Publication Type: Conference Paper/Unpublished Manuscript
Review Method: Peer Reviewed
Abstract: Newspaper companies have been preoccupied with their credibility since the 1980s when the first of several national studies of the problem were launched. None succeeded at establishing a clear picture of the benefits of credibility in economic terms nor the costs of gaining it. Now survey research provides evidence that there is a direct benefit. In small to medium size markets, trusted newspapers can and do charge more for their advertising.
The data come from two sources: a single question on newspaper trust asked in 26 communities followed by the Knight Foundation and published ad rates posted by Standard Rate and Data Service. While ad rates are often discounted, the published rate provides a suitable benchmark.
An effect was found for newspapers with less than 300,000 circulation. After adjusting for market size, household penetration, and the effective buying income of each market, trust accounted for a small (21 percent) but significant portion of the variance in ad rates. The rates in the market’s dominant newspaper increase by $3.53 per Standard Advertising Unit for each one percent increase in the percent of the home county population that says it believes what it reads in the paper “you are most familiar with” all or almost all of the time.
This finding suggests that a news medium’s influence has economic worth not captured by traditional measures of advertising value that rely on eyeball counts of the general population or within targeted demographic groups. Investor pressures on publicly-held newspaper companies to produce their products as cheaply as possible might undermine this hidden value.