Online Job Ad Revenue Triples

by Shankar Gupta, Jan 26, 2006, 6:00 AM

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Spending for online job ads almost tripled last year--growing to $3.5 billion from $1.5 billion in 2004, according to research released on Wednesday by Borrell Associates. Classified job ads in newspapers, meanwhile, grew 17 percent--from $4.6 billion to $5.4 billion for the same period--marking the industry's first double-digit revenue increase since 1998.

But, despite the recent surge in newspaper classifieds, the report predicted that online job ads will overtake newspaper help-wanteds by the end of next year. And by 2010, online classifieds will hit $10.6 billion, with newspapers a distant second at $4.8 billion, according to the report.

In its report, Borrell detailed a host of cost-savings benefits of online job ads. They preclude the need to travel to college campuses and create printed material, and the shortened hiring cycle that quick communication on the Web brings means fewer temps are necessary, the report stated.

"The handwriting's on the wall for the traditional recruitment advertising business," said Colby Atwood, vice president at Borrell Associates. "One of the things the Internet has done is really crush the profit margin out of classified advertising for newspapers, and kind of made the business model obsolete," said Atwood.

But, he added, "it's going to take a long time" before employers eschew newspapers. Smaller newspapers, especially, are sheltered from competition with the Web for now, he said.

"In the larger markets, there's much more at stake, and those are much more attractive to the national job boards that field sales forces," Atwood said. "As the business matures and more people become aware of using the Web for finding a job, the insulation that the suburban and rural newspapers will begin to erode too."

The silver lining for the print world, Atwood said, is that it is possible to compete with Web classifieds services on their own ground. Citing CareerBuilder.com, which is jointly owned by print giants Gannett Co., Knight Ridder, and the Tribune Company, he said that some newspapers were competing well with their own sites. CareerBuilder recently announced an expansion into several international markets including India, Canada, and the United Kingdom.

"A lot of newspapers are vigorously pursing online recruitment ads, and they're doing a good job of it," he said. "While it's true their lunch is being eaten, at least they're getting to eat some of it themselves."

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