Wachovia report: Papers lose the most ad money to the Internet

John Janedis, Wachovia senior analyst, led a team of researchers in analyzing 100 major national advertisers.  Fifty-five of the advertisers fell into seven different categories: automotive, retail, telecommunications, financial services, general services, media, and tech/Internet.

Of the seven groups, only advertisers for financial services increased their ad spending in newspapers.  In 2006, telecommunications advertisers devoted only 24% of spending to newspapers, down from 31.6% spending in 2005.  Although automotive advertisers devoted only 4.6% of their 2006 spending budget to newspapers, retail experienced less than a 2% drop from 29.8% to 28%.

Overall, the report found that newspapers lost 14.3% in advertising dollars, opposed to the 4.4% gain by television media.  Unsurprisingly, the Internet increased by 17.8% in advertising spending. 

According to Wachovia estimates, Internet advertising must grow by an annual 15% over the next decade to catch up with the ad spending currently held by newspapers, approximately $35 billion.  Unfortunately for the newspapers, the report added that the Internet is “already having an impact” on the advertising industry as a whole, which could fuel more concerns of ad revenue losses to online.

Source: Editor & Publisher through IFRA Executive News Service