Bulletin photo by Don Harney

Finance forecast: Better times
ahead, but relative only to terrible times in recent past

By Dan McCready
Bulletin Staff

“Things are getting better, but not by much,” Ed Strapagiel said about the financial outlook for the newspaper industry in 2011.

Strapagiel, executive vice president of KubasPrimedia of Toronto, presented during the recent New England Newspaper and Press Association convention a workshop titled “’Preview 2011’ Industry-wide survey of expectations for revenue growth and plans for strategic initiatives this year.”

KubasPrimedia conducted a survey last year of more than 400 newspapers throughout the United States and Canada and saw reasons for those in the newspaper business to be more encouraged this year than in past years.

“Everything is getting better, at least better than it was,” Strapagiel said.

There has been increasing revenue in retail, automotive, employment and pre-print advertising, he said. Other areas, such as classified advertising, are continuing to struggle but they are getting, “less worse, but that’s better than it was,” Strapagiel said.

KubasPrimedia’s research indicates that the freefall that newspapers were in began slowing down in the fourth quarter of 2009. Strapagiel said it became “less worse from more worse” and that “we started coming up from the hole, but we’re still in the hole.”

Among the biggest surprises in KubasPrimedia’s survey for the year was the growing importance that preprint advertising is having on newspaper income.

In 2000, preprints were about 14 percent of total national ad revenue for newspapers, while in 2010 they were up to 25 percent.

“Preprints and inserts have kept up better than other print advertising,” Strapagiel said.

He thinks that pre-print advertising has gained in importance because shoppers are looking for bargains in a depressed economy and because retailers regard preprints as an effective way to bring in customers.

Real estate and automotive advertising are among the worst-hit areas of newspapers in the past few years, yet even that area began to see improvement, Strapagiel said. Both are “back on the charts,” he said.

There is reason to be optimistic about the potential for growth in automotive advertising, which according to KubasPrimedia’s research was declining before the recession of 2008 and is beginning to come back. Real estate advertising went from “the sub-basement to the bottom,” and, although there is room for improvement, the outlook is more optimistic than it has been in the past few years, Strapagiel said.

He said digital advertising is “sort of initial stuff, so you really don’t know what to make of it or how high it will go.”

Although it does look as though digital advertising will increase in 2011, it’s uncertain how big a role digital advertising will play in creating revenue, he said.

Overall, Strapagiel thinks that things will be better for newspapers in 2011 than they were in 2010, but he cautioned that most of the positive gains follow bad years for the industry, so it basically means that things will stop getting worse. In an industry that is still adapting to rapid changes in the past few years, there are still many variables, such as the overall economy, the state of the real estate market, and technological advances that can affect outcomes.

As Strapagiel told some of the audience members after the workshop: “There’s an old Chinese proverb: ‘First get direction, then increase speed’.”

POSTED 3/17/11

'Preprints and inserts have kept up better than other print advertising.'

-- Ed Strapagiel