From INSIDE CLASSIFIED, April 2002
The growing crisis: Unprofitable online sites may cost newspapers their classified franchises
Most print and online products are delivering too little, too late to capture disappearing lineage
By Alan Jacobson, Brass Tacks Design
Think back four years - long before the dot-com bubble bust. Everyone was saying that newspaper Web site profitability was just around the corner. Turned out the corner was a long way off. Today, profitable newspaper Web sites are few and far between.
Of course you knew all that. What you didn't know was that these unsuccessful sites may cost newspapers their classified franchises.
I'll tell you why in a moment. But first, let's make one more trip back to 1998 – to an article for the Society for News Design in which I predicted the migration of print classified lineage to online sites. Back then I saw a newspaper's site as the lifeboat for its classified franchise - in a perfect world, ads that no longer appeared in the print would show up online.
But we don't live in a perfect world.
Last summer my company gathered research showing my prediction had come true for one of our clients, but with dire consequences. We found that HR directors responsible for placing employment advertising were no longer buying newspaper ads for many higher-income jobs. Instead, they were placing their ads online.
Unfortunately for our client, these HR directors were not placing their ads with our client's co-branded site. Nor were they using a national aggregator like Monster.com. Instead, they were using a local competitor. Why? Because the competition had designed a site that was easier to use. As a result, the newspaper had lost this category of business in print and failed to capture it with their online product.
When I related this story to another newspaper client who manages online classifieds, she told me of the same fate befalling a major, East Coast newspaper.
But you don't need focus groups to tell you what's happened over the last few years. Check out these disturbing statistics Bruce Annan reported in the Feb. 2002 issue of API's NewsFuture Newsletter from a study prepared by International Demographics, Inc., a Texas company with 1,700 media and agency customers:
11.7 percent of respondents said they read newspaper classifieds in 2000, compared with 13.2 percent in 1998. That shows a drop of 11 percent for newspaper classifieds in the 67 metro markets surveyed. The survey also found that more than 25 percent of those who regularly read employment ads do so on the Web.
It's pretty obvious the newspaper's employment/recruitment classified advertising is under siege. Says Bob Jordan, co-chairman of The Media Audit: “The alternative press, shoppers, city and regional publications have been nibbling away at the newspaper classified market for several years, But now the Internet employment sites are rapidly capturing significant market share also.”
What the numbers show, Jordan believes, is that the newspaper industry which invented the classified ad business and owned it for decades has now lost 25 percent of its recruitment advertising audience.
The data illuminates several points applicable to virtually all newspapers:
• Classified lineage is migrating to online sites.
• Co-branding of print and online classified is not enough to prevent the loss of classified ad revenue to online competitors.
• National aggregators of classifieds do not have a lock on the classified market.
• User-friendliness may be more important to customers than branding.
What can we do to protect the classified franchise? Let's begin with four general strategies before I offer some specific tactics:
1. Smell what's cooking.
Household penetration of Internet access now exceeds newspaper readership. And it's going to continue to grow, especially as barriers are overcome and the advantages of online become more apparent.
Two old barriers (access and bandwidth) are already falling. The FCC recently reported that penetration of household broadband access has increased 250% in the past 18 months. And in January, the Wall Street Journal's front page described the Bush Administration's support for boosting broadband as part of the economic stimulus package.
Now that most households have Internet access and an increasing number have broadband, the advantages of classified advertising delivered via the Internet will become more and more apparent in three important verticals - employment, automotive and real estate - and in how we sell classifieds.
In employment: The Internet's global access provides a distinct advantage over print. Employment listings limited to a newspaper's circulation area are not likely to meet all needs because jobseekers are willing to relocate and employers are willing to relocate candidates. Along with richer content, online provides keyword searches that are easier to use than print.
In automotive: The Internet's virtually unlimited "space" allows for vivid, full-color photos of all listings at almost no cost to the provider. This is likely to become the norm as more people acquire inexpensive digital cameras and upload photos for posting online.
In real estate: The Internet offers three-dimensional, virtual tours of homes and high-end products - a service newspapers will never provide. As broadband becomes pervasive, more customers will collect information about potential purchases using the Internet's media-rich environment.
In how we sell classifieds: Most newspaper sites do not allow users to order and pay for their classified ads online. But “a recent study found that ads placed directly online by advertisers averaged 5% to 38% more revenue than ads placed by phone. One newspaper reported $500,000 in revenues from classified ads placed online that executives believe they would not receive without their online system.” This report was quoted in the Feb. 21 issue of Editor & Publisher.
2. Change our approach.
In the face of these obvious threats to newspaper classified lineage, it's surprising more newspaper companies aren't acting aggressively to protect their classified franchises. Unfortunately, I believe the analogy to the now-defunct railroads is all too true. Railroads thought they were in the choo-choo train business instead of the transportation business. Many newspapers act as if they're in the printing business instead of the information business.
That needs to change. The distinction between print and online classified is artificial. Newspaper companies should consider classified to be a single franchise that they distribute two ways.
Some are slowly coming around to this philosophy. At The Hartford Courant, Classified Advertising Director Nancy Stimac oversees both print and online advertising. And recently, Knight Ridder named Thomas Mohr to the newly created position of corporate director of classified to coordinate the company's initiatives in print and online. But consolidation of authority for the classified franchise has yet to become the norm.
According to Editor & Publisher, here's what Steve Rossi, president of Knight Ridder's newspaper division, said newspapers should be doing:
“The fact that there is not a proven business model for newspaper Web sites is no excuse for hoarding capital - intellectual and monetary - while waiting for one to magically appear. What's more important is gaining the dominant position in digital media for our brands - in the way that Yahoo! and eBay did during the Internet's Round 1, and newspaper companies did not. Research is what's important in digital media today, not misguided short-term runs at profit.”
3. Be more friendly.
To preserve your franchise, redesign your print classifieds to make them easier to read and easier to use - mitigating two common complaints about print classified.
At Brass Tacks Design we're currently working on our fourth classified redesign. Each prototype we developed produced positive test results in focus groups. In addition to improving the print product, all these redesigns boosted promotion of our clients' online classifieds and advanced co-branding of print and online. (For details, visit brasstacksdesign.com or see the November 2001 issue of Inside Classified from MacDonald Classified Services).
A thoughtful redesign should help you shore up your position in print. But print classifieds cannot compete with these advantages of online classifieds:
Timeliness: Ads can be posted and read sooner than the daily paper.
Keyword searching: No need to rifle through pages.
Broader searches: Online sites can provide access to national listings of cars, jobs and homes.
Value-added content: Online mortgage calculators, neighborhood profiles and auto reviews help users make informed buying decisions.
Legibility: Online text can be enlarged to make it easier to read.
Convenience: Online sites can accept ads directly; print cannot.
So newspapers should continue to support their position in print while they advance their position online.
4. Leverage the brand.
The best promotional tool a newspaper's print and online classifieds have is each other. But many newspaper online sites do not share a name with the newspaper, even though it's essential for the two to cross-promote.
The “separate name” strategy was conceived years ago when it was believed that a newspaper's online site could be tarnished by direct association with a horse-and-buggy medium like the newspaper. As a result, many online sites do not benefit from the power of the newspaper's brand. This weakness can be overcome by promotion, but this effort must be continuous and never-ending because new readers and newcomers will not intuitively connect the newspaper with its online site.
In testing conducted for a client, we found that customers did not make the connection between the newspaper and the newspaper's online site, despite the fact that the newspaper had promoted this relationship. In this particular case, the newspaper and its online site possessed completely different names, which I believe was the root cause of the limited brand awareness.
Research has shown that newspapers are the most effective means of promoting the newspaper's online site, so the newspaper provides best opportunity to inform customers about the advantages of online classified.
The main classified banner in print should tout the advantages of online classifieds. The messages can be generic (online is faster than print) and/or vertical specific (online real estate and online auto allow you to calculate monthly payments while you shop.) This effort is likely to be more effective if the print and online classified share a common name - even if that name is different from the newspaper and the rest of the online site.
The power of a newspaper's brand will bring readers to the site initially. But users will not revisit a newspaper's co-branded site if a competitor's site is easier to use. So newspapers need to improve their sites to keep people coming back.
What's wrong with newspaper Web sites, and what you can do about it.
Online classifieds are just the tip of the iceberg. Here's what's wrong with newspaper Web sites in general (other than the fact that most aren't profitable):
• They all seem the same. Take the banner off the top and it's difficult to tell one from another. As a result, most newspaper Web sites share the same bland personality.
• They're dull. By presenting each day's news in a static, predictable format that fails to live up the variety of each day's events, they don't compare favorably to their big brothers in print. Ironically, newspaper front pages vary more to match the tenor of the news than newspaper Web site home pages.
• They're confusing. Newspaper Web sites rarely match the visual appeal and ease-of-use of print because they make limited use of imagery, are often cluttered and lack a consistent organizational system from page to page.
• They don't consider the user. By promoting what the newspaper has to offer rather than the content the user seeks, newspaper Web sites show little concern for the wants and needs of customers.
• They provide too much of a useless thing. With too many links on every page, they offer enough to make a reader cry "Uncle."
Here's what Steve Yelvington, Vice President of Web site development for Morris Digital Works, wrote in the December issue of API's NewsFuture:
“News homepages are getting bigger, longer, heavier, more laden with options and choices and voices all clamoring for our precious attention. I counted the links on some newspaper homepages the other day. Here's what he found:
244 Miami Herald
243 Chicago Tribune
211 N.Y. Times
207 L.A. Times
183 Star Tribune
181 Detroit News
180 Florida Times-Union
170 Washington Post
109 ABC News
"Whew! Does the reader really need to have that many choices? The eye and brain can't easily process clusters of more than seven choices, according to research in cognitive psychology that pre-dates the Web by decades. Every word, every link we add takes away from the prominence of every other. When everything's important, nothing's important.”
Here are some general changes I would make at newspaper Web sites:
• Reconsider the name if it doesn't leverage the name of the newspaper. This will tell readers - especially new ones - that your Web site embodies the same values of your newspaper.
• Create a new design for the site based on the wants and needs of visitors. It should be visually appealing, easy to use and flexible enough to reflect the news on a daily basis.
• Give online classifieds a more prominent presence on the home page and tout their advantages. I can't predict whether display or classified will ultimately generate more online revenue, but I'm confident that online classified is the only way to capture the revenue which is likely to disappear from print.
• Follow Steve Rossi's advice and invest more capital - intellectual and monetary - in newspaper online operations to gain the dominant position in digital media.
Here are some specific changes I would make to online classifieds:
• Redesign all classified categories so that they share a common, easy-to-use interface.
• Allow users to place ads online.
• Improve the content by offering national searches in employment, color photos in automotive and virtual tours in real estate.
Ultimately, the goal should be to make the local newspaper's online classifieds the only site anyone in the paper's market needs to visit.
Alan Jacobson leads Brass Tacks Design, which provides marketing, editorial, design and technical support to newspapers worldwide. Clients include The New York Times, the Washington Post Company, Knight-Ridder, Tribune, Gannett, Hearst and Newhouse. Recent projects include redesigns for The St. Louis Post-Dispatch, The Hartford Courant and InfiNet (www.infi.net); Current projects include redesigns for The Union-News and Sunday Republican in Springfield, Mass. and the Sunday News and New Era in Lancaster, Pa.
Alan can be reached at email@example.com or via Brass Tacks' Web site http://www.brasstacksdesign.com
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