If anything, in fact, the Rubicon report indicates that online advertising is still growing relatively strongly despite the turmoil in credit markets and the slump in stock prices, and could even benefit as advertisers look for more quantifiable results for their spending, which online ads provide. The report also says that while overall ad rates tracked by the network dropped 11 per cent in the quarter:
Bad news has been trickling in for months, or even years — newspapers cutting back staff, closing editions, companies on the ropes financially. But it’s been a thousand small cuts, mostly at smaller publications, and so it hasn’t really had as much impact as it might otherwise. It seems to be accelerating though, and now it’s not just small papers or magazines but ones that everybody has heard of. It hit home recently while reading through a summary of industry news that I get daily from the folks at I Want Media. Here’s a sampling of recent headlines:
— “Newark Star-Ledger cuts 40% of staff”
— “TimeWarner to cut 600 jobs in magazines”
— “Gannett to cut 3,000 newspaper jobs”
— “Orange County Register to cut 110 jobs”
— “LA Times cuts 10 per cent of staff”
— “Thomson Reuters eyes massive layoffs”
— “Washington Post profit falls 86 per cent”
— “New York Times debt cut to junk”
This debate has been going on for almost a year now. Google’s stock price came under fire around the end of last year and the beginning of this year because of concern that the search giant might see a downturn in ad spending that would hit the bottom line. Has it? A little, but not a huge amount (although some say that could change). In fact, there are those who argue that search-related ad spending is likely to be the most durable even in a shaky economy — in part because businesses can get more bang from buying AdWords than a newspaper ad or TV spot.
I can’t remember whether Steve used to work at a car company before he joined Bill Gates at Microsoft (I’m pretty sure he worked at Procter & Gamble) but there sure is a lot of talk in the memo about driving. One of the company’s core goals, for example, is to “drive end-user excitement for our products.” My translation of that would be: “Come up with some way to force people to buy Vista and Office, whether they want to or not.” What the hell does “drive end-user excitement” even mean? I’m hoping it has something to do with building better products, but it’s hard to know for sure. Sounds like a blank cheque for the marketing department to come up with some happy videos of families smiling and using Vista to make Grandma a birthday card.
A couple of paragraphs later, Ballmer says that the company needs to “drive developers to create rich applications for Windows” to help promote Silverlight (Microsoft’s version of Adobe’s AIR). How do you “drive developers” to do something? Obviously there are incentives you can offer, but it seems to me that the best way to convince developers to come up with cool apps is to have a great platform that allows developers to do interesting things and reaches the audience they want. Apple seems to have developers beating down its door for access to the iPhone, despite the fact that it often treats developers like crap.
“In 2002, 86 percent of the revenue from I.D.G.â€™s publications came from print and 14 percent online. These days, 52 percent of the revenue is from online ads, while 48 percent is from the print side.”
That’s a remarkable shift. In some cases, magazines continue to be printed but come together primarily online, and in other cases — such as InfoWorld — the print magazine has been closed completely and the publication is solely online. And the business is better:
“Today, I.D.G. says, the InfoWorld Web site is generating ad revenue of $1.6 million a month with operating profit margins of 37 percent. A year earlier, when it had both print and online versions, InfoWorld had a slight operating loss on monthly revenue of $1.5 million.”
There is a dark lining to the silver cloud, however — the story says that IDG’s staff levels are 50-per-cent below where they were when the transformation started:
“By then, the editorial staff was down to its current level of 17 people, about half the number in 2002, and way below the peak of nearly 100 during the technology spending boom of the late 1990s.”
Still, a fascinating tale of one publisher that took the bull by the horns and made the change deliberately. As former editor Stewart Alsop says near the end of the piece: “Whatâ€™s happening at I.D.G. is a fairly accurate map for every other publishing organization. Get over it, itâ€™s going to happen.”