Newspapers Battle Web Sites for Classified Ads

By Lisa Baertlein

SAN FRANCISCO (Reuters) - Not so long ago, the classified ad section of the local newspaper was the best place to sell a car, rent an apartment or post a job opening. Now the Internet is shaking up this once-staid and lucrative business.

Newspaper publishers that once enjoyed a virtual monopoly on the classified market are facing increasing competition, including from Web sites like eBay Inc.

Experts wonder if free online ads and innovations that allow sellers of everything from exotic cars to Pez candy dispensers to reach a massive audience via the Web will expand the business for all or inflict serious damage on incumbents.

EBay, best known for its auction site, has spent more than $850 million to buy three online classified companies in the United States and abroad. Last summer, the Web marketplace took a 25 percent stake in mostly free, San Francisco-based

formatting link
an online classified shop that covers about 100 cities worldwide.

EBay recently launched free classified Web sites in seven international markets including Germany, China and Japan. Those new Kijiji-branded sites

formatting link
mimic Craigslist.

Moves like these are causing havoc with newspapers, many of which have fought back with online versions of their publications -- complete with classifieds.

"It's a free-for-all," said Peter Zollman, founding principal of consulting firm Classified Intelligence. "I think the threat (to newspapers) is very real because classified advertising is so lucrative."

The Newspaper Association of America expects the market for print newspaper classified advertising to grow 5.2 percent to $17.4 billion this year.

But newspaper market share is falling amid intense competition from a range of players, including Web sites and Internet search companies, as well as radio and television, niche publications and Yellow Pages providers, Zollman said.

Newspapers remain the dominant medium for listing jobs and selling cars and homes in most local markets, but Zollman warned they must work to keep that hold.

"I don't think they'll go out of business, but the business is being transformed very fast," he said.

Analysts who focus on the Web also point to the success of companies like Yahoo Inc. and MSN Web unit, which have seen their banner and branded ad revenue grow as big advertisers follow audiences from television to the Internet.


Still, some analysts see the changing classified ad market resulting in a larger sea that can float all boats.

"It's a case of one and one equaling 2 1/2," said Ed Atorino, a publishing analyst at Fulcrum Global Partners. "It doesn't seem to be taking away a lot of dollars from the traditional media; it just seems to be a new market."

Print newspaper classified revenue declined from 2001 to 2003, when the broader ad market was soft, but has risen in every other year since the Web went mainstream in 1995.

The Kelsey Group estimates that total revenue from U.S. Web classifieds was $1.95 billion in 2004, excluding eBay, but including sites operated by newspapers.

Auto sales typically constitute the biggest chunk of classified ad spending at newspapers, followed by help-wanted and real-estate listings, while Web classifieds are dominated by jobs, followed by dating and autos.

The help-wanted market may be a harbinger for the future push and pull between the online and offline worlds.

Newspaper job listings were the first to feel the heat from Internet rivals like

Most newspaper chains during 2004 continued to lose online recruitment market share to rivals, based on the number of job postings, according to Corzen, a New York market research firm. Help-wanted revenue growth at newspapers also lags that of online job posting sites.

But there were some bright spots. Online recruiting site Careerbuilder jointly owned by newspaper publishers Gannett Co. Inc., Knight Ridder Inc. and Tribune Co. gained market share, as did Hollinger International and Pulitzer Inc.

Newspapers are also fighting back on other fronts. For example, Hearst Corp.'s San Francisco Chronicle is giving extended listings to unsuccessful sellers, while Miami Herald and San Jose Mercury News publisher Knight Ridder lets people buy online-only ads, with or without pictures. Still others allow their news items to be used freely in exchange for advertising revenue earned through online sources. Reuters Limited is one such example.

Kelsey analyst Greg Sterling said the jury is still out, but newspapers appear to be worse off than before the arrival of online rivals.

"It's very hard to know what kind of dollars have been lost from newspapers," he said. "I think it's substantial."

NOTE: For more telecom/internet/networking/computer news from the daily media, check out our feature 'Telecom Digest Extra' each day at

formatting link
. Hundreds of new articles daily.

*** FAIR USE NOTICE. This message contains copyrighted material the use of which has not been specifically authorized by the copyright owner. This Internet discussion group is making it available without profit to group members who have expressed a prior interest in receiving the included information in their efforts to advance the understanding of literary, educational, political, and economic issues, for non-profit research and educational purposes only. I believe that this constitutes a 'fair use' of the copyrighted material as provided for in section 107 of the U.S. Copyright Law. If you wish to use this copyrighted material for purposes of your own that go beyond 'fair use,' you must obtain permission from the copyright owner, in this instance, Reuters Limited.

For more information go to:

formatting link

Reply to
Lisa Minter
Loading thread data ... Forums website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.