Forecast: Ad lag will continue for the news industry

With circulation on the downslide for newspapers and fewer viewers tuning in for the nightly news, forecasters are predicting that ad revenue will continue to fall for the news industry. The ad decline will lead to an overall revenue decline according to a new forecast from Outsell Insights.

by Kristina Knight

The downfall is attributed to more users getting their news from online sources.

According to the forecast global news providers will see revenues fall 2.5% to reach $131 billion this year. In 2008, revenues will fall 3.1% (to $127 billion) and in 2009, revenues will fall another 3.1% to reach $123 billion. A similar drop of 3% is forecasted to occur in 2010, which will lead to a negative CAGR for the period of 2.9%.

In addition to readers turning online, however, advertisers are also pushing more ad dollars online. According to the forecast the online search segment, specifically, is hindering more traditional advertising spending.

For the first time, though, forecasters are predicting that increased online spending for news providers won't make up the difference in their offline revenues. That is because online revenues are also beginning to slow.

"Publishers have hoped that online growth would make up for what is now seen as inevitable print losses," was written in the report. "But with about one in ten News revenue dollars earned online and publishers so far unable to increase their share of that increasing online ad pie, these hopes are dimming."