Classified Information: Online Cannibalizing On Print
While some analysts maintain that the downturn in the newspaper industry's classified advertising base is due primarily to sparsely populated help wanted sections, others believe at least part of the decline represents attrition for the print medium as more consumers migrate online.
"Where's the first place you turn to if you're buying a car or looking for a job?" asked Lisa Carparelli of the Online Publishers Association (OPA), adding that the Internet, if you have access to it, is the first place most people turn to for research.
The OPA has been suggesting that the real decline in print-edition classifieds has been masked by the growth in classified ad revenues from online editions. Cox Newspapers, which publishes the Atlanta Journal-Constitution, reported that classifieds currently represents 50 percent of upsold revenues compared with 70 percent a year ago. The declining interest in classifieds is less of a problem when weighed next to Cox Newspaper's burgeoning online ad revenue, made possible by a significant upturn in page views per month.
Other OPA findings show strong third quarter revenue increases for several major publishers. Tribune Interactive's Christine Hennessey reports $25 million in third quarter revenue, up 24 percent due in large part to strength in classified, banner and sponsorship advertising. She cites smart online investments in classifieds services, noting the success of two such Tribune classified ventures, apartments.com and cars.com.
According to the Newspaper Association of America, in the third quarter, employment advertising dropped 10.7 percent to $940 million. Overall classified advertising was down 0.5 percent to $3.8 billion-this after a 3.9 percent second quarter drop. While online classified spending is certainly on the rise, the young industry still only generates a quarter of newspaper classified spending, at $ 4.3 billion. Most analysts believe this number will rise, and upstart personal and classifieds sites like Tribe.net will rely on such assertions.
On Monday, social networking service Tribe.Net announced the receipt of $6.3 million in financing from blue chip venture firm Mayfield, Knight Ridder Inc.-publisher of the Philadelphia Enquirer and the San Jose Mercury News among others, and the Washington Post Company. Tribe.net posts classified listings for its members, who may sign up to the networking community free of charge, which in turn generates qualified leads for jobs, apartments, cars, used merchandise, and recommendations. Tribe plans to create revenue by selling paid listings and targeted advertising.
Hilary Schneider, CEO of Knight Ridder Digital, says her belief in the online classifieds industry is underscored by KRD's investment in Tribe.net. "We have years of real-world experience on the front lines of the classifieds business," she says, adding that the combination of Tribe's targeted reach and Knight Ridder's local market presence experience should reap rewards for both sides.
Local market, user-created content and communities translate into a lower cost of doing business, says Ralph Terkowitz, chief technology officer of the Washington Post Company, which he notes is appealing to advertisers and publishers alike.
Tribe CEO Mark Pincus, however, underlines the risks involved in entering a new marketplace like online classifieds. "The goal for Tribe is to become a sustainable, profitable, independent company in this new market space."