New daily won’t find comfort in classifieds

The recent merger of Honolulu’s two daily newspapers may be irrelevant when it comes to the future of classified advertising. Those making decisions on how to sell cars and houses or find employees have been shifting to online advertising models for the past decade.
Classified advertising used to be one of the big revenue generators for U.S. newspapers, bringing in $19.6 billion to the industry 10 years ago.

That number dropped 68 percent by 2009, when total classified ad revenue was just $6.2 billion, according to the Newspaper Association of America. Gannett Co., which sold The Honolulu Advertiser to Honolulu Star-Bulletin owner Oahu Publications Inc. last month, reported its revenue from U.S. classified advertising for the first quarter of this year was down 7.9 percent from the same quarter in 2009.

Although similar figures are not available for the Honolulu market, anecdotal evidence points to a similar trend, especially for employment classifieds “” once the main source for connecting job seekers and employers.

And with the Honolulu Star-Advertiser taking the place of the two former daily newspapers, it remains to be seen what the future of classified advertising holds for the state’s largest media company.

Star-Advertiser Publisher Dennis Francis said that although the amount of classified revenue has decreased over the years, the NAA figures don’t reflect what’s happened in Hawaii.
“Clearly, it’s isolated,” Francis said of the state. “It doesn’t have the same market components that a Mainland market would, where you would have multiple markets.”
Nationally, revenue from the employment sector of classified advertising has fallen nearly every year since 2000, and was down 91 percent between then and 2009, from $8.7 billion in revenue to $787 million in 2009, according to the NAA.

That fall mainly can be attributed to online job sites such as CareerBuilder.com, which is partially owned by Gannett, and Monster.com, as well as dozens of free online job boards, including Craigslist, which have sucked employment classifieds from print during the past 10 years.

For example, years ago, the human resources and staffing company Altres used to spend “well into the six figures every year running classifieds,” said David Bower, director of business development.

“In years past, sometimes you would open up the paper and it looked like Altres measles because our red ads would be all over eight pages of ads,” he said.

But about three years ago, when the mortgage crisis first hit and the economy was about to turn, Altres began doing more recruiting electronically, he said. Now, it’s a practical decision, when the firm sees the number of applicants it receives from free job boards on the Internet versus newspaper classifieds.

“I think regardless of whether there’s one or two daily papers, the biggest change is going to happen “” people can recruit online for nothing; they don’t have to spend money on recruitment,” Bower said.

The Internet also has siphoned classified revenue away from print for real estate, one of the three pillars of classifieds, along with employment and automotive advertising. Nationally, real estate classified revenue fell 55 percent from $3.1 billion in 2000 to $1.4 billion in 2009, according to the NAA.

Locally, the largest residential real estate firm in Hawaii, Coldwell Banker Pacific Properties, in recent years has shifted most of its marketing budget from classified ads in the newspaper to online and radio ads after determining the calls received from print ads were “extremely low,” President Chason Ishii has said.

Prudential Locations still uses classified ads, but also has shifted more of its marketing budget to online through its own website, and through search engine optimization and pay-per-click advertising, such as buying key words that relate to real estate, said Tracy Beh- ler, executive vice president of client relationship development.

“We’re firm believers in the use of the Internet, and that’s the direction where it’s going,” she said. “We’re doing a lot more than we used to and getting better at it.”

However, Realtors still use newspaper classifieds to hit a target market, said Berton Hamamoto, president and principal broker of Aiea-based Property Profiles.
“There’s still a presence there, you kind of have to look at your demographic,” he said. “The older generation, the veterans’ generation, they’re not necessarily the Internet-savvy consumer, and they still receive their news from the paper, whereas the younger generation, they may not even subscribe to the paper.”

Automotive advertising, which nationally fell 73 percent from $5 billion in 2000 to $1.35 billion in 2009, according to the NAA, has been down during the past year in Hawaii. But that may have been more of a reflection of a drop in sales due to the recession than a change in strategy.

“… A lot is going online but that doesn’t mean newspaper [advertising] doesn’t have a place in the mix of things,” said Nick Cutter, president and chief executive officer of Cutter Management Co., which owns Ford, Isuzu, Volkswagen, Mitsubishi, Mazda, Chrysler, Dodge, Jeep, Chevrolet and GMC dealerships on Oahu. “Right now we do a little less [advertising] based on the economy and car sales in general.”

However, in terms of a percentage, the Cutter dealerships probably do a little less with newspapers because they are doing more online, he said.
“Right now, I don’t think anybody knows the actual answer as to which media is the best draw for car sales, whether its radio, TV, print or online,” Cutter said.

But the answer appears to be clearer for employment ads, which 10 years ago brought in the most revenue and have since suffered the greatest decline.

“Those numbers bear out what I’m seeing with my clients,” said Beth Busch, president of Success Advertising Hawaii, which exclusively handles employment and recruitment ads, mostly classifieds, and also sponsors local job fairs that draw hundreds of employers. “That doesn’t mean they’re not spending money with me “” they’re just not spending it on print.”
One factor that may affect where ad dollars go is any increase in classified ad rates at the Star-Advertiser.

Francis told PBN that classified rates haven’t changed; but some advertisers say they have been told of increases of 40 percent to 60 percent, compared to the former Advertiser’s rates, that will take effect in July.

And online ads on CareerBuilder, which were packaged with the Advertiser’s rates, are no longer included since Gannett left the market. The Star-Advertiser has a relationship with Monster.com, which will be packaged with employment classifieds “in most cases,” Francis said.

Busch noted that while Monster has a “great product, … they have a small presence in the islands right now.”

“Gannett spent years building the CareerBuilder brand here, and they’re the clear market leader,” she said in an e-mail to PBN. “It will take some time and money to change that.”
But other companies won’t wait for that to happen, especially when they figure they don’t have to spend “an arm and a leg to recruit, that online tools make it a lot more cost-effective,” Altres’ Bower said.

“I think it’s an outmoded way of looking for a job,” Bower said of newspaper classifieds. “There will always be a segment of the population that’s not active online, and businesses will need to decide if that’s a segment they need to address.”

June 25, 2010
source: pacific.bizjournals.com