Print newspapers generate their revenue from advertising and circulation with advertising being the most dominant source of the two (Turow 2009, p.317). On average, 80 percent of daily newspaper’s revenue and 90 percent of weekly newspaper’s revenue is from advertising (Turow 2009, p.317). As advertising is what sustains all newspapers (Hirst & Harrison 2007, p.94), the newspaper industry is finding itself under increasing pressure to compete in the digital age. This pressure has been mostly due to the rise of online advertising. Online advertising has created a new source of competition for newspapers as they begin to see their “advertisers are following their target audiences to the Internet and taking money that traditionally has gone to newspapers and using it for online advertising” (Turow 2009, p.320). Advertisers are increasingly moving to online and in 2007, the top 100 advertisers in the United States, “who represent 41 percent of the total advertising spending, shifted about $1 billion […] from TV and newspapers to the Web” (Schonfeld 2008).
Online advertising has experienced quick growth since its inception in 1993. In the early years of the last decade, at a time when competitive challenges were being presented by online and other new media, newspapers were becoming increasingly dependent on advertising spend (Ward 2003, p.131) despite the fact that their biggest threat in the emergence of new media was the loss of this revenue source. According to a report by the Internet Advertising Bureau and PricewaterhouseCoopers, it was found that newspapers were first challenged for advertising spend in 2006 when there was a surge in online advertising (Williams 2010, p.240) totaling more than $16 billion in the United States (Pavlik 2008, p.156). In Australia income from online advertising increased by $597 million dollars in a five year period, from $135 million in 2001 to $732 million in 2006 (Quinn & Lamble 2008, p.7). The global estimation of revenue from advertising was $21.1 billion a year later, during 2007 (Bidgoli 2010, p.452).
This trend has since continued and despite the fact that, most recently due to online advertising, the advertising industry as a whole has been growing strongly over the past decade, there has been a declining share of advertising going to print newspapers (OECD 2010, pp.60-61). It is apparent, by contrast, that the decline of advertising in newspapers is related to the upward momentum of online advertising (Williams 2010, p.240).
As of 2008 online advertising expenditure accounted for 10-15% in Australia. In the period between 1st July and 30th September 2010 there was more than a $100 million increase in online advertising (Triandos 2010). The rise of online advertising since 2004 has come at the expensive of print media including newspapers and magazines with a further rapid decline in share for these traditional mediums predicted in the future (OECD 2010, p.61). It has been forecasted that while for online...