It’s been ages since the days of the town crier delivering important news. Just as that method evolved to faster, easier, and more reliable vehicles — newspapers, radio and TV — now, even those powerhouses are losing advertising dollars to the lighting speed of the Internet.
“We believe that some of the advertising has migrated from the print newspaper publications to online either free classified or other types of online mediums for classified ads. So what’s uncertain is the extent to which the advertising has moved online and away from newspapers,” says Mike Simonton, Senior Director at Fitch Ratings.
He estimates that 30 percent of help-wanted classified advertising is now publicized online. The real estate and auto classified advertisements are significantly lower — Simonton says somewhere around 15 to 20 percent — but will soon likely catch up to the help-wanted classifieds.
“Obviously there is a correlation between the cyclical problems going on in these particular markets because the markets that have the highest decline in home starts are also having the highest decline in real estate newspaper advertising,” says Simonton.
Interestingly, the inventory of unsold homes in those markets has continued to go up since the beginning of the year. Simonton says it is likely that real estate classifieds are still appearing somewhere for those homes, but it seems newspapers aren’t the vehicle of choice anymore. Instead, just as more buyers are doing their homework and researching for their next home online, sellers also are turning to the World Wide Web to get their home noticed.
Companies such as Tribune Co., Gannett Co. and McClatchy Co have all reported significant declines and big losses in California and Florida. Of course, a downward spiraling real estate market may also have triggered a weak advertising slump. But that’s likely only part of the problem.
“There are some obvious benefits to some of the online search tools that are unavailable in a print product,” explains Simonton.
He says things such as being able to target geographic locations, target price range and the features they want make searching online for a home easier and faster. Ultimately, consumers can filter out homes they don’t want and search specifically for what they do want “in a much more sophisticated way than you’re able to do in a print product,” says Simonton.
The ink isn’t running dry in just the newspaper advertising world, “We’ve definitely seen an acceleration of advertising dollars toward the Internet and that’s going on across different mediums. The mediums that have been hurt the most are newspapers for sure, and then radio, broadcast television, Yellow Pages. Anything that’s traditional advertising has been hurt,” says Simonton.
However, real estate advertising in newspapers in some smaller local markets has not yet been affected but Simonton says the clocking is ticking.
“We think that as more people in these local markets use broadband some of the trends that we’re seeing in the larger markets will show up in the smaller markets in the future and it’s not so much that [the smaller local markets] are immune to these changes but these changes haven’t reached them yet,”
He says that means that there is actually some lead time for newspapers and other mediums in the small markets. If they address the declining advertising revenues and start to move their content online they can help offset the loss in revenue by replacing it with a more real-time approach to advertising.
“Overtime they will need to have a very established online position in order to deal with the fact that most of the consumers in the market are using the Internet to get their information about what’s available in the local market,”
But, what about the old faithful glossy magazine? If you’re advertising your high-end home in a nice luxury magazine, you may still be putting your advertising dollars to good use.
“Magazines have been less hit than newspapers have been. People still seek those out because they’re less frequent and typically have more content related to what they’re looking for. I guess you could say it’s a more targeted medium,” explains Simonton.
Regardless of where you decide to advertise your home, know that having several venues and lots of good ol’ fashion word-of-mouth advertising will create an opportunity to be seen by many.
Written by Phoebe Chongchua