5 reasons online advertising won't save newspapers

Print newspapers always relied on advertising as their primary source of revenue -- not circulation -- and the Internet effectively put an end to print advertising. Companies wanted a more immediate and more innovative advertisement, and they wanted to reach as large an audience as possible. The Internet answers all their needs. Print newspapers can no longer compete for advertising dollars. Yet, some industry executives still see advertising as a key. They're wrong.

When it comes to advertising with news organizations, companies shifted their advertising efforts from print to online during the last decade. This shift left print newspapers without a much-needed source of revenue, because the money brought in from advertising paid the salaries of both the reporters and the crews needed to operate printing presses. Newspapers realized they needed to improve their Web sites and make up for the loss in print advertising revenue.

Although newspapers improved the quality of their online ventures during the last decade, a new problem emerged in online advertising. Online advertising depends on the number of clicks an ad receives on a Web site. The more clicks an advertisement receives on a Web site, the more money is made by the company advertising a product. If visitors don't click on ads, companies don't make money. If companies don't make money, they're less likely to advertise. Thus, online news sites are less likely to bring in revenue via advertising.

Online advertising revenue won't save newspapers from going online-only or shutting down. Online advertising revenue isn't going to prevent more layoffs, salary cuts or bankruptcy filings. Online advertising revenue isn't going to save the newspaper industry. How do online news sites such as msnbc.com, FOXNews.com and CNN.com thrive? For one, they get advertising dollars from television efforts. Newspapers don't have that. Newspapers must downsize their print efforts, improve their online products and find new ways to raise revenue.

Here are five key pieces of evidence that prove that online advertising revenue isn't going to save the newspaper industry:

1. Newspaper readers no longer have to flip through pages of advertisements to find stories that interest them. This means advertisers no longer have "a captive audience," as this outstanding article in BusinessWeek notes. The biggest challenge in online advertising is to get readers to actually click on an advertisement.

2. Charging readers fees to access online stories is working at newspapers, and it's guaranteed money instead of hoping for clicks. The Wall Street Journal is proving that charging access fees will not lead to a decrease in readers. Several newspaper chains are going to adopt fees later this year because they realize advertising isn't going to provide a boost.

3. Google and Craigslist are now the leaders in advertising and newspapers are unable to compete with these two Web giants. As this research-based article in The Business Insider correctly notes, the rise of Google and Craigslist spelled the end for the newspaper industry's days of being able to operate based primarily on advertising revenue.

4. The numbers don't lie: It's a fact that companies are spending less and less money each year on newspaper advertisements. This advertising expenditure data from the Newspaper Association of America demonstrates how much revenue is declining each year. This data is a clear indication of why the future of advertising revenue for newspapers is bleak.

5. Advertisements on newspaper Web sites often leave those who actually do click on them very disappointed. Read about this blogger's experience at The Future of Print, and think about your own experiences. You may never have clicked on an advertisement, or maybe you've clicked on one and never want to do so again.