Wanted: Classified ad solution for newspapers

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As rivals attack, dailies fight back with innovations, new products

Daily newspapers' classified advertising grew at a robust 10.1% in 1995 to $13.7 billion, but publishers could be approaching a crisis as outside competitors zero in on the lucrative field.

"Today, newspapers are the medium for classified advertising, but time is no longer on our side," said Anthony Marsella, a VP at the Newspaper Association of America specializing in classified real estate advertising. "There is no longer time for us to do a two-year analysis."

Threats are imminent, agreed Greg Jones, co-publisher of The Greenville (Tenn.) Sun, at the NAA's annual convention in New York last week.

At a heavily attended session titled "Classified in Crisis," he said that while classified accounted for 37% of total 1995 newspaper ad revenue of $36 billion, the entire category is at "serious risk in the next three to five years" from print and electronic competitors.

If a significant percentage of the classified category disappears, it would seriously impact newspaper profits, Mr. Marsella said.

$1 BIL ALREADY GONE

A big chunk of apartment rental advertising has moved into mass distributed apartment guides. "We've already lost $1 billion in advertising a year to them," he said.

Other mainstays of newspaper classified--from employment ads to auto and home ads--could move, too. "Electronic classified is growing and most of it is coming from newspaper classifieds," Mr. Marsella said.

In the employment sector particularly, publishers were warned that human resource directors say they're going to turn more to electronic classifieds in the next year, said Ira Gordon, NAA manager of recruitment advertising.

With used car sales accounting for an increasingly larger percentage of dealer profits, they may forsake the local daily paper for cheaper "auto shoppers."

Not all newspapers are standing pat, however. More than 200 have World Wide Web sites. To help capture national advertising, six major dailies--the Boston Globe, Chicago Tribune, Los Angeles Times, The New York Times, San Jose (Calif.) Mercury News and The Washington Post --have combined to form a site (http://CareerPath.Com).

NEW PRINT PRODUCTS

Other papers are meeting the threat with new print offerings. The Sacramento (Calif.) Bee for example, introduced auto snapshots to its classified ads to battle a local auto shopper.

The Washington Times introduced a targeted home guide that is mass distributed on Fridays as an insert in the newspaper, via boxes in supermarkets and real estate offices and via direct mail to targeted customers. The Mesa (Ariz.) Tribune raised the credit limit for employment advertisers and targeted entry-level employees. Ad linage doubled and revenue rose 70% in a year.

"We still have key advantages," said Sandy Lohr, director of advertising at The (Trenton, N.J.) Times, "We have resources, existing relationships with advertisers and strong cash flow--but we have to act now."

Copyright May 1996 Crain Communications Inc.

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