Despite the well documented declines in newspaper circulation, advertising on newspaper was $22.5 billion in 2012, representing 17.1% of total advertising spend in the U.S. and second only to direct mail, according to BIA/Kelsey’s Media Ad View Plus.

In a previous blog post, I mentioned that newspaper was the medium of choice for real estate advertising in 2012. However, while newspaper accounted for 27.7% of real estate advertising spend, the real estate vertical accounted for only 2.5% of newspaper advertising revenue. Retail (23.5%) and automotive (16%) were actually the largest vertical categories advertising with newspapers in 2012, according to BIA/Kelsey’s Media Ad View Plus.

Approximately 22% of the retail advertising revenue going to newspapers came from one of the 28 retail subcategories broken out in Media Ad View Plus: warehouse clubs and supercenters. For automotive, more than 77% of the advertising revenue going to newspapers came from automotive dealers and manufacturers. This isn’t surprising, as both warehouse clubs/supercenters and automotive dealers/manufacturers have the highest spend in their respective categories across all media.

BIA/Kelsey projects that newspaper advertising revenue will continue falling, reaching $21.3 billion in 2013, a loss of 5.4%. By 2017, BIA/Kelsey expects newspaper’s share of total advertising spend to have continued to decline, falling to just under 12% of total advertising spend. Newspaper advertising revenues are expected to fall from $22.5 billion to $17.8 billion, a compound annual growth rate (CAGR) of negative 4.7%. This projection places newspaper in third place in advertising spend, behind direct mail and television, but just ahead of radio and online.

With advertising revenue dropping, newspapers are looking for alternative sources of revenue. “Digital pay plans are being adopted at 450 of the country’s 1,380 dailies and appear to be working not just at The New York Times but also at small and mid-sized papers. Twinned with print subscription and single-copy price increases, the digital paywall movement has circulation revenues holding steady or rising. Together with the other new revenue streams, these added circulation revenues are rebalancing the industry’s portfolio from its historic over-dependence on advertising,” says The Pew Research Center’s Project for Excellence in Journalism’s State of the News Media in 2013 report.

BIA/Kelsey projects that in 2012, online represented 13.8% of newspaper’s advertising revenue. This is expected to increase to 20.5% in 2017.

More information on Media Ad View Plus is available here.