Newspaper and Real Estate: More Bad News

I’ve posted in the past about newspapers being doomed, and now Real Trends Reports that newspapers are being hit hard by the loss of real estate ads:

Newspapers hit by loss of real estate ads
 
It’s bad enough that a down housing market is leading to a slump in real estate advertising at newspapers, as a dreary series of earnings reports showed this past week. What’s worse is that a lot of that advertising might never come back to newspapers, even if the real estate sector recovers. That’s because a significant chunk of those advertising dollars are moving online.

Exactly how much of a shift is occurring is difficult to measure in terms of dollars or market share. However, several real estate executives say they are making a conscious decision to move money out of newspapers and onto the Internet as that medium grows in importance as a tool for researching homebuying decisions. Last week, Tribune Co., the No. 2 publisher by circulation, posted a 24 percent drop in the second quarter, while industry leader Gannett Co. has reported a 9.9 percent decline and McClatchy Co. reported a 19 percent decline, citing big losses in California and Florida.

But what’s worrying analysts this time around is that real estate could become the next category of classified advertising – after help-wanted ads – to make a significant and permanent shift onto the Internet. The stakes are big for newspapers because classifieds are highly lucrative and make up more than 35 percent of their revenue.

Mike Simonton, media industry analyst at the Fitch Ratings credit-analysis service, said 30 percent of help-wanted classified advertising is now online. The Internet’s share of real estate and auto classified advertising is lower, at about 15 percent to 20 percent, he said, but poised to move higher.

Representatives of several major real estate franchisors said in interviews that many home sellers still see newspaper advertising as an essential component of selling a home, but that younger brokers, home sellers and buyers are clearly more focused on using the Internet. (Associated Press)

I am a bit surprised that the demise of the real estate section is taking so long, but I know real estate agents hate change and the perception that things are “taken away” from them and sellers.

Newspaper advertising is too costly, too ineffctive and a hassle to get right.  A crummy classified ad doesn’t compare to online shopping.

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