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A PR I L 2010

m e d i a

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e n t e r t a i n m e n t

p r a c t i c e

A glimmer of hope for newspapers

The Internet is driving increased consumption of news, a survey shows, but newspapers can take heart in being the most trusted medium.
Philipp M. Nattermann

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News consumption in the United Kingdom rose by 20 percent in the past three years, according to new McKinsey research.1 Average consumption has risen to 72 minutes a day, Web 2009 compared with 60 minutes in 2006—an increase driven almost entirely by people under News Consumption the age of Exhibit 1 of 335 (Exhibit 1). Two-fifths of those in this age group said they felt the need to be the first overall increase in time compared with just 10 percent 18–35 year aged Glance: The to hear the news, spent consuming news is largely driven by of people olds. 55 to 64.
Exhibit title: More news, younger news fans

Exhibit 1

More news, younger fans

Minutes spent per day on news consumption1 Total 72 +20% 60 61 +33% 46 By age group 77 +37% 62 56 75 65 72

2006

2009

73

70

18–24

25–34

35–44

45–54

55–64

1 Self-reported

estimates: average of self-reported time spent on news consumption in the previous week.

Source: 2006 and 2009 McKinsey media and entertainment news surveys

This need for immediacy is reflected in younger news consumers’ choice of media: they overwhelmingly prefer to get their news from television and the Internet (Exhibit 2). While television remains the most popular medium across all age groups, only the behavior of consumers 55 and older prevented the Internet from jumping from fourth in 2006 to become the second most popular news source today. Instead, the Internet is now in third place, just behind newspapers. These findings underline the challenges that lie ahead for newspapers, in the United Kingdom and elsewhere, that are struggling to address long-term circulation and advertising declines caused mainly by the growth of online news consumption and Internet advertising. Some newspapers are eyeing differentiated and innovative revenue models for their online content. But these won’t be a silver bullet: we found that while there is modest potential to increase online revenues, they will be insufficient to compensate for the decline of print. Indeed, even in a hypothetical scenario where online-only versions of existing newspapers and magazines cost 75 percent less than the print versions, only 14 percent of news consumers said they would pay for the online content.
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Two McKinsey media and entertainment news surveys of more than 2,000 news consumers, conducted in the United Kingdom in 2006 and 2009.

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Web 2009 News Consumption Exhibit 2 of 3 Glance: Web sites are the second-most-used news platform for all age groups except those over 55. Exhibit title: News on the Web

Exhibit 2

News on the Web

% of age group interested in given news source 16–24 years old Television Web sites Daily newspapers Radio Magazines Sunday newspapers 44 85 88 72 56 25–34 years old 87 90 76 41 67 35–44 years old 90 91 60 51 59 58 52 66 15 15 38 37 10 12 45 46 45–54 years old 95 92 53 47 65 65 59 65 55–64 years old 91 92

2009 2006

64 53 44 52 36 37 26 27 30 29 32 29

61 51 51 58 22 16

63 52 56 61

38 34

Source: 2006 and 2009 McKinsey media and entertainment news surveys

One finding does suggest a potential revenue opportunity: newspapers have an important inherent advantage as they face the challenges of the digital age—trust. Consumers trust newspapers more than any other medium, and 66 percent describe newspaper advertising as “informative and confidence inspiring,” compared with only 44 percent for TV and 12 percent for the Web (Exhibit 3). This suggests that newspapers have further scope to go beyond news, to drive reader interest and advertising revenues at the same time. Leading newspapers have already created specialized pages and sections in areas such as entertainment, eating out, travel, automobiles, shopping, real estate, and personal finance. Web 2009 The Consumption Newscombination of editorial content, ads, and selected commercial offers—while clearly separated—benefits advertisers and is of practical use to readers. Exhibit 3 of 3
Glance: Print newspapers still hold significant advertising value for consumers. Exhibit title: A trusted source for news

Exhibit 3

A trusted source for news

% of respondents1

What role do the following types of advertisements play?
Newspaper ads Entertaining Annoying Informative, inspiring confidence
1 Respondents

TV ads 29

Radio ads 12 50 65 30

Sponsored links 5 69 25

Internet banners and pop-ups 4 88 12

7 38 66

44

could select more than 1 option.

Source: 2006 and 2009 McKinsey media and entertainment news surveys

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A few publications are going one step further, moving from just selling ad space to taking a role in transactions between advertisers and consumers in these and other areas. “What consumers want Opportunities present themselves for publishers to drive up revenues for their print as from online news” well as online versions by becoming trusted intermediaries. They can, for example, use their call centers to administer bookings for advertised offers to test-drive new car models, “Classified ads: How newspapers can fight back” partner with travel agencies to offer subscribers exclusive tours, or combine editorial news and advice on, say, gardening with opportunities to buy garden products directly from their business partners. “Dwindling readership: Are
tabloids the answer?”

Related thinking

To survive in the digital age, newspapers will need to develop deeper skills—for example, in managing advertiser relationships and gaining customer insights—and they must walk a fine line to retain editorial independence and quality to capture these opportunities. But for those who get it right, the rewards could be significant.

Philipp Nattermann is a principal in McKinsey’s London office. Copyright © 2010 McKinsey & Company. All rights reserved.

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