Whoever made Varian’s slide on page 7 seems to have used the “Print Total” category from the NAA data in the place of the “National” category, almost doubling the estimate of total ad dollars. This would account for the low estimate of online contribution.

The NAA data clearly show that in 2008, “Retail” accounted for 50% of total ad spend, but the chart on page 7 shows it as about one-third. I don’t know what price deflator was used in this graph, but it’s hard to reconcile the NAA’s 2008 estimate of $38 billion in total ad spend with the $60+ billion implied on page 7.

As I noted in my post last week on newspaper company earnings, however, some of that online revenue is tied to print in the form of upsells. It’s not pure, online-only advertising. In fact, if you take the NAA’s reported 2008 online revenue of $3.109 billion and divide it by their reported page views of 40,821,100,000, you get a page CPM of $76.16 — certainly more than almost any newspaper actually gets. So – and I’m not explaining Hal’s numbers here – I do think that 8.2% is a number stretched by accounting maneuvers moving revenue from print to Web, rather than a pure internet revenue number.

I suspect this is true at McClatchy and NYT too. NYT reported that online revenue was down 10.9% in 2009 “mainly due to classified revenue declines.” I suspect that means print classified delines dragged down related online revenue. McClatchy, in its 10K, said more specifically that “43.7% of the Company’s digital advertising revenues came from advertisements placed only online; that is, they were not tied to a joint print buy.” In other words, more than half (56.3%) of the 16.2% of revenue McClatchy says is from digital revenue actually is tied to print.

I suspect it’s the same story all over, and that if you could measure real online-only revenue across all newspapers, it would be closer to 4% than 8%. Anything that’s “tied to print” is questionable: would the print ad have been sold without the upsell? Probably. Could the online portion have been sold by itself? Probably not.

He says less than 5% of ad revenue is from online, and cites NAA as the source. But a quick glance at the NAA data here — http://www.naa.org/TrendsandNumbers/Advertising-Expenditures.aspx — show about 10%, and as you know many industry leaders in this area (NYT, McClatchy) are pushing 20%.

Howard: 12% promotion represents cost of sales. The breakdown came from an economics text and used different terminology than we’re used to.