The unprecedented meltdown in retail sales in the fourth quarter of last year all but assures that newspaper advertising sales in 2009 will fall another 17% – or more – on top of a similar plunge in 2008.
Assuming the projection detailed below proves to be correct, print and online sales for the industry would amount to no better than $31 billion this year after diving to something like $38 billion in 2008.
The last time industry sales were as low as $31 billion was in 1993. In 2007 dollars, $31 billion would be worth $43 billion.
Hopes were dashed today for a reprieve in the fierce decline in newspaper ad sales when a wide spectrum of retailers reported dismal sales in December in what the New York Times called “one the worst holiday shopping seasons in decades.”
The holiday period generates a third or more of the annual profits for most retailers. Deep discounting to clear inventories in the fourth quarter almost certainly put even more pressure on retailer profits than the anemic sales numbers would suggest.
The pain for merchants translates directly into pain for newspapers, because retailing is by far the largest advertising category, producing no less than half of industry revenues. With employment, automotive and real estate classified advertising already severely depressed by the worst economy in generations, the collapse of retailing will put further pressure on already-battered newspaper sales.