Offshoring, ad slump, newspapers in turmoil


The Fresno Bee said Tuesday that it was outsourcing some advertising production work to India, and that seven of 31 Americans working in that department would be laid off. The work will be outsourced to Express KCS , a firm with offices in New Dehli, London and, most recently, San Jose. The Fresno Bee article said:

“Express KCS does advertising production work for some other California newspapers, including the San Jose Mercury News, the Contra Costa Times and ANG Newspapers, which publishes the Oakland Tribune and other daily papers in Fremont, Hayward and San Mateo.”

The Fresno Bee is part of the McClatchy newspaper empire. The story said it is the only McClatchy paper to outsource ad production — at least thus far. But the presence of a Express KCS sales & support office in San Jose, and the intimation that several other California paper, ultimately controlled by the privately-held MediaNews Group, are already outsourcing their ad suggest that this is the beginning of a production outsourcing trend rather than an oddity.

Meanwhile the corporate media financial outlook, suggests an accelerating movement of advertising dollars away from print vehicles to online venues, and while newspaper web sites are benefitting from this secular trend the impact is insufficient to offset the losses. As Paid Content reports:

“Newspapers’ online ad revenue increased 31.5 percent in 2006 to $2.7 billion . . . Howver, online represented just 5 percent of the $49.3 billion in total newspaper ad revenue in 2006.”

Meanwhile, in Q1 2007 the rate of online ad growth for newspaper web sites slowed to 22.3 percent. And a financial analyst from Benchmark Co. predicts that overall newspaper advertising revenue will fall 4.3 percent, “a particularly steep decline,” Paid Content said. And that is without the recession — as defined by a drop in GDP — that surely must be lurking in the not-too-distant future.

To broaden the gloom, I have to wonder about the future of news. A story in Editor & Publisher magazine distills the findings of a Harvard University report titled, Young People and News, that says it isn’t just that the next generation isn’t getting it news from dead-tree media. Young people appear disinterested in public affairs in any medium. As E&P wrote:

“It’s not just newspapers. Younger people appear to just be less interested, even in obtaining news on the internet, or they feel they are learning enough from simply eavesdropping on information or surfing through it.”

I bookmarked the report to print out an read later but I find it curiously consistent with the attitude of my 14-year-old son, who is the middle of three kids. The older guy (18) reads the paper from time to time and particularly likes the culture and movie reviews, but also pays some attention to news (including being an avid Slashdotter). But his younger brother has always manifested a know-it-all attitude that actively disdains book learning. Perhaps its the sense of being constantly surrounded by media and information that creates a sense of being so plugged in that, of course, the next generation are in the know. They do texting and I don’t. They’ve got to be smarter!