January 25, 2023
2000-2010: The Decade That Killed (Newspaper) Classifieds
- by Erik Sass @eriksass1, January 3, 2011
The much-publicized woes of the
newspaper industry are due, in large part, to the collapse of classified advertising revenues, and 2010 may well have been the year that buried them for good. Wherever you looked -- real estate, the job market, the auto industry -- the news was bad, not to say disastrous. Combine that with the secular shift to online classifieds, and you have a perfect storm of adverse business conditions.
Classifieds used to be a mainstay of the newspaper business, reflecting their once-dominant position in local media markets. In 2000, classifieds contributed $19.6 billion or 40% of total newspaper ad revenues of $48.7 billion, according to the Newspaper Association of America.
But beginning in 2006, the market begin softening noticeably, due to competition from free online classifieds offered by sites like Craigslist, compounded by the bursting of the real-estate bubble. From 2005-2007, total classified revenues slipped 18% from $17.3 billion to $14.2 billion, with real estate leading the way with a 22.6% drop in 2007.
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And this was just the beginning.
The worldwide credit crisis and ensuing recession kicked the decline into high gear in 2008, when the real-estate category was joined in its pit of despair by employment and automotive -- a triple whammy that has delivered newspaper classifieds' coup-de-grace.
From 2007-2009, total classified revenues tumbled a remarkable 56% to just $6.2 billion -- less than one-third of their 2000 level. And they're still falling: In the first three quarters of 2010, total classified revenues came to just over $4 billion, down 10% from the same period last year.
The figures are even more incredible when you look at specific categories.
From $2.14 billion in the third quarter of 2000, employment classified revenue has fallen a breathtaking 91% to just $185 million in the third quarter of 2010. From a peak of $1.35 billion in the third quarter of 2006, real estate fell 78% to just $302 million in the same period this year. Meantime, automotive plunged from a peak of $1.22 billion in the third quarter of 2003 to $307 million this year -- a 75% decline.
What's more, the most recent economic data suggests there is no hope on the horizon for any of these beleaguered categories. The U.S. unemployment rate edged up 0.2% to 9.8% in November, after 112 out of 372 labor markets reported their highest unemployment rate in a decade in October. Residential real estate appears headed for a long-term stagnation or decline, reflected in a 1% decline in housing prices from September to October, and a 0.8% year-over-year decline as measured by the Case Shiller Composite-20 Index, leading many economists to predict a double dip in the housing market.
U.S. auto sales are the one relative bright spot, with Standard & Poor's forecasting a 12.9% increase in new car sales in 2011, to about 13 million vehicles -- but new auto sales don't necessarily benefit newspaper classifieds.
While new car buyers traditionally have used cars to sell, this potential source of demand for classifieds was almost certainly diminished by the "Cash for Clunkers" program, which encouraged potential used car sellers to simply take their old vehicles out of circulation for good, rather than try to resell them.
7 comments about "2000-2010: The Decade That Killed (Newspaper) Classifieds".
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The title could have been re-stated: The Opportunity of a Lifetime for the Internet or When the Newspapers were caught napping
Hmmmmm... very interesting analysis here. One thing I remember as a kid growing up was that a Classified was an ad that ANYBODY could afford. Now? Most of the major dailies in MT charge a premium over an ROP display ad that would contain the same amount of text. In some cases they also REQUIRE multiple runs. For example, if you only want to run on Sunday, you must also run on Wednesday - mandatory.
So when someone comes along and says, "Premium pricing? Nope. One-for-all pricing and no mandatory number of insertions you must run. You simply pay for what you order."
Back to my fond memory of my youth... so I go into a newspaper's Classified department thinking I'm going to buy an inexpensive 'text only' ad to sell my guitar amplifier and POW! Right in the kisser - WAY higher than I thought it was going to be AND I can't run it just one time so they get me on the higher price at least twice.
How do YOU think today's Classified Ad customer feels?
And the last time you sold classified newspaper ads? Or be dependent on newspaper ad sales for your source of income? Cash for Clunkers as one of the causes for this problem ? Please, Eric, you can do better.
I will admit I have never sold newspaper classifieds for my living. As for "Cash for Clunkers," I wasn't so much claiming it is a cause of this problem as something which could further depress their already-shrinking revenues. The analogy was to real estate classifieds: increased sales of newly-built houses (used to) correlate with increased listings for old houses, because people moving into new houses put their old houses on the market.
What everyone seems to forget is that newspaper "managements" basically gave away a lot of the classifieds such as real estate and local small businesses - and could get them back rather quickly.
The problem is traditional newspaper management, coming up through the bureaucracy and its committees, could best be described as about as competitive as potential office managers in a VA district office.
My rule of thumb - if a paper lets AP give its news to TV and radio to sell it is need a total cleansing of the executive suite.
The Daily Post (dailypost.org) thinks highly unionized major market newspapers could have, but won't have, a great future with rapidly growing profits. We are seeking mergers and acquisitions.
Eric, I have worked at a major metropolitan newspaper and wholey dependent upon commission. In short, I cannot even to begin here to expound upon the incompetence of management - which still continues BTW - that took newspapers to this low. This culture and demise began years before the real estate and auto markets collapsed. If you really want to know and have a quite a few hours to spare, I would give you a one on one to sort out discrepancies and perhaps the truth could help the industry revive at least part of itself. But with or without my input, you can do better.