As newspapers are dogged by falling circulation, ad sales, NY Times looks to take a bite out of ad blockers

By Jim O'Neill on Jun 22 2016 at 8:15 AM
As newspapers are dogged by falling circulation, ad sales, NY Times looks to take a bite out of ad blockers

The New York Times is tired of fighting ad-blocking technology – which its chief executive called unfair and deceptive – and will launch a higher-priced ad-free digital subscription aimed at helping customers do the right thing while helping the company.

Ad blockers globally cost publishers an estimated $24 billion in unrealized ad revenue in 2015 as more than 200 million consumers used the technology.

Times’ CEO Mark Thompson, speaking on a panel at the Cannes Lions advertising festival this week, said the move was needed because journalism “costs real money and needs to be paid for.” Thompson didn’t say how much the media company will charge for its ad-free digital edition, nor did he forecast how many of its estimated 1.16 digital subscribers might opt for the higher-priced product.

But, both will have to be substantial numbers to offset revenue lost from digital ad sales.

The newspaper industry is coming off its worst year – in terms of subscribers and ad revenue – since the 2008-09 recession, according to the PEW Research Center’s most recent State of the Newspaper Industry report.

Circulation during the week fell 7% and Sunday sales were down 4%, their biggest fall since 2010. 

The drop in ad revenue was even worse, seeing the largest dip since the recession, nearly 8% year-over-year.

The number of consumers using newspapers’ digital sites is up slightly, with

weekday and Sunday digital circulation rising 2% and 4% respectively in 2015.

Digital ad revenues, which now make up 25% of overall ad revenue for newspapers, haven’t kept pace. In 2015, they declined about 2%. And that’s a major concern.

Ad revenue at the Times fell nearly 7% in Q1 and is expected to see a similar decline in Q2.

The Times hopes that circumventing ad blocking with a premium product will help, and is looking for other publishers to work together to fight ad-blocking companies. Thompson, for his part, feels that more needs to be done to educate the public about how ad blockers work, generally allowing some ads though, often for a fee.

Publications have battled ad blockers in several ways; some have opted to block consumers using the technology from accessing premium content on their sites, others have asked readers to “whitelist” their publication, allowing ads to stream through, and others have allowed ad-blocking readers access in return for personal information.

And others have turned to anti-ad blocking software, which can be very successful in increasing ad revenue. In Q1, reported Ooyala’s Global Video Index, one of its publishers using ad reinsertion technology saw 23% more ad impressions.

The newspaper industry, of course, isn’t the only one suffering from subscriber losses and ad revenue declines. Magazine publishers, too, have seen the wind go out of their print sails and have begun looking for new ways to regain momentum.

Magazine publisher Rodale – which counts Men’s Health and Bicycling among its titles – recently announced that its Prevention magazine, too, would go sans ads. But, unlike the Times, Prevention intends to drop its print ads. The company said it will lose revenue from some 700 annual pages of advertising but is also “walking away from a lot of expense.”

Publisher Maria Rodale said the magazine has been in the red for the past two years and hopes increasing the newsstand and subscription prices, a move she knows will likely also cut readership numbers substantially, will end up turning the tide of red ink.

Rodale also has a strong digital presence for most of its titles.

But all ad-supported media online, Thompson said, is struggling.

“I think we’re in for a really, really rough ride,” he said.

Stay tuned.

Follow me on Twitter @JimONeillMedia and on LinkedIn

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