• by Erik Sass , Staff Writer @eriksass1, May 29, 2007

“Birds of a feather flock together.” “Safety in numbers.” These aphorisms would have elicited a derisive snort from newspaper publishers 30 years ago, when profits were fat and the advertising pie just kept getting bigger. But with revenues in decline, newspapers are rediscovering their herd instincts. Now, these independent-minded old media stalwarts are the driving force behind the newest generation of online network partnerships.

Consider, 264 U.S. newspapers now participate in a job ad-sharing program with Yahoo. Over the last year, Monster signed agreements with 55 newspapers, including the properties of The New York Times Company and the Philadelphia Inquirer and Philadelphia Daily News. And in March, Monster Worldwide partnered with tech firm Adicio to share job listings with its network of more than 250 newspapers, including The Seattle Times, Star Tribune of Minneapolis, Las Vegas Review-Journal and Career Journal, a site maintained by The Wall Street Journal.

The new partnership — call it Classifieds 3.0 — comes after almost a decade of earlier efforts to compete with the Web. For instance, the Tribune Co. joined with Gannett, The Washington Post Co. and others in 1998 to create a national network for auto classifieds, called Cars.com. Tribune and Knight Ridder (now owned by McClatchy) took control of CareerBuilder.com in 2000, with Gannett joining in 2002.

The back story is grim. In 2006 print revenue fell to about $46.6 billion — a drop of almost 1.7 percent from 2005. Ominously, classified advertising, representing the lion’s share of newspaper ad revenue, took the biggest hit. Auto classifieds slipped 12.9 percent in 2006. Recruitment, the most lucrative category, joined the soft parade with a 7.5 percent drop. The slowdown in the housing market is buffeting real estate classifieds too.

It makes sense. Led by Craigslist, founded in 1995, big online networks simply do classified placement better: you can post an online ad selling a car or house on Craigslist for free, whereas a local newspaper placement still generally runs $15.00 to $20.00. Database management allows you to search large numbers of listings by keywords and price.

Newspapers recognized the threat, but even big regional papers couldn’t replicate the breadth of a Craigslist or Monster.com on their own. “There’s an acknowledgement that they need to reach beyond themselves to find audiences,” says Ken Doctor, an industry analyst with Outsell, Inc. “A young professional in New York might want to look for jobs in California or Florida. Then they’ll need an apartment or house listings.”

This latest wave of deals, bringing together former foes, stems in part from an acknowledgement of strategic weakness, Doctor says. “The destination strategy that they’ve pursued online for a decade has only worked to a small extent. They don’t have the online dominance in local areas that they had in print.” Here, Doctor noted that the print editions of local papers typically enjoy 40 percent market penetration on a household basis, “whereas a lot of local users are [on] Yahoo, MSN, AOL, things like that, so the amount of time they’re spending on newspaper sites is relatively low,” at about 12-15 minutes a week. “You’ve got to reach out to audiences on other people’s Web sites.”

Meanwhile, as newspaper classified networks forge ahead, similar services are springing up for national placement of online display ads in local papers. One such buying service, Centro, has grown to include partnerships with 3,000 local interactive publishers, and CEO Shawn Riegsecker says it currently places about 50 percent of all display ads on local newspaper Web sites. Unlike the classified networks. Centro serves as a media-buying proxy for its advertising clients, distributing business among participating papers as it sees fit, with targeting objectives in mind.

Centro doesn’t give newspaper publishers inventory or traffic guarantees, but Riegsecker touts it as a single point of contact for national ad dollars, giving small papers traction they couldn’t get on their own. Riegsecker says buys are distributed based on newspapers' “back-end data from impression serve, to click-throughs, to time spent, to interaction rate. All decisions are made on research and target demographics.” This data lets Centro “grade” and sort local papers to achieve geographic and demographic targets. It offers a range of buying options, and has executed campaigns for about 150 Fortune 500 companies.