Pew: News Organizations Struggle With Digital Dollars

New study finds that news outlets are not attracting the largest advertisers from their traditional TV and print platforms to their websites

George Winslow -- Broadcasting & Cable, 2/13/2012 12:01:00 AM

After more than 15 years of heavy investments in their online efforts, news organizations are still having a hard time getting the big advertisers on their traditional broadcast, cable TV and print platforms to place online ads on their main websites, according a major study of online advertising at 22 major news organizations by The Project for Excellence in Journalism at the Pew Research Center.

The study focuses on a key issue for traditional news organizations: How can they fund more of their newsgathering operations from the rapidly growing online and digital advertising sector? The question is a critical issue for the future of newspapers and magazines seeing a slump in print advertising and circulation figures. But it is also an important one for TV news organizations who face rapidly mounting costs from their digital efforts at a time when they face increased competition from online news sources.

So far the answers to that question are discouraging, the study found.

While news organizations have worked hard to persuade their print and TV advertiser "to buy space across multiple platforms, there is little evidence that they had succeeded" because "the kinds of products and service being advertised online were quite different than in legacy platforms," the study found.

Worse, the study found that "in-house ads, ads selling or promoting a news organization's own products, fill more space across these news websites than another advertising category," making up 21% of all ads captured during the study, Pew found.

The study also argued that news organizations are doing a relatively poor job of attracting the fastest growing types of online advertising.

For example, the 22 news web sites tended to rely heavily on static banner ads, rather than rich media or video ads, which EMarketer expects to grow by 43% in 2012. In contrast, the banner ads widely seen on news sites will increase by about 18%.

The study also found that very few news organizations were offering targeted ads based on consumer behavior, another increasingly lucrative online practice. "Just three of the 22-CNN, the New York Times and Yahoo News-employed high levels of targeting, delivering different ads to the researchers based on that person's recent online activity," wrote the authors of "Digital Advertising and News: Who advertises on news sites and how much those ads are targeted."

Overall the study found that the top advertising categories online were in-house ads (21%), followed by financial (18%), toiletries/cosmetics (5%), leisure time/activities (5%), corporations (5%) and job search (5%).

The breakdown is based on the volume of ads, not the money they may have produced.

In-house ads were most prevalent on the websites of magazines, accounting for half of all ads, followed by newspapers, where they accounted for 21%. In-house ads were less prevalent on the websites of TV news organizations, with Foxnews.com carrying the most at 12%.

Financial services were heavy advertisers on some TV sites, accounting for 45% of the ads on ABC.com, 30% on CNN.com, 25% at MSNBC.com and 21% at Foxnews.com. CBSnews.com slightly under-indexed with 15%, compared to the 18% average for all 22 sites. 

The study also found significant differences between the prevalence of different types of advertising on cable TV news channels and their web sites. While financial services was the biggest category for cable news online sites, it was the 5^th largest category on cable TV news channels in terms of the volume of ads. In contrast, movies, which were the largest cable TV news category, were relatively rate online.

In terms of network TV news, prescription drug ads accounted for 16% of the ads on network morning and evening news, but "they were just half that on the web," the study concluded.

Online the network TV news sites also relied heavily on financial ads, which made up 31% of their total analyzed, while those ads accounted for only 4.3% of ads on the network TV shows.

Overall, video ads were also relatively rare. "They were most common on cable news websites but they still made up only 2.5% of the ads," the authors noted. "Video ads made up even less on network TV sites, 1.2% at CBSnews.com and less than 1% at ABCnews.com."

Overall the study analyzed 5,381 ads on the main websites and legacy outlets of 22 different news organizations. The initial phase covered ads in various days between June 28 and July 1, 2011. The researchers also followed up with various sites on their targeting efforts on Jan. 27, 2012.