Touting audience or revenue

Comes now the latest report from the Newspaper Association of America, touting the supremacy of online newspapers in reaching the biggest and most affluent online audience.

This is great news but, data-wise, a bit of Groundhog Day.

The NAA has been saying this since 2002, when I did the Power Users study for them. I was director of new media for MORI Research. We found that online newspaper users went online more, spent more, earned more and were better educated that average online users. It was good news for an industry recovering from a recession accompanied by the dot-com bubble burst.

We repeated the study in 2004 and found the same thing. The NAA found similar findings in later studies, using Nielsen data. This year, the NAA analyzed comScore data rather than Nielsen – thank God – and found similar but more dramatic results.

At the same time, Google reported that profit rose 32% during the last quarter. While search ads continue to dominate, display advertising is on an annual run rate of $2.5 billion and mobile is on an annualized run rate of $1 billion.

Newspapers do not have an audience problem.

Newspapers do not have a content problem.

Newspapers have a sales problem.

Leaning on circulation/audience data to prove the industry’s value is a silent indictment of an inability to monetize that audience. Nearly 10 years of these reports, and the story remains dead-on true: Online newspapers reach the best local audience. But it is not the best at selling that audience.

If anything, online newspapers have too much inventory. In working with the Yahoo!/Newspaper Consortium, no online newspaper could state 100% of its inventory sold out. Most couldn’t break the 50% barrier. That’s not because the audience isn’t desirable. It’s usually because of a lack of sales focus and discipline.

Meanwhile, Google posts 32% profit during one of the shakiest economic periods on record. Thirty-two percent. With $1 billion from mobile.

Recently, I have done a lot of work with so-called Fifth Estate sites – the news entrepreneurs who are rushing in to fill the journalism void left by newsroom cuts, closed bureaus and consolidations, as recently chronicled by the Pew Project for Excellence in Journalism. Many have received portions of the millions of dollars in grant funding from such generous organizations as the Knight Foundation, which has been funding journalism innovation with idea grants since 2007.

With few exceptions – such as the for-profit Batavian and the non-profit Texas Tribune – they are not sustainable. They have no revenue model past their current grant funding, and literally squirm in their chairs when I talk about the basics of a business plan. Many of these entrepreneurs, so passionate about community connection and about serving their readers, have big, neon Vacancy signs where their revenue model should be.

Which makes them, I suppose, just like the newspapers they intend to unseat.

Newspapers need to talk less about circulation and start talking about digital sales focus. And if Fifth Estaters really wanted to be disruptors, they’d show newspapers how it’s done.

Google certainly is.