Cover your ears, put on your helmet, duck behind your desk! It's time to blow up your failing classified advertising model.
In 2000, U.S. newspapers sold $8.7 billion worth of help wanted classified ads. The Newspaper Association of America estimates the 2010 total will be $723 million. That's a 92 percent decline.
Total classifieds, the NAA says, fell from $19.6 billion in 2000 to $5 billion in 2010.
During the last decade, newspapers lost three-quarters of their total classified advertising, and 92 percent of their help wanted revenue.
The Great Recession deserves a chunk of the blame, and the worst of the overall classified decline occurred sine 2006. Classified revenue fell 16.5 percent in 2007, 29.7 percent in 2008, 38.1 percent in 2009, and an estimated 8.6 percent in 2010.
Can the newspaper industry afford to have a strategy that amounts to this: "Once the economy rebounds, business will get back to normal?"
No.
Despite this evidence, many newspapers continue with their own business model - complicated print rates dictate, and online is a combination or up-sell. Some still sell based on agate-line rates, complicated pickup packages, and worry if they should change from a six-column to a nine-column format. Should we use seven-point or eight-point type or nine-point type? How about serif or san serif?
In the digital age, this is all nonsense.
In many markets - the NAA statistics support this claim - newspapers have "lost" the classified franchise. Yet the old way of doing things lingers at many newspaper companies.
In June 2004, I wrote this: "I think newspapers biggest challenge in the next decade will be culture. Too many newspaper executives try too hard to use online to defend print revenues. That often makes newspapers too slow to respond to changing technology and customer demand."
At that time, Craigslist was operating in fewer than 35 U.S. markets. Today, Craigslist - with a staff of just 28 people -- is in hundreds of markets, serving over 20 billion page views a month - the seventh most-visited web site in the United States. The company reports receiving some 80 million new classified ads each week, most posted for free.
It is very difficult to compete with free.
But, not impossible.
Here's what I think newspapers should do (with modifications on a market-by-market basis, as needed):
1. Allow self-service customers to post free classifieds ads in almost every category on the newspaper's online edition.
2. Aggregate free classifieds with other newspapers, possibly through press associations, or group ownership, or both. Allow syndication of these free ads to anyone who wants them - Oodle, Wal-mart, Realtors, employers, etc.
3. Offer all kinds of up-sells: from featured ads with attention getters, to print, to online calendars, to Top Ads, to social media pages, to pay-per-click search engines, job boards, and other specialty advertising services.
The cost of this should not be high. It doesn't cost the newspapers more to post online classifieds - unlike ink-on-paper products that consume costly newsprint.
Self-service ad entry is essential - that's how Craigslist keeps its staff small and its costs low. (Most newspapers will have some expense, because they probably will want to screen ads before they are posted. As an alternative, a "report abuse" system could be used for ads posted to the Web without pre-approval.)
This proposed model will help newspapers re-establish themselves as local classified marketplaces. Once they do that, they will be able to charge significant amounts for certain classifications of ads (such as employment and real estate - as does Craigslist).
For the last decade, technology and online startups have been able to disrupt the historically lucrative newspaper classified business.
Many newspapers now have lost the classified franchise. That loss allows them the freedom to turn the tables - they now can be the disruptors.
What have you got to lose? On a more positive note --what do you have to gain?
