By: E&P Staff
Matthew Campbell, Jonathan Browning and Simon Thiel | Bloomberg
European publishers, rushing to develop ever glossier applications for Apple Inc.’s iPad, are turning to an old-fashioned prop for growth: the classified ad.
Hit by falling circulation as readers increasingly get their information from the Internet, publishers of newspapers and magazines are buying up online classified-ad sites, mostly for real estate, jobs and cars. The moves are aimed at regaining ground in an advertising market they once dominated and that has been taken over by websites where posts can be placed for free.
“The motivation to develop online classifieds is very strong,” said Alex DeGroote, a media analyst at Panmure Gordon in London. “Traditionally, classifieds were what supported the journalism.”
Germany’s Axel Springer AG, whose publications include “Bild” and “Die Welt,” and Norway’s Schibsted ASA, which puts out “Aftenposten” and “Dagens Medisin,” are among companies that have been on the prowl for such classified sites.
Schibsted in September bought control of French site leboncoin.fr, an online marketplace for cars, apartments and other sales, in a deal that valued it at about $540 million. Trinity Mirror in the U.K. last month took full control of Fish4, adding to its digital classified portfolio, which includes SmartNewHomes, SecsInTheCity and totallylegal.
Axel Springer offered $629 million for French property site SeLoger.com in September, or 25 times estimated 2011 earnings. Some shareholders, including Groupe Arnault, the investment company controlled by billionaire Bernard Arnault, have rejected the bid as too low. It is also investing in two sites in India.
‘More to Win’
“We use the reach we have established with the brands in order to establish strong classified ad platforms,” Axel Springer Chief Executive Officer Mathias Doepfner said at the Morgan Stanley Technology, Media & Telecommunications Conference in Barcelona yesterday. “Only six percent of traditional revenue came from classifieds. We have a lot more to win in the digital space than we have to lose in the print space.”
U.S. newspapers’ ad revenues plunged to $24.8 billion last year from $48.6 billion in 2000, according to the Newspaper Association of America. Classified ads have taken the worst hit of any ad category, declining 68 percent since Craigslist began rolling out its business nationwide in 2000.