Newspaper industry experiences worst drop in advertising revenue in more than 50 years

According to new data released by the Newspaper Association of America, total print advertising revenue in 2007 plunged 9.4% to $42 billion compared to 2006 -- the most severe percent decline since the association started measuring advertising expenditures in 1950.

The drop-off points to an economic slowdown on top of the secular challenges faced by the industry. The second worst decline in advertising revenue occurred in 2001 when it fell 9.0%. Total advertising revenue in 2007 -- including online revenue -- decreased 7.9% to $45.3 billion compared to the prior year.

There are signs that online revenue is beginning to slow as well. Internet ad revenue in 2007 grew 18.8% to $3.2 billion compared to 2006. In 2006, online ad revenue had soared 31.4% to $2.6 billion. In 2005, it jumped 31.4% to $2 billion. As newspaper Web sites generate more advertising revenue, the growth rate naturally slows.

The NAA reported that online revenue now represents 7.5% of total newspaper ad revenue in 2007 compared to 5.7% in 2006. That growth could not stave off the losses in the print however. National print advertising revenue dropped 6.7% to $7 billion last year. Retail slipped 5% to $21 billion. Classified plunged 16.5% to $14.1 billion.

2. It's not Craig's fault. Newspaper classifieds suck and they have for years. Either develop simple database applications with photos and maps to let your users actually find what they're looking for, or partner with a good third-party vertical who can. Anything less is a waste of your time.

Total newspaper advertising revenues fell by $3 billion in the first six months of this year to $18.8 billion, the lowest level in a dozen years, according to data published today by the Newspaper Association of America.

The record 14% sales plunge featured the first-ever drop in online sales. Interactive revenues slipped by 2.3% in the second quarter of this year to $776.6 million. For the entire first half, online sales rose a modest $35 million, or 2.3%, to a bit less than $1.6 billion.

The $3 billion decline in just six months is equal to 6.6% of the industry's total sales of $45.4 billion in 2007.

As you can see in the chart below, print revenues have declined at an almost continuously accelerating rate for nine straight quarters since the second quarter of 2006.

The 16% decline in print sales in the second quarter of this year surpassed the prior record plunge of 14.4% in the first quarter of 2008. The drop in the first quarter of this year was larger than the slide in the last quarter of 2007. And so forth.

The sales debacle in the first half of this year was led by a staggering 35.2% collapse in print classified advertising, which fell nearly $1.8 billion, or 35.2%, to $5 billion.

Help-wanted and real estate advertising each dived by more than a third from the prior year. Recruitment sales fell $710.6 million, or 36%, to less than $1.3 billion in the first half of the year, while real estate tumbled $682.2 million, or 35.5%, to $1.2 billion in the same period. Automotive classifieds dropped $331 million, or 21.9%, to less than $1.2 billion.

According to The Newsosaur, Alan Mutter, the first-half 2008 newspaper revenue details, released by the Newspaper Association of America, represent the worst numbers in a dozen years.

But that's comparing 1996 dollars to 2008 dollars. If you look at print revenue performance in constant 2008 dollars, the industry hasn't seen numbers this grim since 1982.

What's really bracing about that chart is how the rate of decline clearly accelerates in the past few years.

In early 2004, Alan Block sent a letter to Blade employees. WSPD reported then :