ORLANDO, Fla. ñ EBay and Craigslist have had a significant impact on merchandise classified advertising in newspapers across the United States, and free classified Web sites and publications are forcing some newspapers to cut their rates, a new survey shows.
The study, ìEBay, Craigslist and e-commerce: Newspapers fight to recapture revenue,î was based on a survey of executives at 36 newspapers around the country. It was published by Classified Intelligence, L.L.C., the interactive-media consulting group, and sponsored by CityXpress Corp., a leading provider of auction and e-commerce services to newspapers. The report is available free at ClassifiedIntelligence.com and CityXpress.com.
EBay has had a ìmajorî or ìmoderateî impact on classified advertising at two-thirds of the newspapers surveyed, while only two of the papers said it had no impact. The papers reported that ñ so far, at least ñ Craigslistís impact has been more limited: Two of the 36 said it had a ìmoderateî impact; 14 papers said its impact was ìminimal,î and three said it had no impact on their classifieds.
ìNewspapers have known for a long time that EBay and Craigslist were significant threats, but this is the first study that shows just how much theyíre damaging daily newspapers, which ran about $2 billion in merchandise classifieds last year,î said Peter M. Zollman, founding principal of Classified Intelligence. ìIt should serve as a real call to action, so they focus on how to ëmaintain the marketplaceí in their local markets ñ if they havenít lost it already.î
Some key points:
Newspapers are seeing strong downward pricing pressure on merchandise classifieds, in part due to free ad sites like Craigslist and Freecycle.org, and due to EBay; some are offering free classifieds in print and/or online to compete.
More than 90 percent of the respondents said newspapers should offer auctions or auction-like services to their advertisers and readers / users.
Some newspapers are still struggling with the challenge. The classified ad executive at a major newspaper said he was ìvaguelyî aware of Craigslist and did not know if it has a site in his market; it has more than 30,000 listings in that market. In another city, the paperís interactive-services director said he had tried to develop services to combat EBay and Craigslist, ìbut we just havenít had the opportunity because of a lack of buy-in from the classified managers. They wish the Internet would just go away.î
EBay, which is little more than nine years old, was recently dubbed ìthe fastest-growing company in historyî by Fortune magazine; CEO Meg Whitman was listed as ìthe most powerful woman in business.î Craigslist, a tiny company with $10 million in revenues in 2004, was started in 1995 by Craig Newmark; it now operates in 57 cities in the U.S., U.K. Canada and Australia. EBay recently purchased an equity stake in Craigslist for $10 million to $12 million, valuing the company at about $60 million.
While most papers said they are feeling the effects of Hurricanes Craig and Meg, many are taking action: Almost two-thirds say they have either launched new services to compete, or plan to do so within the next six months.
ìItís critical for newspapers to understand this long-term change in their business, and to develop effective interactive and e-commerce services for their audiences and their advertisers,î said Phil Dubois, president and CEO of CityXpress. ìNew online products like continuous auctions, event auctions and e-commerce-enabled classifieds can make a huge difference in the future of the newspaper classified marketplace.î
EBay and Craigslist have had a significant impact on merchandise classified advertising
in newspapers across the United States
