• by Paul Gough , January 14, 2004

When recruitment advertising returns with the job market, newspapers may find that a bigger piece of the pie has gone elsewhere.

Recruitment advertising has been a mainstay of newspapers forever. Generally hundreds of smaller ads instead of the labor-intensive other types of run-of-the-press ads do, they're relatively easy to put together and don't need to be solicited by the sales staff. Most of the revenues end up going straight to the newspaper bottom line. But a new study by Borrell Associates Inc. finds that printed newspapers won't be getting as much recruitment advertising revenue as before once job recovery begins. "Employment Advertising Online: The Battle for Local Dominance" finds that the Internet is increasingly becoming a player in help-wanted classifieds, responsible for about $3.1 billion (20 percent) of the $15.5 billion market for recruitment ads.

That's bad for newspapers, which have suffered from a plunge in help-wanted ads since the job market crashed in 2001. Borrell Associates estimates that help-wanted revenues have dropped by more than 50 percent from the $9.1 billion peak in 2000. Throughout the media recession, newspaper executives haven't been coy about the condition of help-wanted and stronger growth in newspapers until the job market recovers. Several publishers have, in recent months, said that they've seen the bottom or close to it. Publishers have also said that they're confident that newspapers will get their market share back when the job market improves, just as they have in past recessions, the most recent being in the early 1990s after the end of the Persian Gulf War.

Yet that might not be the case, according to the Borrell Associates report. Online recruitment advertising--and its interactive capabilities of resume management, data mining, and targeting--is going to keep crimping the newspapers' market share in the next few years, the study said.

"I think that there's a belief, a gut feeling, that it's not coming back," said Gordon Borrell, president of Borrell Associates, of newspapers' share of recruitment advertising. "It may stabilize, but it's certainly not going to come back to the levels it was before ... They certainly have lost a lot that I don't think is coming back."

Thanks to Internet job sites like Monster and HotJobs--along with newspaper-backed sites like CareerBuilder--job hunters are increasingly going online, whereas in the past they would have turned the pages of local, regional, and national newspapers. Borrell said the pattern has been well-traveled in recent years, with the Internet becoming the preferred medium to buy or sell cars and real estate, two traditionally strong categories for printed newspapers (and what has kept newspaper classified revenue from losses of tragic proportions in this current recession).

"The big problem is the consumer mindset in the marketplace, at least for those two categories and potentially for jobs, is the Internet," said Borrell.

The news isn't all bad. Newspapers have well-regarded Internet sites and a dominant presence locally, and both these factors can be turned to their advantage with the right strategies. Colby Atwood, senior analyst at Borrell Associates, believes newspapers are well-positioned for the coming battle. Atwood points to CareerBuilder and CareerSite, which represent a heavy investment by the newspaper industry in reaction to the growth of the big portals. He also believes that the synergies between online and offline sales are in favor of newspapers, along with their long-standing position in the local marketplace.

"Local advertisers still make up 70 percent of overall listings," Atwood said. "The local markets, especially in second- and third-tier cities, are for newspapers to lose."

Borrell said that, in looking at the data and newspapers' reactions, there's a lot of room for hope, given their printed and offline products.

"We do firmly believe that newspapers have built a formidable foothold on the Internet in terms of local employment advertising sites. It's remarkable what they've done, and it's very admirable, and they're reacted from a very defensive position at first to what now appears like a very opportunistic stance."