• by Erik Sass  @eriksass1, March 26, 2012

The precipitous decline in the newspaper industry continued in 2011, when total advertising revenues fell to $23.9 billion, down 7.3% from $25.8 billion in 2010, according to figures released by the Newspaper Association of America on March 14.

But this is a minor casualty compared with the long-term losses suffered by the medium since Internet competition began to hurt in the middle of the last decade. Indeed, total newspaper ad revenues in 2011 were less than half their 2005 level of $49.4 billion -- reflecting a 51.6% drop in just six years.

The collapse has hit every major category of newspaper ads, beginning with the categories most vulnerable to online competition -- the classifieds -- but then quickly extending to the other traditional mainstays of the newspaper business, national and retail advertising. 

Total classified revenues have plunged from $17.3 billion in 2005 to $5 billion in 2011 -- a 71% drop. While the economic downturn affected all the major classified categories, the truth is their long slide began well before the recession hit in the last quarter of 2007, reflecting the shift of classified listings to free or low-cost Internet services.

Thus automotive classified revenues shrank from $5.2 billion in 2003 to $4 billion in 2006, before tumbling to $1.1 billion in 2011 -- down 79% in eight years. Real estate classified revenues plummeted from $5.2 billion in 2006 to $885 million in 2011, for an 83% drop. And employment classified revenues fell from $5.1 billion in 2005 to $743 million in 2011, a vertiginous 85.5% decline.

Where classifieds led the way, the national and retail ad categories were soon to follow. From a peak of $8.1 billion in 2004, national ad revenues have decreased 53% to $3.8 billion in 2011. Retail (also known as local, long the industry’s biggest source of ad revenue) fell from $22.2 billion in 2005 to $11.9 billion in 2011, for a 46.4% drop.

The one bright spot for the newspaper industry, online advertising, has seen inconsistent growth, at best. After a promising start, when online revenues grew from $1.2 billion in 2003 to $3.2 billion in 2007, they went into reverse during the recession, declining to $2.7 billion in 2009, before returning to a positive growth trajectory in 2010-2011, reaching $3.25 billion last year.

Still, the total growth in newspapers’ online revenues from 2003-2011 -- 167% over eight years -- pales in comparison to the growth rate of online ad revenues overall: total online ad revenues have increased from $7.3 billion in 2003, according to the Interactive Advertising Bureau, to a projected $32 billion in 2011, according to eMarketer, for 338% growth over the same period.