Newspaper vs. Online Advertising – Is There a Niche for Newspapers in Modern Advertising Markets?

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractNewspapers have experienced declining circulation figures and declining advertising revenues for several years. In particular, declining advertising figures put a threat on newspapers -this is especially severe in the US where 73% of their revenues are generated through advertising. On the advertising side many companies have expanded their advertising expenditure towards online. Consequently, there are concerns about online advertising substituting newspaper advertising -in the same way as it has been feared for many years for the readership side. Both possible effects might put a threat on the further existence of (print) newspapers. However, though the internet -compared to newspapersoffers a variety of advantages for advertising companies, substitution tendencies cannot be generalized. In particular, we argue that newspaper advertising offers great benefits for the retailing industry. Consequently, we believe that retail advertising offers a niche for regional and local newspapers that can be expected to represent a sustainable segment of complementarity within the otherwise predominantly substitutional advertising markets. The paper substantiates this argument by applying the economic theory of advertising -in particular the differentiation between persuasive/complementary and informative advertising. The latter one presents the reason for retailers to continue advertising in newspapers. Subsequently, we conclude that no complete substitution between newspaper and online advertising can be expected to take place on the advertising side in the foreseeable future.

Newspaper and Internet Display Advertising – Co-Existence or Substitution?

“…It is the aim of this paper now to empirically test the theory driven conclusion from Lindstädt and Budzinski (2011). We pose hypotheses for the retail industry and closely related industries where a similar phenomenon could hold, which are subsequently tested.…”

“…In an earlier paper, Lindstädt & Budzinski (2011) argued from a theoretical viewpoint that industry-specific patterns exist that determine substitution or complementation effects between internet and newspaper advertising. It was argued that retail advertising, in particular, may offer a niche for regional/local newspapers that can be expected to present a sustainable segment of complementarity along with the otherwise mostly substitutional advertising markets.…”

“…However, though the internet -compared to newspapers -offers certain advantages for advertising companies, substitution tendencies cannot be generalized. In an earlier paper, Lindstädt & Budzinski (2011) argue that there are reasons why newspapers may remain attractive as an advertising medium. Deriving from the economic theory of advertising, it was shown that newspapers are a predestined medium for informative advertising and that, in particular, retailers experience incentives to continue predominantly advertising in regional and local newspapers.…”

“…A notable exception is Lindstädt & Budzinski (2011), who present a theoretical discussion of substitution effects between newspaper and online advertising based upon the economic theory of advertising. They derive the hypothesis that retail markets should present a sustainable niche for newspaper advertising, considerably protected against substitution forces.…”

“…(ii) explicitly tests the hypotheses deriving from Lindstädt & Budzinski's (2011) theoretical reasoning. Silk et al (2001) present an early empirical study of substitution tendencies between offline media advertising and online media advertising, highlighting the 9 at that time emerging impact of the internet as an advertising medium.…”