Some of the major factors that affect newspaper advertising revenue include circulation levels, competition, readership demographics and the state of the economy. The Internet has had a profound effect on advertising in print media as a whole. Newspapers in the US, for example, are facing significant declines in revenue as they adapt to new technology. The factors affecting newspaper advertising revenue in the 21st century reflect technological advances that have changed public consumption habits, rather than just the consequences of a significant economic downturn.
Traditionally, the amount of advertising revenue a newspaper can expect to generate depends largely upon its circulation numbers. These numbers are tracked throughout the year and advertising rates set based on the results. Advertising across media has always been tied to the number of people expected to see an advertisement and the quality of their attention. Free Internet news sources have offered significant challenges to traditional newspapers trying to maintain circulation numbers and related advertising revenue.
Competition is another factor that affects newspaper advertising revenue. The Internet has opened up new options for advertisers to spend money, including online periodicals, blogs, videos, social websites and podcasts. Not only are newspapers no longer the only option for news in print, they no longer reign supreme as the place people go to search for jobs, list real estate for sale or to buy and sell personal items. Advertising revenue is now more disbursed across many consumer sources, and newspapers are only a shrinking portion of that landscape.
Another factor that affects newspaper advertising revenue is the demographics of a paper's readership. Papers with reader bases that are perceived as more affluent, educated or professional can typically charge a higher advertising rate that targets makers of luxury goods. Likewise, a newspaper that focuses on a valuable target group, such as mothers of a certain age, can tailor its advertising rates to capitalize on its captured audience, increasing revenue in this manner.
The most consistent factor that has affected newspaper advertising revenue historically is the overall state of the economy. Whenever the economy is perceived by consumers in a negative light, important sources of advertising revenue have a tendency to dry up. For example, if the real estate industry is in a downturn, sales of advertisements in that category decline dramatically. The same is true in other important newspaper advertising categories, such as general classifieds, help wanted and the automobile industry.