Used Car Dealers Suffer from Web Offerings

by Jack Loechner, Aug 22, 2006, 3:00 AM

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Used Car Dealers Suffer from Web Offerings

According to the just published World Association of Newspaper's third annual Digital Classified Survey, newspapers in developed countries increased overall revenues by 4.2 percent in 2005 from a year earlier. Revenues from print classified advertising increased by more than 5 percent during the period, a major improvement compared to the decline of 12 percent reported the previous year, when overall revenues grew by more than 4 percent.

"The overall figures mask a major contrast between the growth in recruitment and property advertising on the one hand, and the collapsing categories of automotive, travel and private party advertising on the other," says the report. Market share of automotive classified advertising, however, was down 12 percent from the previous year, by far the biggest loss across all categories.

The Survey report notes that automotive advertising has been hard hit because auto dealers are finding themselves "disintermediated" -- classified sites and direct sales channels are cutting out the need for dealers from the sale of used cars. This poses a dilemma for newspapers: if they embrace the change and offer platforms like direct sales, they are likely to alienate their most important advertisers.

The Digital Trends Survey also found:

• The internet accounted for 7.6 percent of recruitment revenues at newspapers that participated in the study, up from 2.7 percent in 2004 and 1.5 percent in 2003.
• White collar jobs tend to be the first recruitment category to migrate to the internet and is the category were newspapers have lost the most in the last few years: 21 percent of their market share has moved online.
• Newspapers have managed to hold on to about one quarter of the revenues lost from print in their own online operations. Another quarter of the revenues have migrated to "pure play" internet companies, while the remaining revenues have been cost savings to advertisers due to lower rates and fiercer competition online than in print. A further problem for newspapers is their inability to charge anything close to print rates for ads placed online.
• For regional newspapers, property advertising has emerged as the least vulnerable category because this is the most "local" area of advertising.

"The central message of this year's study of classified migration is that complacency is still the largest enemy of the newspaper industry," says the report. "While many newspapers have a dominant market position online, the majority still do not have a realistic strategy to face the inevitable migration process: they have so far failed to adjust their business models and mindset to the new market place."

More information about the SFN project, and the World Association of Newspapers, can be found here.

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