Newspaper executives hope that keeping it local will keep them in business.

“What newspapers do best is deliver the local perspective,” Susie Ellwood, chief executive officer of the Detroit Newspaper Group and the Detroit Media Partnership, said Tuesday during a panel discussion held as part of Advertising Week in New York.

Making the news relevant to local readers means newspapers will continue to deliver key consumers to advertisers. But there are huge challenges ahead.

The Pew Project for Excellence in Journalism reports that declines in print newspaper circulation, which began to accelerate in late 2003, deepened in 2008. Overall, newspaper circulation fell 4.6% daily and 4.8% in Sunday issues for the six-month period ended September 30, 2008.

Still, total daily circulation was 48.4 million and Sunday circulation totaled 48.8 million, making newspapers an effective way to reach a broad audience in a single advertising buy.

Page views of newspaper websites were up 25.2% in the survey period. On average, unduplicated Internet readers added 8.4% to a newspaper’s readership in its home market.
Like other media, the basic question for newspapers is: Who sees the ads and actually responds to them?

Current measurement techniques are imprecise, but that may change as electronic delivery becomes more important to newspapers.

E-readers, such as Amazon’s (AMZN) Kindle DX will allow newspapers to know who sees the ads and to better measure response. Sony (SNE) offers a competing product and Apple (AAPL) is expected to launch its e-reader in 12  to 18 months.

One disadvantage: So far, e-readers don’t offer color and advertisers may not be enthusiastic about making their pitch on a screen that has all the emotional snap of a monochromatic computer at the Department of Motor Vehicles.

E-readers are often pitched as the next big thing, but it’s not yet clear that newspaper readers will adopt them in huge numbers. Newspapers, the original portable media, are cheap, easy to use, and not damaged if dropped. E-readers are expensive, fragile, and using one on a train or a bus in a large city may invite theft.

Don Meek, president of Tribune 365, says some critics overlook a basic strength of newspapers: their ability to deliver ads or sample products to every residence in select areas, typically portions of upscale zip codes.