By: Steve Outing Classified advertising is essentially local, which has of course been the advantage of newspapers for so many years. Yet some would suggest that national companies can come in to local markets and do well in the classifieds space. Already, Internet companies like Yahoo! and Classified2000 are giving local newspapers a scare by giving consumers in local markets viable classifieds services that in some cases are larger than what newspaper Web sites offer, providing a critical mass of local-market ads.
In some cases, the consumer is faced with a choice between searching at several small newspaper sites to find a particular product they seek, or a single national site like Classifieds2000 that offers as many local-market ads as multiple newspaper sites. The path of least resistance for the consumer is to visit the single site that offers everything. Ergo, newspapers have a problem.
The competitive answer, of course, is that newspapers must aggregate their classified ads in order to fend off the Classifieds2000's of the world, says Diana Kramer, executive director of the Washington Newspaper Publishers Association. Late last month, WNPA's board of directors voted (unanimously) to fund development of a Web site devoted to aggregating classified advertising of all newspaper Web sites in Washington state and surrounding areas of the Pacific Northwest. WNPA sees this as the best way to address growing competition from Yahoo!, Classifieds2000, America Online and Microsoft.
Recognizing that it must move quickly, WNPA has set a tight deadline on getting a service up and running; Kramer hopes to launch the site by October 1. The service, to be called Northwest-Classifieds.com, will be operated using technology from an as yet unchosen vendor. Six companies were invited to submit bids, and three finalists have been chosen: Electric Classifieds Inc., AdQuest, and International Newspaper Network. A final decision is expected shortly.
Everyone's welcome
WNPA is primarily an association serving smaller weekly newspapers; of its 117 members, only two are dailies. Yet WNPA sees itself as the logical organization to pull off an Internet classifieds service because the principal state association for daily papers, Allied Daily Newspapers of Washington, is primarily a lobbying group. Kramer recently toured Washington and parts of Oregon and Idaho to lobby publishers on the proposed service, and she says she found strong support among publishers of all size newspapers. Northwest-Classifieds.com will be open to all papers, not just WNPA members. (At this writing, however, the service remains in the planning stages and no papers have signed contracts to participate yet.)
Kramer thinks the local-newspaper advantage can work, and that regional newspapers must band together better to effectively battle the cyber competition. One of the reasons the newspaper consortium New Century Network didn't fly, she suggests, was its national scope. (NCN didn't get into the classifieds space before its nine media company owners decided to shut it down earlier this year, but many observers felt that an aggregated newspapers classifieds play should have been a high priority.) Even Classified Ventures, another newspaper company online classifieds collaborative venture involving some of the same companies that founded NCN, may have trouble because it is focusing too much on larger papers. Classified Ventures might come into Washington and pick up the Seattle dailies, but unless it also picked up every small paper in the state as well, it won't offer as effective of a service to consumers as can a WNPA classified site, Kramer says.
The best approach may be to create a site that takes all the newspaper ads from a region and aggregates them into a single database. Consumers want the most ads and the best ads in a single place, and that can best be accomplished by getting newspapers large and small to participate in regional online classifieds networks, Kramer says. Newspaper ads continue to be perceived as of higher "quality" than free classifieds offered by Yahoo! and Classifieds2000, but if consumers must go off in search of individual newspaper sites that offer less quantity, increasingly they'll learn to use online competitors' sites.
Kramer says many small newspapers in the Pacific Northwest already have their classifieds online, so she doesn't anticipate a great deal of trouble in enabling them to contribute their ads to the WNPA service. A good number of regional papers already participate in national classifieds services like Classifieds Warehouse (formerly AdOne) or AdQuest. While Northwest-Classifieds.com might obviate the need for some papers to participate in such ventures, Kramer says that there's no need for them to drop those services if they are earning money for the newspapers. The more venues that newspaper classifieds turn up in online, the better.
Participating newspapers are most likely to follow the traditional "upsell" model to pay for participating in the new service, raising the price of their print classified ads to reflect the additional value that advertisers get by their ads being included on Northwest-Classifieds.com. The service will charge a fee per ad to publishers, with pricing depending on the quantity of ads placed on the site. A small paper with only 100 ads a day would pay more per ad than a large publisher with 2,000 daily ads. Non-WNPA members also will have to pay an initiation fee when they join the service.
Revenues produced by the service will be used for operational costs, of course, with the balance going toward an aggressive marketing campaign to make consumers aware of the service. Kramer says that because the service is being operated by an association instead of a commercial entity (like NCN) or a vendor (like AdOne), "we'll do it without spending millions of dollars." Because a vendor will provide the technology component, she expects to hire a single person to run Northwest-Classifieds.com in concert with WNPA staff.
Beyond repurposing
The service needs to do more than aggregate print liner ads in a central database, and discussions are ongoing about how to incorporate online-only ads into the mix or allow consumers to place ads into print and online from the central Web site. It might be possible, Kramer says, for the site to allow a consumer to place an online only ad and then participating publishers split that revenue, for example. But while that's a no-brainer approach for online-only classifieds companies, such a suggestion strikes fear into some newspaper publishers. "We do recognize the importance (for newspapers) to reinvent ourselves," says Kramer, "and that terrifies some people" in the newspaper business. But it must be done to compete in a digital future.
Along the same lines, the service will need to incorporate features that allow advertisers to offer more content online than in print. Kramer envisions giving publishers the ability to offer combination print-online ads where the online ad could contain additional content and features -- e.g., the online component of a garage sale ad could list all the items for sale and include a map locating the sale location. These are most likely to be phase two features of Northwest-Classifieds.com.
What WNPA envisions will be the first statewide classifieds aggregation service created by a state newspaper association in the U.S. Kramer says that an association in many ways is an ideal vehicle for facilitating the cooperation among otherwise competitive publishers. A publisher who competes fiercely with a cross-town paper would likely never agree to combine his classifieds with the competitor in a joint commercial venture, Kramer says, but they will work together under the neutral association umbrella.
"We can put up the tent and invite everyone inside as equals," she says.
The concept behind Northwest-Classifieds.com was fine tuned partly by fellow members of Kramer's executive MBA course at the University of Washington, who took on the project's blueprint as a class study project.
Contact: Diane Kramer, wnpa@aol.com
Steve
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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at:steve@planetarynews.com
The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company
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