For local media in the US, advertising revenue still determines our success.
Sure, we’re trying to shift more of the revenue to readers with digital paid content strategies, but we still live and die on ads. And one thing that has struck me since I took over as executive editor of a handful of newspapers in the US state of Wisconsin, is how the retail landscape has shifted in my communities over the past fifty years.
Since a peak in 2005, newspaper advertising sales in the US have dropped by 55 percent.
We’ve all seen the mirror image of Google’s rising advertising revenue and newspapers precipitous decline.
But looking back before the rise of the consumer internet, I see another round of dramatic shifts, tectonic shifts in retail that began long before Amazon. As retail went from local to regional to national, so did advertising, and the struggle of local newspapers began as the locally owned businesses that supported them began to struggle.
I’ve spent several afternoons in the archives of one of my papers, the Sheboygan Press. We have bound copies of all of newspapers going back even before our official first edition in 1907 to predecessors or the Sheboygan Press into the mid-19th Century. Looking back at old editions, it’s not just the volume of the ads that’s striking, but also the variety, the number of local businesses that used to advertise with us.
Local to National: The Shift in Retail
A historical writer in one of our local weekly newspapers, The Beacon, tallied up all of the businesses for his column in May. William Wangemann found that in the 1945 Sheboygan city directory there were:
“89 family owned grocery stores, 54 gas (petrol) stations, 142 neighborhood taverns, 49 barber shops, 9 bakeries, 10 candy shops, 10 hardware (DIY) stores, 19 drug stores and 4 lumber yards…”
And the population was actually about 10,000 people less than there is now, just a little more than 40,000 people.
In comparison, now, I think the community has a dozen large American style grocery stores, with a couple of small specialist farm-to-table or organic food stores and a food coop. Apart from one local grocery chain, most are national or regional chains. We have one homegrown DIY store, actually the oldest full service hardware store in the state.
More than all this Sheboygan was the home of a regional department store change, Prange’s, and its flagship store was downtown. It had several stores in this state and the state south where I’m from originally, Illinois. It was a classic kind of department store that sold everything, and it anchored the downtown business district.
The original store burned down in 1983 and threatened to take a good chunk of downtown with it. The store that replaced it was just demolished this year.
I can’t imagine how a town of 40,000 supported all of those businesses.
But the shift from local businesses to national chains started long ago, and it had a profound impact on local media.
Picking out a 1949 edition, I could see five of those family grocery stores competing for business and using the newspaper to reach their customers.
And this story has played out across the United States. In 2000, the Institute for Local Self-Reliance found:
The loss of locally owned stores and the pace of retail consolidation is staggering.
11,000 independent pharmacies have closed since 1990. Independent bookstores have fallen from 58 percent of book sales in 1972 to just 17 percent today. Local hardware dealers are on the decline, while two companies have captured 30 percent of the market. Blockbuster rents one out of three videos nationwide.
Five firms control one-third of the grocery market, up from 19 percent just five years ago.
Of course those statistics from 2000 don’t take into account the digital disruption that has taken place since then. Blockbuster has gone bust, undercut by Netflix’s DVD by mail model and now streaming services.
But what this consolidation has meant is that hundreds of small local businesses that would have advertised with my newspapers simply no longer exist.
Pages from The Sheboygan Press, 10th March, 1949
Local to National: The Shift in Advertising
But it’s not just the number of small local grocery stores, barbers, movie theatres, car dealerships and department stores, it is also down to how changes in how national chains handle their ads. The ad director in Sheboygan has been with the Press for more than 30 years.
Back when he started local managers for the national chains all had their own locally controlled ad budget to spend as they saw fit.
Looking back at those papers, you see full pages of department store ads.
And in the 1970s, you can see how it supported papers on a weekday that ran up to 40 pages. Now, we usually print 12 pages on a weekday. To be honest, we often produce more news than we have pages in the paper.
My ad director makes another important point: many of those pages of ads still exist, but they aren’t printed by the paper.
They are bulk printed by the national chains and inserted into our paper. It’s obviously a more efficient way of them producing high quality print advertising across all of their stores. However, if you put those pages back in the newspaper itself, instead of them just being standalone inserts, it would feel more substantial.
The next wave of local ad disruption
The next challenge for local newspapers in the US will be if those inserts go away.
Already, Target not only puts inserts in my papers, they also send me a PDF that lands in my inbox. Walgreens, which owns Alliance Boots, has a smartphone app, which users can connect to their loyalty accounts and get coupons for instore deals.
I don’t see print inserts going away tomorrow, but I keep a very close eye on retail trends so we can prepare for the next shift in advertising. Fortunately, I have great commercial teams that I work closely with to stay one step ahead of the next source of disruption.
What is the next big retail trend that you think has the potential to help or hurt local media? How have you convinced local businesses to keep advertising with you, whether that is in print or digital?
Kevin Anderson is currently a regional executive editor for Gannett Wisconsin Media, overseeing four newsrooms. He is writing here in a personel capacity.