Web to overtake newspapers in advertising

The internet will overtake national newspapers this year to become the third biggest medium for advertising spending, according to a report today.

Global advertising firm GroupM said the internet will take a 13.3% share of the media advertising market in 2006 compared with 13.2% for the printed versions of national newspapers.

It contrasts with last year’s 9.7% for the internet and 13.8% for national newspapers and propels the internet into third place behind regional newspapers and TV, which are forecast to take 19.6% and 28.8% this year respectively.

The report highlighted the pressure on newspapers to develop new ways of winning advertising revenues as the growth of internet advertising eats into profits.

Report author Adam Smith, futures director at GroupM, said the internet will continue to rival regional newspapers as it develops stronger platforms for classified ads where there is “massive potential” for growth.

He said the growth of the internet could turn into a “critical assault” on newspaper profits.

Mr Smith said: “There has been a tendency to underestimate the growth of the internet.

“It is not so much about when advertising on the internet catches the regional press but how much damage the internet can do to their profits.

“Classifieds are very profitable for newspapers so every pound that online takes out of the regional newspaper business comes straight out of their bottom line.

“We are only at the beginning of seeing what the internet can do for classified advertising. There are still vast potential audiences online which are not being used yet.”

The comments came as newspaper publishers battle to secure new advertising platforms such as their own websites, as spending on traditional advertising in the press declines.

Last week, Daily Mail & General Trust said advertising revenues at Associated Newspapers and its regionals arm Northcliffe were down in the first six months of the year, and added that there was “little sign of an advertising recovery”.

But DMGT said the slowdown was offset by other activities such as its own digital operations which include websites Jobsite, Find a Property and Prime Location.

GroupM – the parent company for WPP’s worldwide media assets with control of more than 30% of global advertising revenues – forecast total media advertising spend to increase from €17.3bn last year to €17.8bn this year and €18.5bn in 2007.

Without the internet, media advertising would be in recession with TV and newspapers reporting falls in revenues this year.

The internet is expected to post a 39% rise in advertising revenues this year compared with a 1.9% decline for national newspapers, 6.6% decline for regional newspapers and 2.4% decline for TV.

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