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To fight competition from specialty publications and audiotex, database and online services, newspapers are launching their own specialty classified services.

The move is designed to increase automotive, employment and real estate classified revenues.

Classified ad expenditures are strong, totaling $12.5 billion in 1994, up 11.9% from 1993, according to Newspaper Association of America. Newspaper ad expenditures totaled $31.9 billion in 1993.

But free specialty publications targeting house hunters, car buyers and job seekers are gaining ground.

"There is more and more serious exploration of non-newspaper products of all kinds," says Thomas Mohr, VP-classified market groups, Minneapolis Star & Tribune. "[Classifieds are] a very lucrative business," says Bruce Thorp, a media industry analyst at PNC Bank. "Newspapers are active in combating inroads competitors make. It is a strategy of heading off the competition-trying to get there early, if not first; early in the competitors' cycle .*.*. before the startups establish much of a base."

The Star & Tribune is launching a specialty real estate classified publication and an online service, says Mr. Mohr, and the company also has purchased a telephone service.

"The Star & Tribune has been around for 125 years, so clearly we are in the mature phase of our business of being a traditional newspaper. We have concluded that our growth is going to occur through the extension to our product line," says Mr. Mohr.

"Our strategy is not driven by our competitors," he says. "We are doing this because it is the best opportunity to grow our business."

Classified linage at the Star & Tribune grew 12% in 1994 versus 1993, he says, declining to give revenue figures.

In May, it will launch Star & Tribune Real Estate Extra, which will go directly against competitors for these classified dollars.

Star & Tribune Real Estate Extra is a standalone monthly publication available free to consumers at retail outlets.

The first issue is expected to have about 80 pages.

In that market, Harmon Homes-an every other week publication-is the low-price leader, carrying b&w newsprint advertising. Homes & Land of the Twin Cities -which publishes 13 issues a year-is a free glossy, color high-end entry distributed in convenience stores, grocery stores, restaurants, hotel and motel locations and real estate offices. It is one of 300 locally owned franchises of a magazine based in Tallahassee, Fla.

The new Star & Tribune issue will be in the middle, says Mr. Mohr.

Star & Tribune Online will be launched in June or July.

"We will have classified presented that is going to be far more innovative than early presentations of classified in an online environment," claims Mr. Mohr. "If you are looking for vacation homes, you get on [our] online system and can press an icon that will allow you to get news stories" about a vacation area, Mr. Mohr says.

For real estate, users eventually will be able to click on an area of a map to access all the listings in that area.

In its third targeted arena, the Star & Tribune in 1993 purchased Fonahome, a database of about 120,000 rental properties in the Twin Cities. Fonahome has led to a 30% increase in revenues in the paper's rental activities classification, Mr. Mohr says.

Promotional ads in the regular newspaper prompt calls to Fonahome. Callers reach a real estate agent who will customize information from a database.

"We are using the newspaper's promotional firepower to link with consumers and present them with customized information," Mr. Mohr says.

Fonahome advertisers have a choice of two packages. Advertisers can buy either a combination plan that includes database and newspaper lineage or a "performance plan"-in which advertisers buy newspaper advertising and Fonahome separately and pay only when a rent is delivered.

In addition to its other classified products, Star & Tribune offers Twin Cities a weekly alternate delivery "non-newspaper" product to 460,000 non-subscriber homes. Launched by the paper's advertising department in September, Twin Cities Extra targets non-subscribers and includes light news along with advertising.

Similar non-newspaper products are in the works at "We are no longer merely a paper-on-ink publication," says Jerry Alger, automotive manager at the paper. "We are multifaceted now with inserts, audiotex and specialty publications."

"Knowing that merely being in the auto classified section isn't the end-all and be-all, we have looked at other opportunities to meet our advertisers' marketing needs," he says.

A specialty publication geared to auto buyers, Auto Finder, was introduced in May 1993 and has been so successful a separate spinoff publication, Truck Finder, was launched in September 1994.

The two publications specifically target auto and truck shoppers and are available in about 2,000 outlets weekly, for a cover price of $1.

"I'm not sure if it was a response [to competition] as much as it was an extension of different opportunities to reach car shoppers, both new and used," he says. "We have 70% of all the automotive inches that are run between the two major papers in Chicago. We have such critical mass that people feel compelled to pick up the Trib."

But, he notes, "We're still not the be-all and end-all-these specialty publications laser in, rifle in on the used car shopper."

The two products run more than 300 pages weekly. Mr. Alger says there was a 112% increase over the previous year through the first quarter of 1995.

The Tribune's Car Line audiotex service, 1-312-222-CARS, allows customers to shop for cars by make, model, year, price and geographic location. The service debuted in April 1993, and "pays its own cost and makes up for it by enhancing existing products," he says.

The Tribune has a similar phone service for real estate classifieds.

C. Dean Welch, director of classified advertising, Atlanta Journal & Constitution (and president of Newspaper Association of America's Classified Federation) says: "Classified is enjoying real growth and a real spotlight. As a result, we are facing increased competition for those dollars."

The Journal & Constitution launched Georgia Jobs Today, a reprint of the Sunday job listings, in a standalone publication form. At some outlets it's free; at others there is a charge, says Mr. Welch. Star & Tribune Real Estate Extra debuts in May to fight inroads on the Minneapolis paper's real estate revenue.

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