newspaper advertising revenue estimates

While newspapers clearly are suffering economically, different sources of newspaper advertising statistics show different extents of decline.  The Newspaper Association of America (NAA) website reports a 27.94% year-on-year decline in newspaper advertising revenue for the third quarter of 2009 (2009 Q3).   Data from the U.S. Census Bureau’s Quarterly Services Survey indicate a 14% year-on-year decline in newspaper operating revenue for 2009 Q3.   Evidence from the Census Services Survey for 2008 and plausible assumptions suggest a 17% year-on-year 2009 Q3 decline in newspaper advertising revenue.   Hence, compared to NAA statistics, reasonable estimates from the Census Services Survey imply a 10 percentage point smaller decline in newspaper advertising revenue in 2009.

The Census Services Survey data seem to me more credible than the NAA statistics.  The NAA has obvious self-interest in newspaper industry statistics.  The NAA does not report its statistical sources and estimation procedures.  The NAA statistics also include no estimates of the reliability of the reported data.  The Census Bureau, in contrast, is an expert government agency.  The Census Services Survey carefully describes the sampling and estimation procedures.  In addition, the Census Services Survey includes variability estimates.   The coefficient of variation for the reported 2009 Q3 newspaper operating revenue is 5.6%.  The coefficient of variation for general newspapers’ advertising revenue in 2008 is 3.1%.  The standard error of the 2008/2007 general newspapers’ advertising revenue change is 1.5 percentage points.   These statistics suggest that the true decline in newspaper advertising revenue year-to-year 2009 Q3 is probably between roughly 12% and 22%.[1]   The NAA figure is most likely an over-estimate.  The NAA’s reporting of that figure to one-hundredths of a percentage point is misleading.

The NAA newspaper advertising figures have been much larger than Census figures, but the NAA figures are dropping rapidly relative to Census figures.  For 2008, the Census Services Survey showed $29.8 billion in newspaper advertising revenue.  The NAA figures showed $37.8 billion in newspaper advertising revenue.[2]  That’s 27% higher than the Census figure.  However, in 2006 the NAA newspaper advertising revenue figure was 45% higher than the Census figure.    Some of the decline in NAA reported newspaper advertising may be an artifact of NAA’s advertising accounting / estimation procedure.

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Data: U.S. newspaper advertising trend, with comparison between Census and NAA data (Excel version).  Large dataset of historical advertising expenditure by media.

Notes:

[1] The decline in annual newspaper advertising revenue was 10% from 2007 to 2008.  I’ve assumed a 2.5 percentage-point standard error in the decline in quarterly newspaper advertising revenue 2008 Q3 to 2009 Q3.  That number seems reasonable given the error bounds for the quarterly revenue figure, the annual revenue figure, and the change in annual revenue 2007 to 2008.  Twice the standard error, or 5 percentage points, defines a 95% confidence interval.  I’ve formed that interval around the point estimate of a 17% revenue decline.

[2]  That’s the NAA figure for print and online advertising . Since the Census figures are establishment-based, newspapers online advertising revenue are included in the Census figures.  Hence the NAA print and online total is the relevant comparison.

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