March 17, 2010

Bad News for Online News

Unique Visitors Revenue
Unique Visitors 9.3
Revenue -4.6

4.6% – Percentage drop in ad revenue for online news sites in 2009

The past year brought a substantial increase in the audience for online news sites. In 2009, they saw a 9.25% jump in average unique visitors over 2008, according to a PEJ analysis of the Nielsen Net Ratings list of 4,600 news and information sites. In 2009, the only other media sector to see a rise in audience was cable news, and that was due in large part to a 19% jump in Fox News prime-time audience.

But despite this rise in traffic, online advertising revenues declined for the first time since 2002. According to online research firm eMarketer’s projections based on the first 8 months of the year, revenues in 2009 were expected to fall to $22.4 billion from $23.4 billion in 2008—a 4.6% drop. This follows a modest 10% growth rate in 2008. As recently as 2006, online ad revenue was expanding by about one-third annually.

Some categories fared better than others. Search, which flows mainly to aggregators like Google, was projected to grow 3% while display advertising, the kind that news sites are most dependent on, is slated for a 2% decline. And classified ad revenue was projected to plummet 31%.

The eMarketer firm does have a more optimistic projection for 2010, predicting that as the economy slowly recovers, online revenues will reach $23.6 billion, a level slightly higher than 2008 earnings.  

For more about the economics of online news, read the Online chapter of PEJ’s annual report on the health of the journalism industry, the State of the News Media 2010.