By Dave Hendricks, Executive VP, Strategic Sales and Planning, Datran Media-

In the first quarter of 2009, newspaper ad sales plummeted by 30 percent.  Given the general economic conditions, this isn’t surprising, but it’s clear that there’s more to the decline than the mere fact that the economy is in shambles.  The way that we consume advertising parallels the way that we consume news, and that way is increasingly online.

According to the Pew Research Center, of their panel respondents, “currently, 40 percent say they get most of their news about national and international issues from the Internet, up from just 24 percent in September 2007. For the first time in a Pew survey, more people say they rely mostly on the Internet for news than cite newspapers (35 percent).”

Understandably, newspapers did not greet the decline with cupcakes and balloons.  Indeed, in the first and second quarters of this year newspapers, as well as magazines, saw more closures and layoffs.  The reason for the closures and layoffs clearly has nothing to do with the news being read in print or on the net, or from any lacking of content for magazines.  The obvious reason is that advertisers are abandoning traditional printed platforms at an alarming rate.  And that’s been happening since about 2004.

While advertisers have been abandoning print, something else has been happening:  consumers have largely stayed put.  While the Min Magazine 40 had ad pages drop by about 24 percent, rate bases for these publications stayed consistent.  New York Magazine cut its rate base in May by 6 percent, while Food Network’s magazine raised its 600,000 following better-than-expected success of its new title.  What this means is that while the ad pages may not be there, the readers are.

Where there are readers, there is revenue.  The challenge is finding the right mix of revenue for the publication.  In the case of Cook’s Illustrated, revenue comes in the form of high subscription prices to offset the lack of advertising.  In the case of other publications, revenue may have to come from several sources not limited to subscriptions and ad pages.

Email and display ads are quickly filling the gap left by reduced ad pages.  Today’s magazine reader is a multi-channel information consumer – not necessarily reading the entire magazine in any one format.  For example, while I subscribe to The Atlantic, I often read parts of it online.  I don’t subscribe to Vanity Fair, but buy it at the newsstand and read it online.  In many cases, I sign up for newsletters from my favorite publications, and they notify me of new stories and issues, some of which are unique to the online version.

Advertisers have been quick to catch on to this trend.  They’ve moved their spend to where the reader is – throwing to where the runner will be – in an attempt to gain more reach and more measurability.

In the meantime, publishers have embraced the new online audience and have started to monetize their online subscribers in order to make up the shortfall.  This has become so mainstream that the IAB is currently working on guidelines for audience monetization through email, a first for them.

If you are interested in understanding how publishers are monetizing their online subscriber base through email advertisements, join me for a complimentary Webinar I’m hosting on July 28th - Generating Value from your Online Ad Inventory Part II : How Publishers Can Survive & Thrive in an Ad Recession.  You can register online.

As advertising becomes more targeted and timely, publishers have a great platform to benefit by virtue of their extensive customer intelligence.  How are you making the most of you customer data asset?  Join us and register here.

In his role as Executive VP, Strategic Sales and Planning, Dave Hendricks is responsible for the overall success of Datran Media's eMail, Display and List Management businesses. Since 2001, Datran has enabled over 75 million transactions and billions of clicks and impressions for its publisher and advertiser clients. Datran Media's Aperture, Exchange Online and StormPost platform is the only integrated display, list management and email marketing network.