Newspaper Industry Suffers On Classifieds Decline

By Michael Dorausch, D.C.

A leading global rating agency reported this week with a negative outlook on the newspaper industry. The less than positive outlook was a result of poor profits in the area of classified advertising affecting print publications.

Fitch Ratings, a global rating agency, expects soft revenue and pressured profitability due to weaknesses in high-margin classifieds. According to Fitch, year-to-date (which is through July of 2007) operating performance for some of the largest newspapers has been weaker than the rating agency initially anticipated. As a result, the agency’s outlook for the newspaper industry remains negative.

According to the report, ad pages are down by as much as 17% at newspapers such as USA Today, with real estate classifieds in community newspapers down by 20%. Companies such as the Tribune are reportedly showing a decrease in classified advertising, with advertising in real estate and employment down by 24% and 19%, respectively.

Fitch Ratings primarily focuses its attention on real estate advertising trends, and according to the rating agency, real estate classified declines have been significant. Fitch notes that the average print newspaper generates about 30% of its revenues from classified advertising, with some larger papers generating more.

According to the report, Fitch believes that since many affected markets are also regions of high broadband penetration, it is likely that sellers, buyers and their agents will increasingly utilize the Internet to identify opportunities. It is anticipated that as participants gain comfort with online media they will be less likely to return to the print newspaper in the future. Fitch does expect some newspaper web sites to capture some of the shifting ad dollars that are moving online.

Performing a Google search for classifieds, we currently see Yahoo!, MySpace, The New York Times, and The Los Angeles Times, among the top players in natural search results. These web sites are likely gathering a significant number of new online users to their web-based classified ad systems, as people increasingly move away from the traditional print model.

print advertising versus online advertisingI find this particularly interesting as all of these major properties hold great potential in the areas of real estate advertising, automobile advertising, and employment advertising, on both the local and national level. While each of those industries are targeted vertically by a number of mega Web properties, “the big boys” (companies listed above) can certainly continue being heavy hitters in the ring.

Activity in online classifieds has been on a steady increase, and it has been found to be a significant source of increased traffic (as well as increased revenue) for sites like those mentioned above, and even for sites geared directly towards niche vertical markets, the Planet Chiropractic Classified Ad Network, being one example.

Using chiropractic advertising as a model, one can see that there is opportunity for growth in niche industries, not currently being dominated by the big players in online classified networks. Using a widget perspective, it becomes easy to recognize the similarities in industries such as orthopedic surgery, acupuncture, dentistry, plastic surgery, restaurant equipment supply, and others.

Applying the widget perspective to the industry of Chiropractic, we can better understand and recognize the opportunities that an online classified advertising model provides. It would be highly unlikely (and ineffective) for a local chiropractor to advertise equipment, such as x-ray film cassettes or chiropractic adjusting tables, in a traditional newspaper. Just as it would be unlikely for a local gynecologist to post a classified ad listing for an gynecological exam table, whether to be bought or sold. The same goes for equipment and services for industry segments such as breast augmentation, or the broader industry of cosmetic surgery.

Previous to the introduction of the Internet, advertising in vertical markets (healthcare as an example) would traditionally be most recognized on the back pages of professional journal publications and maybe a handful of industry print publications. However, the traditional model has always been wrought with limitations. A simple example is the case of advertising on the back pages of a professional journal. There is the limitation of waiting until publication, and the limitation of the publication only reaching a small segment of an already small industry (when compared to industries such as real estate, auto sales, or employment).

Just as major print news classifieds are being affected by participants moving online, and gaining comfort in those models, the same is happening in a number of niche vertical markets, that in the past funded much of their print publications distribution with paid classified advertising. If advertising is your industry, and you’re in print media, online media, or both, the cheese is moving. It’s a good idea for you to move on your industry (if you haven’t already), before all the cheese has gone elsewhere.

View the Fitch Ratings report for more specifics on print advertising numbers and visit the web site for more details about their services.

Fitch Ratings Source: Business Wire
About Fitch Ratings: Fitch Ratings, Dual-headquartered in New York and London, Fitch Ratings is a leading global rating agency committed to providing the world’s credit markets with independent, timely and prospective credit opinions.

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Dr. Michael Dorausch has managed a niche online classified ad network, focused on the industry of chiropractic, since 1999. Classified advertising is provided as a free service and it has offered tremendous opportunity for buyers, sellers, and agents involved in areas specific to chiropractors and chiropractic graduate students. Press and other industry professionals seeking to gain insight and knowledge as to what has worked, what is working, and what roadblocks may lie ahead, for vertical industries in the area of online classified advertising, may contact Michael at mail [AT] for more information. @ 11:54 am | Article ID: 1188500119