By: E&P Staff Online revenue has become the Botox of the newspaper industry, "adding a healthy glow to print classified revenues," said Borrell Associates Inc. of Portsmouth, Va. The consulting firm sees strong growth for local Internet advertising through year-end.
"The largest holder of local online ad share -- daily newspapers -- saw their ad revenues grow 43% in the first six months of 2004," Borrell wrote to clients in a memo this week. The group estimated that newspaper Web operations will capture $1.14 billion this year, up from $811 million in 2003 -- much of that revenue coming from classifieds.
"Daily newspapers are still over-dependent on the 'Big Three' classified verticals of real estate, automotive and recruitment, but their growth in these areas means they're not about to relinquish any more ground to Monster.com, Realtor.com, Autotrader or any other classified vertical operators," the memo said.
Borrell noted that other companies tapping the local ad stream are faring even better. Google's revenue grew at a rate of 141.5%, with half coming from its AdSense targeting program. Ask Jeeves doubled its ad revenue during the first half of 2004, and announced this week it will launch its own local search program in concert with CitySearch.
In terms of profitability, Internet revenues account for a growing percentage of newspaper company total revenues, according to Borrell. Knight Ridder's Web revenues made up 3.7% of total company revenues so far this year, up from 2.5% in 2003. The New York Times Co. is at 3.3% vs. 2.6% last year, and The McClatchy Co. is at 3.3% vs. 2.7%.
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