Magazine article Editor & Publisher

In the Classified Ad Race

Magazine article Editor & Publisher

In the Classified Ad Race

Article excerpt

PAPERS STILL HOLD A LEADERSHIP POSITION

Print-to-online migration of classified ads may be under way, but, at this time, they provide 40% of newspaper ad revenue

At a recent gathering of classified advertising directors, Val Kurapka, president of the Newspaper Association of America's (NAA) Classified Federation, gave the good news first: Newspapers are still one of the first places people go to look for a car, house, or job, as evidenced by a 6.7% gain in industry classified revenue in the first quarter. Then came the bad news: Well-heeled online players are threatening to take a significant bite out of a major revenue source.

Classifieds account for some 40% of newspaper ad revenue and are considered the revenue source most at risk from the Internet because they lend themselves to easy searches.

Within classifieds, recruitment is not only the biggest single category but also the one most at risk because that's where the most dollars are being spent. That's what prompted the Tribune Co. and Knight Ridder to decide to buy two job sites, CareerBuilder Inc. and CareerPath.com Inc. and roll them into a single company.

How great is the online threat? No one really knows, but there are some scary figures out there.

Jupiter Communications has forecasted online classified revenue will reach $1.4 billion in 2005 (6% of total print classified), from $270 million (1%) in 1999.

A Forrester Research Inc. prediction is even more dire, calling for online ad revenue to increase to $8.2 billion in 2005 from $1.2 billion in 2000. Forrester also said print classified, which reached $18.6 billion last year, will stall at $17.1 billion in 2005.

Jupiter has projected that print-to-online migration, plus erosion due to free and discounted classifieds, will cost newspapers $4.1 billion in 2005. "These projections promise anything but a rosy future for many businesses relying on classifieds listing revenue," a Jupiter report stated.

Newspaper analysts are quick to attack such forecasts as baseless. "That kind of long-term forecast has a very shaky track record," said James Conaghan, the NAA's chief market analyst, who doesn't forecast beyond a year. He and others said the Internet research firms also ignore the bigger threat to newspapers posed by phone directories, niche papers, and shoppers. …

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