One Reason Newspapers Are Doomed

Classified Ad
We have a basement apartment in our house that we rent to help pay the mortgage and property taxes, which keep going up and up.

To advertise, my wife used to take out a newspaper classified ad. It was a process that required some thought about whether the ad should run two or three days, and/or over one or two weekends. You also had to be parsimonious about how many words you used, which involved lots of acronyms. After all, a tiny two-day ad costs more than $100.

Today, all those classified ad concerns/issues have disappeared. Why? Craigslist. Instead of taking out a newspaper classified, we put a free advertisement on Craigslist. Not only it is free but you can run the ad as early as you want in the month, for as long as you want, and quickly change the description/price based on supply/demand. Even better, Craigslist has become extremely popular with apartment renters, who used to scour the weekend newspapers for vacancies.

What troubling to newspapers is classified ads such as apartment rentals are high-margin products. They used to be the bread-and-butter of the business even though the more glamorous full-page ads dominated the landscape. With competition such as Craigslist and Kijiji, newspapers are in a serious battle to stay in a game they dominated just a few years ago.

In terms of online advertising growth, Veronis Suhler Stevenson expects the U.S. market will climb to $61.9-billion by 2011 from $23.6-billion in 2006, and that the Internet wills surpass newspapers as the leading mediu.

“We are in the midst of a major shift in the media landscape that is being fueled by changes in technology, end-user behaviors and the response by brand marketers and communications companies,” says James Rutherford, executive vice president and managing director at VSS.

More: The Financial Times has a news story on the VSS study while WatchMojo suggests the forecasts are probably too aggressive. Scott Karp had some interesting insights on Kijiji’s expansion plans earlier this month.

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  • Paul Lomax

    I once went for a drink with the managing director of a major UK regional newspaper publication which had over 150 titles. He wanted to pick my brains about what they were either doing wrong or not doing with their websites. This was a couple of years ago.

    Before we met I had a look at their sites and they weren’t bad – lots of local content, and you could book classified ads online. Which was more than you could say for the magazine titles I’d worked with before.

    But then it occurred to me what the USP of regional newspapers is – locality. You don’t want to advertise your pram to people 500 miles away if you want them to pick it up.

    Unfortunately for regional newspapers, locality online is just a zip/post code search away…

    So when I introduced him to Craigslist and all the others (eg Oodle and Gum Tree) he was understandibly concerned. He wanted to know what he could do. I could not give him an answer – there was certainly no silver bullet – and any meaningful approach he took would seriously impact his revenue in the short to medium term.

    Two months later I read in the industry press that he had decided to retire early to spend more time with his family.

    He quit while he was ahead.

    Bottom line, newspapers need an entirely new revenue model. And/or they need to be able to operate with practically no costs…

  • Cyrus Mavalwala

    This certainly rang true for us too.

    In the past we would purchase a Tor Star add and even tried some other online apt rental services…but it was Craigslist that worked.
    It’s free for almost all cities (I think there are a handful of cities they charge landlords – mostly to get rid of the spammers) and adding numerous pix helps us differentiate the property from others out there.

    As we receive a large number of great candidates every time, I see no reason to list an apt anywhere else.

  • Gary Marr

    I thought you supported those increased taxes…will we last longer than B5media?

  • Mark Evans

    Gary: The National Post is un-killable. :)