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Cause and effect: The outlook for American news media

The outlook for American news journalism has significantly shifted over the years. To shed light on what caused this shift, my team at Accenture recently completed an analysis of newspaper revenues over two decades. And while some suggest that tech companies like Google have taken the ad revenue from news publishers, our analysis reveals a more complex story. 

Smartphones and high-speed broadband brought the wonders of the internet to our fingertips. With technological advances have come tremendous volumes of content from around the world — academic sources, specialist and topic-specific news and other content — offering consumers choice about how, where and in what format they access content. 

This availability of digital news and other content has fragmented audiences and created more competition for advertising revenue, putting newspaper margins under pressure. Thousands of American journalists have been laid off, and the industry has consolidated as publishers cut costs.

Now, with a growing debate about how tomorrow’s news industry should be shaped, it’s important to consider how digitization brought change to the news business of today. 

Americans are deepening their engagement with news

In our report, we found the underlying consumer demand for news is growing. A quarter of Americans report a significant increase in the amount of news they consume and more Americans are paying for news.

A chart showing that 54% of Americans report increasing their news consumption over the past five years

Total newspaper readership grew to 62 million paying readers and, between 2015 and 2018, 17 million more American readers purchased an online subscription. This mimics the global trend of growth in digital news circulation far exceeding any print readership decline.

Pew Research also reports readers are increasingly turning to local news outlets, with one in four Americans becoming more engaged with local content through the pandemic.

Publisher revenues in decline

As readers become more attuned to digital devices and digital news, advertisers have followed, with corresponding impacts for news publishers. 

Newspaper revenues peaked ahead of the 2005 global financial crisis, but fell by more than 52% to $27.4 billion over the 15 year period to 2018 in nominal terms. Display advertising revenues earned by news publishers fell to $13.4 billion over this period but the majority of the decline in total newspaper revenues resulted from the loss of classified revenue — which fell more than 86% to $2.6 billion.

A chart showing the decline on spending on classifieds ads accounts for 53% of the overall newspaper revenue decline

Of course, classifieds didn’t simply disappear. We still seek out used cars, jobs and homes on Craigslist, Zillow, eBay and other sites, and classified advertising revenues have continued to grow, but more than $15.8 billion in classifieds revenue has shifted from traditional news publishers and no longer subsidizes newsrooms as it once did.

A chart showing that newspapers have lost classifieds revenue to "pure play" classifieds websites over time

Online advertising revenues drive overall ad market growth

Our research did not find a single category of media advertising that declined materially in absolute value since 2003 in a way that is attributable to online search. The growth in online advertising, which includes digital classifieds, display and search ad revenues, reflects the consumer shift to the online world, and the more cost-effective nature of online ads

A chart showing that growth in online advertising has supported overall advertising growth since 2004

Spending on search advertising has reached $55 billion in annual revenue, almost three quarters of which came from overall market growth, not from classifieds. In other words, search advertising has attracted new advertising dollars that would not otherwise have been directed to other categories. 

A chart showing that search advertising has grown $51.4B, predominantly from new opportunities

The outlook ahead

While news publisher revenues have come under significant strain since news publishers’ advertising revenues peaked in the early 2000s, we can be reassured that Americans continue to engage with and value news.

We shouldn’t downplay the challenges, including the open questions about the role of journalism in modern society and related issues of trust in the media. But as the economy recovers, there are reasons for optimism. Some publishers report that ad revenues have fully rebounded from pandemic-induced lows and stronger revenue growth is expected in 2021 than at any time in the past 40 years. 

A study from the association of Local Independent and Online News publishers (LION) identified “tremendous growth” in the number of digital native, local news organizations in North America. Perhaps most encouraging: While media jobs are still being lost, hundreds of media jobs are starting to be added.

Without doubt, the outlook for news journalism remains a complex story — one that deserves careful attention and fact-based debate. I hope this study helps contribute to the conversation. 

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