Growth in online search will offset the the downturn in online display and classified advertising in 2009, according to new analysis from Ernst & Young.

Less money will be spent on advertising focused on reach with investment in performance-based advertising, such as search, expected to increase, suggested the ‘media and entertainment by numbers’ report.

Internet advertising is likely to overtake TV advertising this year as the largest ad medium, the report said.

“But to assume that a media accounting for a fifth of all advertising budgets could be totally immune to a downturn would be too optimistic,” the report added.

Publishers will be affected most by the move to more interactive ad models, including cost-per-click (CPC) or cost-per-action (CPA), as this will cause CPM rates for banners and display advertising to fall.

Online classified advertising will be affected more by the general economic climate, for example fewer jobs and properties available, than by changes within the advertising industry itself, the report added.

[Read Journalism.co.uk's full breakdown of the Ernst & Young report]

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The newspaper industry should not be fixated with young audiences, Gavin O’Reilly, president of the World Association of Newspapers (WAN), said at the organisation’s annual conference today.

The chief information officer of Independent News and Media said publishers should be looking to serve all generations with their print and online products.

The focus on youth is largely driven by the advertising industry, which is ‘transfixed’ by the youth market, he said.

“There’s always been an unnecessary fixation on youth. We need to capture them first.

“We need to market the newspaper for all generations and we also need to explain to the young that while the net is overwhelming in content it is pretty underwhelming in reliability.”

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The online consumption of newspapers has risen by 20% in the last year and by 100% over the last three years, according to stats released at the World Association of Newspapers (WAN) conference.

The World Digital Media Trends report – collected by 71 research companies and covering 232 countries – also suggested a 13.77% rise in the number of newspaper websites in the world bringing the total to 4,500.

52% of readers who view newspaper websites spend the same amount of time reading newspapers, according to the stats; while 35% say the time they spend with either print or online newspapers has increased.

Figures presented for print circulation worldwide presented an equally positive picture.

The circulation of paid for print dailies rose by 2.98% last year with the total number of titles increasing by 27.22%.

573,235,00 paid and free newspapers are distributed every day and 1.75 billion people read a print edition a day.

Print circulation in China, India and Latin America also showed growth.

Presenting the figures, WAN chairman Timothy Balding said these were just the facts, without sentiment or analysis.

And while figures pointing out that revenue in the advertising industry is still dominated by the print went hand in hand with the positivity of the circulation figures, follow-up sessions at the conference on integration and the challenges of web 2.0 to newspapers will perhaps paint a more cautious picture.

As Christophe Pleitgen, head of news for Reuters UK, told delegates in a later session:

“We are living on borrowed time. In a sense, some of us may have more time, while colleagues in the US would say it is high time. It’s great that newspaper editors are optimistic about the future. They have gotten on with integrating their newsrooms – doing that is more urgent than most of us think.”

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