Newspapers counter competition from craigslist with free classified ad space

The Business Review (Albany) – by Pam Allen The Business Review

  •  Consumers are learning that Craigslist may be a good forum for inexpensive items, but is hit-or-miss for job searches and real estate sales, said Brian Steffens, executive director of the National Newspaper Association, a trade group representing 3,500 weeklies and small daily newspapers.

What these free Web sites have changed is the industry’s negative perception of personal ads. Personal advertising brings in about $1 million a year in sales.

“Until craigslist, newspapers shied away from personals because they were a bit too racy for them,” he said.

Craigslist and other online advertising services are hurting newspapers to some degree, said Kevin Kamen, owner ofKamen & Co. Group Services on Long Island, a print and digital media appraisal and brokerage firm.

Publishers used to earn 60 percent of their profits from classified ads, but now it’s only about 30 percent.

Online services aren’t solely to blame, though. The slowdown in the real estate market has also cut into classified revenue.

“A smart publisher whose classifieds are going down would enhance and upgrade their classified sales division and really put people to work to raid competitors as well as to seek advertisers out there,” Kamen said.

In an August 4, 2007, interview with Charlie Rose on PBS, craigslist founder Craig Newmark acknowledged the Web site is causing problems for the newspaper industry because it’s taking away classified ad revenue. But he maintained newspapers are hurt more by Wall Street investors pressuring companies to cut costs and earn bigger profits, which has resulted in newsroom layoffs.

“We do have an effect and it’s probably somehow significant,” Newmark said, “but it’s small compared to the profit margin thing.”