by Barry Schaeffer

If there’s one area in which newspapers know they’re facing critical challenges, it’s the classified section. At most newspaper conventions these days, you hear about little else. That could be due to the fact that ad lineage, up to 40 percent of many newspapers’ revenues and even higher percentages of their profit, doesn’t have to drop much to make a big dent in the bottom line. It may also be due to the fact that, of all newspapers do, classified advertising is among the least protected by brand loyalty. Advertisers care only about reaching buyers, and readers care only about finding what they want quickly and easily. If either find it outside the traditional newspaper-based print model, they’ll go there in a heartbeat. Anyone doubting that fact need only remember the rise of the free "pennysaver" publications that debuted widely in Southern California in the early sixties and spread rapidly across the nation. Despite poor quality, spotty coverage and weekly distribution, these local ad papers grew like wildfire, taking a significant if non-lethal slice of both classified and display lineage from surrounding local and even large metropolitan papers. Their advantage; they were inexpensive to advertise in, offered a convenient 8½ by 11 format, and could be highly focused. Their economics allowed some publishers to actually give the small classifieds away just to build a platform for the display ads. Sound familiar?

There are lessons here that newspapers, having learned once, shouldn’t miss this time around.

First, classified advertising has belonged to newspapers not because they were anointed to provide it to the masses but because the newspaper medium has been the most effective and convenient way to link buyers and sellers. The minute it becomes less than this, newspapers’ classified franchise erodes. This can be seen in two phenomena at opposite ends of the classifieds spectrum. At one pole, a number of organizations including small newspaper chains have been remarkably successful in developing heavily-used online classified offerings, many developing innovative ways of working with local businesses and groups to expand and enhance the concept of classified advertising. The single most common denominator in these efforts is a tight focus on what local advertisers, buyers and interested groups wanted, coupled with a pragmatic but intense focus on providing it. Tiny Ebay, for example, an online auction site started as a project barely four years ago, currently lists 100,000 new items per day, $30 million in revenue, and a market valuation of over $8 billion. At the other pole are well healed but ponderous efforts that failed to make a dent. These giants, perhaps best represented by New Century Network, the ill-fated 1995 effort by 9 of the industry’s major players, often lack the spontaneity and agility to find what their designated users want and then provide it.

Second; users don’t care how much money is spent on an online classified site, or who is managing the effort. They want results and assess a site very quickly, voting up or down by whether they hit the "bookmark" button or complete the online user agreement form. This statement of the obvious still seems to elude many entrants into the online ad market. In preparing this column, for example, the writer actually found major daily newspaper classified sites that make the reader scroll through hundreds of single-column ads with little or no attempt to simplify or shorten the search. Other sites display category screens so complex that only the most computer literate and persistent can wade through them to find the area they’re seeking. A notable percentage of sites, even those with good content, lack an easy means of online ad submission and virtually all require a live call-back. With the technology easily available to do better, one must conclude that no one in these efforts thought about what users might actually want in an online service. Worse yet, executive management in these efforts may not have cared enough, about holding onto 40 percent of its revenues, to approve the modest investment, in people and tools, needed to do the online job right.

Third; since the demise of New Century Network, we have seen other cooperative ventures in the classified marketplace. The latest, Classified Ventures LLC, uses the money and clout of its corporate investors, Central Newspapers, Gannett, Knight Ridder, McClatchy, The New York Times, Times Mirror, Tribune and The Washington Post Companies, to develop and field nationwide auto, apartment and new home sites with perhaps more to come. The network has signed up 140 newspaper web sites to display its products and signed distribution agreements with AOL, Excite and USA Today. While apparently avoiding the missteps of its ill-fated predecessor, this effort (and others like it) may be a mixed blessing for the average newspaper.

To begin with, sites from Classified Ventures are reachable directly via their own URLs, so newspapers that sign up get no reliable protection for their own site traffic. Once you reach the combined site, it’s easy to modify the bookmark to return there directly, ignoring the newspaper whose site got you there. In such cases, the newspaper site is a highly visible cyberspace middleman. Then there is the specter of a new, rich competitor in a position to dictate to its affiliates as it builds its own revenues and brand loyalty. While owned jointly by newspaper companies, Classified Ventures, for example, has goals not perpetually guaranteed to be altruistic for newspapers outside its investors’ properties. While this situation isn’t necessarily a reason not to participate in national and regional ad networks, it suggests that each newspaper should make sure that it knows what its readers and advertisers want and can deliver it with resources at least partially under its direct control.

In the final analysis, newspaper classified sections offer a valuable service to their local areas. To remain successful, they must continue to do so. Against determined competition from other business sectors, newspapers’ best weapons are their close connection to the local community, their ability to field web sites that people want to visit for news as well as ads. As a number of newspapers have shown, success in this endeavor will, more than anything else, depend on a clear-headed approach to providing the most service with the least amount of complexity.