PR types can’t ignore digital advertising

18 Jan 2018 PR types can’t ignore digital advertising

Recent quarterly financial results from Postmedia, the country’s largest newspaper chain, continue to indicate in a dramatic way the shift that is taking place in the print industry – one that began a few years ago and is accelerating.

First full disclosure. I was an employee for the Calgary Herald, a Postmedia brand, for 35 years before being laid off two years ago as part of continued cost-cutting measures. And those cost-cutting measures have cut a wide swath in the newspaper industry precisely because of a plunge in print advertising.



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It’s a trend that public relations and communications professionals can’t ignore when traditional media is falling fast while the digital world explodes.

Let’s take Postmedia’s latest quarterly results as an example of what’s taking place in the media these days. It’s a lesson in history and a forecast for the future.

Financial information for the three months ended November 30, 2017, the company’s fiscal first quarter, indicated revenue for the quarter was $189 million as compared to $210.8 million in the same period a year ago, a decrease of $21.8 million or 10.3 per cent.

Postmedia said the revenue decline was primarily due to decreases in print advertising revenue of $19.9 million or 17.9 per cent and decreases in print circulation revenue of $3.8 million or 6.1 per cent.

However, digital revenue increased by $4 million or 14.5 per cent in the quarter with digital advertising revenue up 17.3 per cent.

So, what are the consequences for the media giant with these numbers?

For one, net earnings in the quarter was $5.8 million compared to $17.8 million the year before.

But Postmedia also said it will continue to identify and undertake ongoing cost reduction initiatives to address revenue declines in its legacy print business.

“We have a strategy and it is working,” said Paul Godfrey, Executive Chairman and Chief Executive Officer, Postmedia, in a statement. “The strongest validation that our strategy is working is growth in digital advertising revenue – up for the fourth straight quarter by double-digit percentage increases. While this growth is very promising, digital revenue remains much smaller than our legacy print revenue and as such it needs time to grow. Therefore, we must remain vigilant in aligning our cost structure to the industry-wide declines in our legacy business in order to extend our runway to provide sufficient time to transform our business.”

Keep in mind also that in November Postmedia and Torstar Corp., publisher of The Toronto Star, struck a deal where the two media powerhouses essentially traded 41 community and commuter newspapers, mostly in southern Ontario, with plans to close the vast majority of them and cutting close to 300 jobs along the way.

Traditional mainstream media channels are in a seemingly losing battle to social media giants Facebook and Google when it comes to advertising.

Here are some staggering numbers from eMarketer looking at media ad spending in Canada. In 2017, the digital side was $4.88 billion and forecast to increase to $7.99 billion in 2021, growing from 45.6 per cent of the total share to 57.8 per cent. At the same time, newspaper media ad spending will drop from $1.31 billion to $1.2 billion which is a drop from 12.2 per cent of the total share to 8.7 per cent.

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“The continuing shift in advertising dollars from print advertising to advertising in other formats, particularly online and other digital platforms including search and social media websites, combined with periods of economic uncertainty have resulted in significant declines in print advertising. We anticipate the print advertising market to remain challenging and expect current trends to continue throughout the remainder of fiscal 2018,” stated Postmedia in its financial report.

Words to ponder for public relations and communications professionals looking for the biggest bang for their advertising buck in this rapidly changing media world.

Mario Toneguzzi
Mario Toneguzzi
mdtoneguzzi@gmail.com

Mario Toneguzzi is a recovering daily newspaper reporter, editor and columnist and a content-making machine. Fun fact - Mario publishes so much online, many Calgarians didn't notice he'd been set free from the big daily in January 2016! A confirmed Italian-Canadian (the name should have given it away), Mario loves Spolumbo's sandwiches and soccer, both maybe a little too much. When not pounding on his keyboard, Mario enjoys spending time reading, volunteering, playing bocce and drinking craft beer.

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