Classified: newspaper ads migrate to web

Martha Stone, WAN manager: special projects, 'Shaping the Future of the Newspaper', reported back that the annual WAN survey of classified advertising migration from print to the web has found massive growth in online advertising revenues - and growth in print revenues as well.

Stone said the survey of 159 newspapers, from 72 companies in 45 countries, found that online classified revenues grew 52% among the respondents, while print ad revenues grew 5.3%.

"The increases in online classifieds is incredible," says Stone. "We are seeing internet classifieds growing in all 72 companies surveyed. However, their growth rate is below the booming online advertising rate overall.

Recruitment classifieds are the advertisements that tend to migrate first from print to the web. But as migration accelerates, the biggest impact seems to be on automotive and other categories including travel, says Stone.

The full survey is included in "Digital Classifieds Survey", one of six new strategy reports from the Shaping the Future of the Newspaper project. For more on the project, consult www.futureofthenewspaper.com.

Defending the classifieds

Daniel Jauernig, president and CEO, Classified Ventures, United States, agreed that the migration of classified advertisements from print to web is accelerating, and defended the role of the traditional classified advertisement.

He highlighted the experiences of his company, Classified Ventures, in the United States - which has been strong nationwide since 1997. The company is a strategic joint venture owned and funded by six of the largest media companies in the United States: Gannett; Tribune Company; Belo; Knight Ridder; the Washington Post; and McClatchy, which came together to exploit the online classified market for cars, rentals and real estate.

Jauernig examined the reasons for starting the joint venture, which creates strongly branded, nationwide classified websites for its 170 affiliate newspapers, its successes and the challenges it faces from online competitors and new technologies.

"We believe that having national websites with strong national brands gives each of our 170 newspaper affiliates a competitive advantage in selling these critical online products in their local markets," Jauernig said.

The company will generate US$350 million in revenues this year with a pre-tax margin of 20%.

Major challenges, however, are appearing from free classified sites such as Craigslist; aggregators such as Google Base; platform delivery shifts from PC to mobile; and RSS and XML feeds.

Classified Ventures was responding to the challenge from Craigslist by distinguishing its products and services. Aggregators like Google Base - which is not charging anyone to display classified listings on its site - is not yet a threat, but the potential is there.

Bigger is better

Scale is everything in online classified advertising, says Paul Zwillenberg, global head of media and entertainment, OCBC Strategy Consultants, United Kingdom, who provided lessons from the "pure play" online companies that are challenging newspapers for their classified ad markets.

Zwillenberg described online scenarios in which the number one market position quickly leads to dominance - more visitors, higher response and, eventually, the ability to charge higher prices.

Using several case studies, including e-Bay's automotive site, Zwillenberg described the strategies of the pure-play internet companies. But he also provided points for newspapers working with online classifieds:

• Make the most of your assets - content, promotional power, customers.
• Embrace new revenue models to drive advertising spending such as pay-for-performance models.
• Use the same brand across print and online.
• Use multimedia.
• Go for scale - quickly.

For more on the World Association of Newspapers (WAN) congress held in Moscow this year or the World Editor's Forum, go to www.moscow2006.com and www.editorsweblog.org.