Newspaper and internet display advertising - co-existence or substitution?
Newspapers have been experiencing declining circulation figures and diminishing advertising revenues for several years - both effects might pose a threat to the continuing existence of (print) newspapers. In an earlier paper, Lindstädt & Budzinski (2011) argued from a theoretical viewpoint that industryspecific patterns exist that determine substitution or complementation effects between internet and newspaper advertising. It was argued that retail advertising, in particular, may offer a niche for regional/local newspapers that can be expected to present a sustainable segment of complementarity along with the otherwise mostly substitutional advertising markets. This paper empirically tests these hypotheses by analyzing advertising spending data for newspaper and internet display advertising of 13 different industries in the U.S. from 2001-2010. We find evidence for some of the hypotheses. Whereas some industries showed clear substitution effects between internet display and newspaper advertising, the majority of our hypotheses could be only partly rejected: newspaper substitution effects could be observed, however, in the direction to traditional media platforms instead of internet display advertising. For two retail-sub-industries, the hypotheses could not be rejected for the analyzed period.
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- Dewenter, Ralf & Haucap, Justus, 2008. "Wettbewerb als Aufgabe und Problem auf Medienmaerkten: Fallstudien aus Sicht der "Theorie zweiseitiger Maerkte"," Working Paper 78/2008, Helmut Schmidt University, Hamburg.
- George Lisa M, 2008. "The Internet and the Market for Daily Newspapers," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-33, July.
- Avi Goldfarb & Catherine Tucker, 2011. "Search Engine Advertising: Channel Substitution When Pricing Ads to Context," Management Science, INFORMS, vol. 57(3), pages 458-470, March.
- Matthew Gentzkow, 2007. "Valuing New Goods in a Model with Complementarity: Online Newspapers," American Economic Review, American Economic Association, vol. 97(3), pages 713-744, June.
- Lindstädt, Nadine & Budzinski, Oliver, 2012.
"Newspaper vs. online advertising - Is there a niche for newspapers in modern advertising markets?,"
Ilmenau Economics Discussion Papers
73, Ilmenau University of Technology, Institute of Economics.
- Nadine Lindstädt & Oliver Budzinski, 2011. "Newspaper vs. Online Advertising – Is There a Niche for Newspapers in Modern Advertising Markets?," Working Papers 113/11, University of Southern Denmark, Department of Environmental and Business Economics.
- Hsiang Iris Chyi & Dominic Lasorsa, 2002. "An Explorative Study on the Market Relation Between Online and Print Newspapers," Journal of Media Economics, Taylor & Francis Journals, vol. 15(2), pages 91-106.
- Dewenter, Ralf, 2003. "The Economics of Media Markets," Working Paper 10/2003, Helmut Schmidt University, Hamburg.
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