If you want the pithiest summation of the problem facing modern journalism, here it is: dollars in print, dimes on the Web, pennies on mobile.

That’s advertising revenue we’re talking about. Journalism is what economists call a “two-sided market”: Media companies sell news and entertainment to you, and they sell you to advertisers. Outside of some specialty trade publications, subscriptions have never covered the cost of producing newspapers and magazines. In fact, they rarely exceed the cost of printing and mailing the things. The actual work of reporting has always been paid for by the advertisers.

The Web has slashed the costs of distributing our product, but it hasn’t done that much to change the cost of gathering the news. Oh, sure, there was fat in the industry, accumulated during flush times; journalists still get kind of misty when they hear the words “Time magazine drinks cart.” But researching, reporting and writing stories consume a surprising amount of time and money. Readers are always shocked when I tell them how much effort goes into producing a single 2,500-word feature.

The problem is, advertising dollars are shrinking. We just can’t charge as much for Web advertising as we used to for print advertising. A decade ago, when I entered professional journalism and began earnestly discussing its financial future, there was a reasonable case that, eventually, digital advertising would be worth more than print advertising ― you could precisely target it, after all, and measure its effects. As soon as we got better at building digital ad products and educated advertisers, in theory we’d be in better shape than ever.

That theory has, alas, been pretty well destroyed by the last 10 years. Advertisers still won’t pay print rates for digital. Worse, the money that does get spent on digital advertising increasingly isn’t going to news outlets; it’s going to Google and Facebook and Yahoo.

Here’s the interesting thing, though. A new study from the National Bureau of Economic Research suggests that the advertisers who have deserted us may be getting nothing for their money:

Internet advertising has been the fastest growing advertising channel in recent years with paid search ads comprising the bulk of this revenue. We present results from a series of large-scale field experiments done at eBay that were designed to measure the causal effectiveness of paid search ads. Because search clicks and purchase behavior are correlated, we show that returns from paid search are a fraction of conventional non-experimental estimates. As an extreme case, we show that brand-keyword ads have no measurable short-term benefits. For non-brand keywords we find that new and infrequent users are positively influenced by ads but that more frequent users whose purchasing behavior is not influenced by ads account for most of the advertising expenses, resulting in average returns that are negative.

The American merchant, civic leader and marketing guru John Wanamaker famously said that half his advertising was worthless, only he couldn’t tell which half. This study suggests that even if you can tell which half, you’re potentially better off killing all of it.

A journalist can read this in two ways. One is to celebrate: Search advertising is useless, so those advertisers should come crawling back to us! The other is to despair: Even Google’s exquisitely targeted ads don’t work, and we’re all doomed. (There’s a third way you can read this: as a single study that is interesting but hardly probative. That’s the correct way to read it, of course, but it’s sort of a buzzkill.)

Assuming the results are correct, and broadly applicable, which way should we read this?

It’s entirely plausible that search advertising costs more than it’s worth, especially for big outlets such as eBay. On the other hand, I don’t think that saves the media. Digital ads simply have a lot of drawbacks that print didn’t. For starters, people either hate or ignore them; the more you try to get their attention, the angrier they get. I assume that whoever invented autoplay video ads is already in some sort of federal witness protection program.

Then there’s the problem of ad blockers ― no one ever arranged for a copy of Time magazine with all the ads neatly scissored out, but the digital equivalent is easy to achieve with a browser plug-in. And the problem of ad size ― the available real estate is a lot smaller than a magazine page. And the problem of click fraud, which makes advertisers reluctant to commit a lot of funds.

But I think the biggest issue is the one that I hear the least about: Companies just don’t need intermediaries as much as they used to. They can build their own Web pages, run their own videos on YouTube. Sure, they’d like to have our readers, but because our readers ignore or block their ads, maybe they should just put the money into building their own Web presence.

If all this is true, then Google and Facebook may need to find a new business model. But if they do, they’ll probably run into us out there, still looking under rocks.

By Megan McArdle

Megan McArdle is a Bloomberg View columnist who writes on economics, business and public policy. She is the author of “The Up Side of Down.” ― Ed.

(Bloomberg)