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The LinkUp Blog The Industry's Best-Kept Secret

October 5, 2006 / Toby Dayton

Storm Clouds Over Daily Newspapers Are Getting Darker

In a Media Daily News article earlier this week, it was reported that a major U.S. retailer would be dropping 100% of its spending on freestanding inserts (FSI) with daily newspapers in the coming year. The prediction was made by David Verklin, CEO of Carat, at Media Magazine’s Forecast ’07 conference in New York. Carat is the media agency for Radio Shack and is actively pitching for Wal-Mart’s business as well. Following the presentation, industry experts predicted that a big-box retailer like Best Buy, which spends 40% of its total advertising budget on inserts, could no longer justify the expenditure when only 276 SKUs can be promoted. In contrast, online advertising vehicles can promote 250,000 SKUs.

While it was only a matter of time before the dailies started losing their FSI business, erosion of that revenue stream might occur sooner and more rapidly than most might predict. Added to the well documented declines in subscription revenue, display advertising revenue, and classified advertising revenue, the loss of FSI advertisers might prove to be the last crippling blow to an industry already on its deathbed. The change would certainly strengthen Mark Glaser’s case, as detailed in a recent PBS/MediaShift article, that the most viable long-term option for daily newspapers is to become citizen-owned entities.

[tags]Death of Newspapers, Carat, Freestanding Inserts, FSI, Mark Glaser, Daily Newspapers, Advertising[/tags]