Classified advertising is the canary in the mineshaft for newspapers — and it has flopped over

By Mick Gregory

Help wanted and automotive classified advertising have been the core revenue category for daily newspapers. But the bottom has fallen out because of competition from the much more customer-centric and well-read Web portals. Craigslist.org, Ebay.com, Yahoo and Google have taken the lion’s share of revenue and listings in just five years. The classified gold mines newspapers created and held on to “mining rights” for nearly a century have played out.

One of the hidden, but major differences in operations between the Web and newspapers is interaction with the customer. With Internet sites, the customers — “advertisers” in newspaper lingo — do the classified ad writing, placement and coordination. At newspapers, a huge staff of “account executives” perform that process. But that is about to change.

AdStar Inc., provider of e-commerce software and services for advertisers and publishers, is supplying its E-commerce Platform and Web-based Ad Sales software solutions to MediaNews Group (the new media privately held company that specializes in “fire sale” newspapers.

AdStar’s approach enables advertisers to create, schedule and pay for one or more ad listings from a single application for print and Web-based publications. Most MediaNews papers converted last year to AdStar Web-based software as have several Hearst publications.

AdStar calls the latest version of its application “much more Web-centric and assumes a strong Internet bias on the part of the online consumer coming to newspapers’ online brands.” Simple Internet packaging and pricing (Good/Better/Best) replaces representations made by newspaper account executives of complex print classified packaging and shown on many newspaper Web sites. They often need explaining and the customers are a lot more savvy today.

The purpose of enterprise software such as AdStar is to make it easier for customers to automatically place their own classified ads. The big savings will come from old media downsizing their labor intensive classified and inside retail sales staffs and offshoreing the remaining human element to Mumbai or Manila for a 24/7 service.

One dirty little secret that has been hidden from newspaper classified advertisers is that the readership of the paid advertising is often higher than the shallow, formula written stories by their editorial departments. Hard to believe? It’s true. The ads are interesting, useful content. Craigslist knows that.

So newsrooms with head counts that would have even caught the attention Enron executives for budget cuts, remain bloated. The LA Times has some 950 editorial staff. The New York Times carries even more. What are the stockholders thinking?

Editorial enterprise solutions…

(I’m guessing that’s what the software companies will call it).

The next step will be copyediting Web-based systems. They are already in place at Hearst and some MediaNews Group papers. Though, right now, the only labor saving effieciencies comes from stories from sister papers. In the near future, popular stories can be placed in multiple regions for both print and Web publications within seconds. And copy editors for the entire chain of papers and Web sites can be in one central location, today San Ramon, tomorrow Mumbai.

The elitist editorial departments haven’t bothered to check the health of their canaries lately. It’s over and the fat canary isn’t singing.

As newspapers seek to cut costs in the face of sagging circulation and advertising pressures, some have started to ship jobs overseas to places like India. “More than two years ago, Reuters, the financial news service, opened a new center in Bangalore,” reports Doreen Carvajal. “The 340 employees, including an editorial team of 13 local journalists, was deployed to write about corporate earnings and broker research on U.S. companies. Since then, the Reuters staff at the center has grown to about 1,600, with 100 journalists working on U.S. stories.” Other publications are using the services of Hi-Tech Export, an Indian company with some 700 employees that offers proofreading, copy-editing and writing services to companies in the United States, France and Britain.

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4 thoughts on “Classified advertising is the canary in the mineshaft for newspapers — and it has flopped over

  1. I hope that charting the demise of the MSM gives you as much pleasure as it does to moi reading about it.

    Keep up the good work – appart from it’s immediate value – what a historical record!

    Mercie, Vimto. You’re toons describe American politics much better than anything in the mainstream media in America, and you are an Britt!

  2. I do enjoy “teaching” journalists a few lessons in economics and MBA-style case studies on their business operations. They are so oblivious, and arrogant it is funny. And when they get their pink slips or chump change “buyouts,” you know they will blame Bush. LOL.

  3. I, for one, am waiting to see what several thousand “media elites” will do when they are suddenly unemployed. They can’t all become college professors and web designers. After they are done blaming Bush will a Blue Ribbon panel of congressmen decide that a new set of laws need to be passed to protect the jobs of people who are not needed but are friendly to the cause of misinformation?
    And how will these liberal media giants respond to laws that actually tell THEM what to do and how to do it? When Bush is finally out of the White House the only unifying force holding liberalism in America together will be gone. There will be no strong leader out there for them to rally behind. The Clintons will never let B. Hussein Obama get more than 15 minutes of fame and Hillary is most certainly NOT a unifying force in any party.
    The silent fracturing of liberal solidarity is beginning, and it is being chronicled right here by you Mick. Great job!

  4. Mike! news in the UK overshaddowed by other bigger news is the selling off of the (I think it is) group tha owns the Mirror and about 90 other papers all failing to thrive. (quote: the nespaper industry has gangrene) I’m in a rush now (9 hours driving to London & backand now out to bible study). but will google it later if you haven’t. Apparently no-one wants to buy the gruop.

    They are fallling like flies.

    Thanks for the tip Vimto! I like that, gangrene, we have to amputate.

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