Small ads are flooding away from newspapers and onto the internet

Rupert Murdock once described them as ….. "rivers of gold" - ….. lucrative classified-advertising revenues that flowed into …..big newspaper groups. But ….. golden rivers are being diverted online as ….. internet breaks ….. grip that …..local and regional newspapers once held over their advertising markets.

Typically, ….. local newspaper would expect to get some 80% of its revenue from …..advertising, of which around two-thirds would come from classified. But last year in ….. San Francisco Bay area, …..job ads worth some $60 m were lost from newspapers to ….. web, reckons Classified Intelligence, ….. consultancy. Emap, …..British publisher, recently gave warning of a 30% decline in …..recruitment ads in one of its titles, Nursing Times, following ….. launch of ….. free website for jobs in Britain's National Health Service.

….. Internet has become ….. fastest-growing advertising medium. Online ad revenues reached $5.8 billion in …. first six months of this year in America, up 26% on ….. same period last year, according to ….. joint study by ….. Interactive Advertising Bureau and Pricewaterhouse-Coopers. In Britain, online ad revenues surged by 62% in ….. same period to almost $870m.

Search advertising - ….. small text-ads that appear alongside Google and Yahoo searches - account for 40% of the online ad market. Another 20% goes to display ads and 18% to classified advertising. But …..search advertising can also work like …..small ad and will increasingly challenge print classifieds as web-sites develop localized and more elaborate services for online users.

Perhaps ….. most significant development came on November 16^th, when Google started up ….. prototype service called Google Base. It offers ….. searchable database of …..free listings, including small ads which can be narrowed down to postal regions. Among its first offerings were …..used cars. In time, Google could challenge eBay, whose own auction listings now work much like ….. giant classified website - especially with its "Buy-it-now" options. But eBay charges …..sellers. Even so, it sold more than 450m items in ….. tree months to September 30^th, for almost $11 billion.

In …..response, most print publishers are expanding online. Mr Murdock is buying …..websites including Propertyfinder and MySpace, ….. social-networking site. Newspaper groups have teamed up to jointly operate websites to compete with Monster for recruitment ads. But ….. online operators are expanding too. eBay, for instance, is building ….. global network of …..classified sites under the Kijiji brand. It also has …..stake in ….. popular Craigslist which, having soaked up do many listings around its San Francisco home, is now frightening other newspapers as it now expands its mostly-free ads service to other cities around ….. world.

The Economist (Nov 17th 2005)