Joshua Gans at Digitopoly says ‘yes’:
[T]he big issue is that no newspaper has grappled with the new digital reality: having an advertising sales department is obsolete. Traditionally, a newspaper’s sales department was the core of its business. It had relationships with local businesses and metrics to analyse performance. None of those capabilities matter in the digital world. Newspapers run around trying to sell ads — display ads mostly — for their online sites. But in that business, there are substitutes and what is more, the consumers will not stick around to see what a good job the newspaper’s sales department is doing. That is a national and global market now. What is more, the role of matching ads to content is now done by computers rather than people. Hence, the newspapers that are going to survive are going to be the ones focussing purely on readers and outsourcing ad sales to broader networks. The Pew report does not even mention this as a possibility. Why? Because most firms have trouble outsourcing their previous revenue center. However, this blindspot is an illusion of past balance sheet specifications and managerial incentive provisions.
Agreed. There’s a cost to maintaining an advertising staff, and a lot of what they do can be automated. I don’t think the relationships necessary in the old model (for calling in a favor with the sales rep for preferred placement or a copy revision), or more importantly that the relationships have changed. There’s no reason they couldn’t outsource a large percentage of their advertising business to Google via Adsense or Amazon Affiliates. If they could bank ~20-50% without having to clothe and feed an advertising department, I think that’s an institutional win (save for the jobs destroyed).