Every dollar of an advertising budget should count, so how do you make the most of that pie slice in 2011? Technology is critical to the mix as traditional media struggle to get key content to readers, viewers, and users in paid content systems, according to the eighth annual “State of the News Media” report 2011.

“The news industry saw improvement in 2010, but it’s a weakened industry—and its future is digital,” says Tom Rosenstiel, author and journalist who gave an update on this year’s state of the industry from The Poynter Institute.

In 2010, digital was the only media sector seeing audience growth. While mobile ad spending still amounts to just 3 percent of total online ad spending ($743 million), it increased an impressive 79 percent in 2010.

For advertisers looking for the sweet spot, consider these State of the News Media 2011 statistics:

  • 47 percent of Americans now get some local news on a mobile device.
  • 11 percent have downloaded a news app but only 1 percent of those have paid for an app to receive news.
  • 23 percent said they would pay a $5 monthly subscription fee for news but only if their local newspaper went out of business.
  • 7 percent of Americans now have a tablet, a number that has doubled in the last six months.

Of newspapers that launched paid content in 2010, only 1 percent of their users opted to pay. The few making money are those courting a professional or “elite” audience such as the Financial Times and The Wall Street Journal. Company expense budgets are subsidizing those subscriptions rather than individuals.

Younger people are less willing to pay for news. But the report isn’t clear why. As people get older, they get busier, are earning more and want information sorted out – so they’re more willing to pay. Tech savvy users, who tend to be younger, also know how to easily find the free online content that they want.

As the industry changes even more, seven of the nation’s top 25 newspapers also now find themselves owned by hedge funds. Investors are pulling in non-traditional troubleshooters to find a relevant and winning combination to connect with users. Most investors are providing narrow windows—up to 2 years or less—to change course and secure profitable margins.

Other key findings:

According to the report, nearly half of all Americans, or 47 percent, now get some form of local news on a mobile device. And they continue to migrate to the web as a primary source of news. Migration to the web continues to accelerate—last year by 17 percent. For the first time, more people said they got their news from the web than newspapers.

Advertising revenue continue to splinter. No one, two or even half a dozen revenue sources, provide the backbone of survival for legacy media. Local TV got a healthy infusion last year from the federal bailout of the automobile industry and elections, leading to an increase in auto dealer ads and campaign spots that carried much of the weight in 2010.

All cable news channels dropped in viewership. CNN lost 37 percent of its audience last year; Fox dropped 11 percent; and MSNBC dropped 5 percent. Fox also spent most of its money on opinion shows anchored with personalities, while CNN spent it on bureaus and news reporters.

National network news is still tops. More than 21 million people, on average, are watching one of three national network programs a night. Those programs are not losing money and are holding their own.

Local TV was the biggest winner in ad revenue, thanks to auto and political ads. But station by station, it’s not as healthy of a business as it was a decade ago. Local TV news stations are upping the ante in the early hours. Sixty-nine cities added 4:30 a.m. news slots, up from 28 the prior year.

The top online news sites rank as most visited in this order: Yahoo, CNN, MSNBC, AOL and The New York Times. Yahoo is an aggregator only. CNN is now an original content creator, chucking its reliance on wire copy. And MSNBC is relying on a new model of taking wire copy from multiple sources, merging and creating specialized content.

Commute times in the car have kept AM/FM listening stable. Internet radio is also now being installed by seven automobile manufacturers. That mass scale, with the addition of sites like Pandora, may ultimately change the radio landscape and offer more possibilities. Twenty-seven percent of Americans said they were “very interested” in online radio in the car in 2010.

The “State of the News Media” report is published through the Pew Research Center’s Project for Excellence in Journalism, a nonpolitical, nonpartisan research institute funded by the Pew Charitable Trusts.

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