Online classifieds heat up

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Most industry players believe classifieds will be as big online as they are in print. But what's still unclear is who will own the category--the newspapers themselves or the savvy new-media brands that are unaffiliated with print.

Print classifieds were a $15.1 billion business in the U.S. last year and a $20 billion business worldwide, according to the Newspaper Association of America.


Not only do classifieds account for 40% of most newspapers' ad revenue, but classified advertising is growing at a rate of 6% per year. With more than 500 newspapers currently online, the NAA predicts Web classifieds will be an $800 million business by 1998.

Most insiders agree that if newspapers don't leverage their franchises soon enough, they risk major competition from other classified brands: category-specific offerings like Auto-by-Tel or Monster Board, and startups like Classifieds 2000, which lists national classifieds from both businesses and individuals.

Tom Bates, VP-advertising at New Century Network, which helps bring national advertising and custom publishing options to online newspapers, said classifieds aren't one of the services his company plans to offer to affiliate sites. NCN may, however, strike a preferred-provider deal to get affiliates competitive prices on licensing classified technology.

Providing technology to newspapers is exactly the business model for AdOne Classifieds. The two-year-old company now services 400 mostly smaller-circulation papers. Newspaper sales reps sell their own classified advertising and have the option to port those listings to the AdOne Web site.

Classifieds competition will soon come from TV stations as well. Both CityWeb, a Warner Bros. offering, and NBC Interactive Neighborhood intend to allow their member TV stations to sell classifieds.


In the meantime, Classifieds 2000 in April signed a deal with Granite Broadcasting, under which Granite sales reps in 12 local markets will sell online classifieds, said Classifieds 2000 VP-Marketing Karim El-Fishaway.

Meanwhile, Electric Classifieds is pitching its online technology services to both the newspaper and non-newspaper camps.

While the company acknowledges that working with both sides "is definitely an issue for some papers new to the online environment," said Steven Buck, VP-business development, "to those who understand the Web, it isn't."

Copyright May 1997, Crain Communications Inc.

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