Although online classifieds hit $185 million in 1998, (a mere 1.3% of print classifieds and 14% of all online advertising), Forrester Research claims those numbers will grow to $2.85 billion in 2003, (or 27% of all online advertising).
Of the 1,015 members of Newspaper Association of America, 551 daily newspapers offer online classifieds in either real estate, employment or vehicles. That number is up from 530 in March of 1998 and 325 in July of 1997.
MORE MOVE ONLINE
"Clearly the rate of growth has slowed as more and more papers move online," says Kevin McCourt, NAA's director of real estate advertising and online classifieds, whose site (www.naa.org) provides a directory of all newspaper classifieds online. "But we expect continued growth in the category over the next few years."
"The Internet is ideally suited to carry classifieds because the content can be 'classified,' " explains David Israel, president-CEO of Classified Ventures, an online service formed by eight media companies including Central Newspapers, Gannett Co., Knight-Ridder, McClatchy Newspapers, The New York Times Co., Times Mirror Co., Tribune Co. and Washington Post Co. The venture operates five nationally branded classified services including apartments.com, cars.com and newhomenetwork.com.
COMPLEMENT TO PRINT
One tactic publishers are using to fight online competition is the creation of regional groups to complement existing sites. At least six state press associations, including Pennsylvania and Washington, have created unified online classifieds for their members, says Mr. McCourt.
"The idea behind a regional play is that if a person is looking to buy a car, they most likely won't go across the country for one, but they will go a few counties over," he says.
In Texas, Hearst Corp., Cox Enterprises, A.H. Belo Corp. and E.W. Scripps Co. have forged an alliance to create TEXAS4U.com, an online classified ad service that brings together 18 Texas newspapers.
In addition, Ad-Star recently introduced an online Web browser product, Ad123, that allows newspaper classified advertisers to create, schedule and pay for their ad in real time.
The product is currently being tested by 51 newspapers, says Adam Leff, chief operating officer. He expects the service to go live in the second quarter of 1999.
Additionally, Ad-Star has formed strategic alliances with AdOne and PowerAdz, which has more than 650 newspaper affiliates, including the Dallas Morning News and Milwaukee Journal Sentinel.
Newcity.com, a new national network of 40 alternative newspapers, also plans on creating a powerful classified area on its site.
"Classifieds have always been an important source of revenue for papers, especially the alternatives," says Kevin Rankin, Newcity.com's business development manager.
"We are right now considering the best way to take 40 city paper affiliates and utilize the power of the Internet to make classifieds as lucrative and effective as they can be."
FIGHT AGAINST EROSION
With an already crowded marketplace, the folks at Newcity.com have got plenty of company in the quest to stave off erosion of print classifieds.
Because the capital costs for technology, talent and brand-building can become formidable as newspapers take their operations online, most believe it is more efficient when classified players band together as a network. Classified Ventures touts more than 140 affiliate newspapers and covers 34 of the top 50 U.S. markets.
"We've essentially created a confederacy of newspapers whose markets can be served by classifieds to ward off any erosion of their territory by huge national online classified startups," adds Mr. Israel.
Other major classified networks include Excite-owned Classifieds 2000, AdOne Network and AdQuest, among others. In protecting their classified listings and local territories, newspapers are safeguarding the valuable online real estate on which they can sell advertising products and packages as well as banner and sponsorship opportunities.
"We often place media on a classifieds site because it catches people in the mind-set of purchasing something," says Ian Shafer, a senior account planner at i-traffic, New York.
"Not only are [online] classifieds a more cost-efficient way to target," he adds, "but it lets you get into a space you normally couldn't advertise in," noting that in the print world advertisers are rarely allowed in the classified