A couple of consultants from McKinsey and Co (the same people advising Rupert Murdoch on News Corp’s internet strategy) provided newspaper publishers with a reality check a couple of months back at the NAA conference:
Luis Ubinas and Jochen Heck warned that newspapers could lose $4 billion of “highly profitable” classified revenue by 2007 — or around 20% of newspapers’ 2004 classifieds revenue and just under 9% of the $46.6 billion in total newspaper ad revenue last year — if trends that afflict help-wanted classifieds spread to automotive and real-estate classifieds. Source: adage.com
For more than five years Craigslist has been nibbling away at the classified business in several major US cities. In San Francisco, for example, they have decimated the apartment for rent marketplace. In New York they are having the same effect.
Craigslist is now in Australia.
Then there’s the impact of eBay on general classifieds. And the many other lesser known advertising sites. Of course, in Australia, there’s tradingpost.com.au (part of Telstra).
Newspapers are responding will all manner of offers. These include price cutting and dramatically changing the offers by putting content online and in print.
The McKinsey experts talk about “price destruction” in when considering the impact of the internet on newspaper classified business. Advertising is falling and rates are falling as well.
One option newspapers have is to develop a unique value proposition built around local communities. In Australia, especially, publishers could embrace ‘local’ by partnering with their 4,600 newsagent retail and distribution outlets in a smarter and more valuable classified business.
This is only half an idea at present but it seems to me that newspaper publishers and newsagents share a challenge in terms of how to address the pressure of internet businesses like Craigslist. Craigslist is a one way model. It’s a website where people advertise free of charge. By harnessing newsagents into the mix, maybe as collect points or payment points or product display points newspaper publishers, in partnership with newsagents can offer a different form of advertising – a substantially better value proposition.
As I said, it’s half an idea at present. But, I suspect, an idea worth considering.
Newsagents and newspaper publishers need to be developing strategies which help them better compete against the likes of Craigslist. The offering could be put to consumers as safer and more reliable.
Beyond a publisher/newsagent offering, newsagents could also be part of an eBay drop off/pick up strategy.