Memo To Newspapers: Online Yellow Pages Are Key

Online classifieds and job listing sites continue eating into newspapers’
bread-and-butter classified listings, but there’s plenty newspapers can do
to find new economics alongside popular sites such as Craigslist, according
to a new report.

Called “Competing with Craig: Strategies and tactics
for battling Craigslist and its counterparts,” the report by research and consulting firm Classified Intelligence
said Craigslist has cost newspapers in the San Francisco Bay Area $50 million to $65
million in employment advertising revenue. The free community Web site generates
more than 1 billion page views each month.

The study said employment advertising accounts for about 19 percent of
newspapers’ revenue, and focused on the impact of popular listing
communities such as Craigslist on Bay Area newspapers. Overall, classified
advertising represents a $28 billion to $30 billion business (combined) in
the United States, including $16 billion in daily newspapers, according to
the study, which used data from the Newspaper Association of America in
compiling its figures.

It’s no secret that newspapers have been getting hurt by all sorts of all
new online classified services in the past few years, said Peter Zollman,
founding principal of Classified Intelligence. But the growth and continued
popularity of sites like Craigslist, as well as job sites such as
Monster.com and HotJobs, doesn’t mean it’s “game over” for newspaper
publishers either, he told internetnews.com.

And it’s not like they’re sitting still anyway. After all,
Careerbuilder.com is owned by three major newspaper publishers: USA Today
publisher Gannett ; Knight-Ridder , which
owns the Miami Herald; and Tribune Company , parent
of The Chicago Tribune.

“Newspapers have a lot of opportunity in their markets. They have to
understand the nature of [their] business is changing, and they have to
change with it if they want to be the marketplace for their communities.”

Zollman said community publishers in smaller to medium markets have
opportunities to seize in order to stem the flow of classified dollars that
are heading for online recruitment sites.

For one, “stop thinking like a newspaper,” the report said, and pay
attention to the hybrid classifieds and Yellow Pages-style listings offered
online. “Yellow-page publishers are moving into classifieds; dot-com
classifieds are growing, and many broadcasters are improving their
classified offerings,” Zollman said. “As the business becomes even more
competitive than it has been, consumers will benefit from more efficient
marketplaces and advertisers will find improved services. Only
publishers who don’t keep up with the changes will lose.”

The shift is well under way. Zollman pointed to Sweden and Australia,
where leading publishers of Yellow Pages directories have purchased trading
post companies similar to Craigslist.

In the United States, publisher Gannett Company
recently acquired HomeTown Communications Network, which offers online Web
listing services along with newspapers, telephone directories, shoppers and
niche publications in Michigan, Ohio and Kentucky.

Hearst, another major
U.S. publisher, is pursuing Yellow Pages listings and services, such as its
purchase of White Directory Publishers of Buffalo, N.Y., the fourth-largest
independent yellow pages publisher in the United States.

“It’s starting to become a bit of a merger of what’s in Yellow Pages and
what’s in a classified ad,” Zollman said. “There is not a distinction like
there used to be. Suddenly you have a situation where Yellow Pages can
publish classifieds. Newspapers offer Yellow Pages. That trend will
definitely continue in 2005.”

The 57-page report offered a lengthy list of
strategies for any player in the sector in order to help them develop more
effective products for auto, employment, real estate and merchandise advertising. But it also offered newspapers direct suggestions:

  • Immediately begin offering free online-only classifieds, at minimum in
    every category outside of real estate, recruitment, autos and rentals. Strongly consider making all
    categories free online for the next few years.
  • Create a simple self-service method for individuals to post ads online.
    Rebuild a vital marketplace
    online and you will make money from that marketplace in many ways going
    forward. Plus, the margins on that business will be breathtaking.
  • Throw significant energy at building easy tools for business
    classified customers, auto
    dealers, etc., to simplify their use of your online classifieds. In this
    way, expand your existing advantage over Craigslist.
  • Promote the free online ads like crazy in your print products and
    elsewhere. It doesn’t do
    any good to launch something and not talk about it. Newspapers consistently
    refuse to promote their online efforts.
  • Strongly encourage growth in your online merchandise categories. Your
    readers should
    expect to find anything they want in your classifieds. That guarantees
    they’ll view you as central.
    Business follows the buyers. Make sure you are the prime destination for
    buyers.
  • Stop worrying about your own online unit eroding print classifieds.
    Print will erode as
    online grows; this is an unstoppable force. By focusing on dominating your
    market online,
    you ensure that a vibrant high-margin business will be yours in the end.
  • Offer RSS feeds on classifieds that are selectable and
    highly targetable, so [customers] receive ads they want while not receiving
    material that’s useless. Post ads immediately as they are posted or phoned
    in by sellers. Why wait until an overnight feed?
  • Although there may not be a lot to celebrate in the rise of online job
    listing sites, “newspapers still have distinct competitive advantages,”
    Zollman added. “If they take advantage of what they have, there are strong
    opportunities. It’s not like newspapering is going to die [from online classifieds].

    “The reality is that newspapers are still a good business, but facing some
    very severe challenges, and not only from Craigslist, but from hundreds of
    other sites.”

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