Sunday, July 24, 2005

Newspapers are scrambling to adjust their classified advertising to grab the attention of the 18- to 34-year-olds whom advertisers crave.

Younger consumers especially are turning to the Internet instead of the local paper to find an apartment, new roommates, a used car or dating services.

Papers, which relied on print classifieds for more than 35 percent of their revenue in 2004, are seeing the ads diminish.

Free online competitors such as have “destroyed” as much as 75 percent of classified ad pricing by forcing down rates, said London-based management consulting firm McKinsey & Co.

“Something like 54 to 57 percent of households have broadband high-speed Internet, changing customer behavior. It’s diminishing their use of traditional media, draining eyeballs and revenue from newspapers. There’s a range of things [customers] are able to do online. It’s a much richer experience,” said Greg Sterling, analyst for the Kelsey Group, a Princeton, N.J., firm that conducts strategic research and analysis on media options.

Newspapers are rushing to compete, buying online businesses they hope will connect Internet-savvy, newsprint-averse readers to their advertisers, said Rob Runett, director of electronic media communications at the Newspaper Association of America, a trade group in Vienna, Va.

“All major media are trying to understand what ways they can use to address this [interconnectivity], what the competition is doing and what they have to do to compete,” Mr. Runett said.

Belo Corp., Gannett Co. Inc., Knight Ridder Inc., the McClatchy Co., Tribune Co. and The Washington Post Co. have formed Classified Ventures LLC of Chicago to take advantage of revenue growth in online automobile, apartment and real estate classifieds.

Tribune, Knight Ridder Digital and Gannett, which co-owned job service, recently purchased of Chicago, which allows online research of local store specials. They also bought 75 percent of Palo Alto, Calif., news aggregator

Dow Jones, publisher of the Wall Street Journal, bought San Francisco’s; the New York Times Co. acquired of New York, which links users to real human specialists; and E.W. Scripps bought Los Angeles-based shopping search engine Shopzilla Inc.

But analyses by online newspaper guru Steve Outing shows no consensus on what online advertising strategy to use. Mr. Outing writes for Editor & Publisher magazine of New York, which covers the newspaper publishing industry, and the Poynter Institute, an education resource for journalists in St. Petersburg, Fla.

Online newspaper classifieds generated $1.5 billion in 2004, less than half of the $3.9 billion brought in by all online media and only 3 percent of the newspapers’ total revenue.

The papers must compete not just with free or inexpensive online listings provided by Craigslist, based in San Francisco, and EBay of San Jose, Calif., but with powerful new search engines that collect, or “scrape,” online listings from various sources and then sort and select them according to a user’s specifications., of San Mateo, Calif., is one such search engine. It does not take listings itself, but it lets users make efficient use of online listings from newspaper sites, Craigslist and elsewhere., which moved into the Washington area at the end of June, allows users to define their search and how far they are willing to travel, even request an “alert” when an appropriate ad is posted.

When a user clicks on the Oodle listing, he is passed back to the original online ad.

For example, Mark Gaines wanted a desk, but the Alexandria resident was frustrated by the cost of new desks and did not want to trek to Gaithersburg during rush hour to look at one. Oodle helped him find a desk nearby by searching for ads on Craigslist within the area he prescribed. The ad had a photo, and soon Mr. Gaines had a desk.

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