truncate the motto, the "Devil". Contrary to popular belief, based on newspaper industry statistics, we find the newspaper industry bedeviled since 1980.
Figure 1 plots industry numbers from the Editor & Publisher International Yearbook. Around 1980 evening newspaper numbers decline (Note: This is the number of daily newspapers, not the actual number of newspapers circulated).Figure 1. Daily newspaper numbers for morning, evening, and Sunday. Dotted line marks notable shift in newspaper industry around 1980.
Figure 2 plots circulation numbers from the Editor & Publisher International Yearbook. Note that circulation numbers peak between 1980 and 1990. Compare this plateau to the bubbly numbers plotted in figures 3 & 4. Although print media numbers plateau, stock prices inflate through nearly 2005. Advertising revenue numbers respond somewhat quicker with a significant decrease initiating in 2000.
Figure 2. Daily newspaper circulation statistics for morning, evening, and Sunday. Dotted line marks notable shift in newspaper industry around 1980.
Figure 3 plots national, retail, and classified advertising revenue. National advertising yields an expected result. Large corporations benefit from blanket advertising. Numbers remain relatively constant with time compared to retail and classified advertising.
Retail advertising, however, is strongly driven by demographics (i.e., sex, age, income, zip-code). Databases are perfect for demographic data retention and analysis.
Classified advertising, requiring significant buyer and seller coordination and search capability, was ripe to disappear from black and white print with character limits as short as a text message.
Not surprisingly, retail and classified ad revenues vaporized with dynamic, relevant, user-generated ads instantly transmitted to a mass audience.
On-line advertising represents only a tiny revenue sliver. We expect this sliver to expand as premium content providers develop new on-line advertising strategies. Apple may play a messianic role in shaping on-line advertising—the iAd on the iPad.