Newspapers take on the net

In the internet boom years it was claimed the web would kill off newspapers. That didn’t happen and hasn’t happened yet, though it is certainly the case that the internet is really starting to carve into industry revenues.

by McKinsey Quarterly January 2006
Last Updated: 23 Jul 2013

Classified advertising has been particularly hit, with no less an industry figure than News Corporation’s Rupert Murdoch talking recently about how these “rivers of gold” were running dry for newspapers.

A study of the US market suggests that newspapers lost more than 40% of their share of some classified categories between 2001 and 2004. At the same time inexpensive – and inexhaustible – ad space has made it harder for papers to raise advertising rates.

This crumbling of what accounts for a third of papers’ advertising revenues, combined with increasing worries for display ad revenues, falling circulations and rising costs has put the industry’s business model under severe strain.

Standing still is not an option. The housing boom may have softened the impact on property classifieds, nevertheless economic recovery has not triggered a revival in recruitment advertising to newspapers.

Newspapers need to focus on the value of their combination of print and internet offerings and explore new services. They should offer packages or bundles of print and online ads – and make it as easy as possible to buy such dual offerings using a single order process. Sales team training may help to overcome both purchasing and selling inertia.

Adding new tools and services to online advertising listings can also make for more satisfied users and advertisers – and even provide additional revenue.

For example, property classifieds can be enriched with tools that allow property buyers to research an area and its schools, or source mortgage finance. Or job sites can use an online user questionnaire to screen both candidates and jobs to help achieve a better fit.

But as well as taking on and imitating the online competition, newspapers also need to keep an open mind on acquiring or partnering with them. 

Source: Classified ads: how newspapers can fight back
Luis A Ubinas and Thomas T Yang

Review by Steve Lodge 

McKinsey Quarterly January 2006 recommends

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