By: Jennifer Saba Though still in the early stages, Google's entry into the classified market could seriously impact newspapers, said a report from Banc of America Securities released Tuesday evening.
Google confirmed Tuesday that it's testing Google Base, a database that will include classifieds supported by keyword advertising.
"If Google offers the service for free, the sole revenue stream will be derived from keyword advertising and it will likely take share from other players, compressing growth rates," said the note.
The research firm estimates the total classified category represents $19 billion with newspapers generating $17 billion in annual classified revenue in 2005. In print, auto represents 30% of classifieds. The Internet has the greatest impact on recruitment advertising, which represents 23% of all help wanted revenues. Online real estate and auto revenues represent roughly 10%.
Internet classifieds are expected to generate $2 billion in 2005 with recruitment advertising accounting for half of that amount.
Banc of America points out that it will take some time for Google Base to have "more than a psychological impact." However, analysts note that every 1% share of classifieds or combination of keyword related revenues would be the equivalent to $190 million.
The research firm maintained its "neutral" rating on Google.
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