Ten CBS television affiliates are jumping into online classified advertising, hoping to grab a share of a $17 billion market that historically has been dominated by local newspapers.
CBS Television announced a deal today with Classifieds2000, a back-end provider and distributor of classified ads on the Internet, to let ten CBS-owned stations (and other CBS affiliates in the future) sell ads on their Web sites and then promote them on the air.
The deal gives the TV stations a foot in the door of the lucrative classified ad business, giving them a new, lucrative revenue source on top of the paid TV ads from advertisers, mostly employers, who buy online ads in packages with air time.
"It seems like a no-brainer to me. TV has been kept out of local classifieds for years, and all of a sudden, through the miracle of the Web, it's theirs," said Jerry Michalski, managing editor of technology newsletter Release 1.0.
"They can outsource [to Classifieds2000], and it gets them some classified dollars," he added.
TV stations aren't the only companies lusting after newspaper classified revenue, where job listings, real estate, personals, and autos are the most promising categories for online venues.
The plethora of local Web sites--Microsoft's Sidewalk, CitySearch, America Online's Digital City sites, and Yahoo, which today renewed its classifieds and mapping contract with Classifieds2000 rival Vicinity--eye classifieds hungrily. So do Classifieds2000 customers as diverse as ISPs, Net search engines, and CNET's own Snap Online service. (CNET is the publisher of NEWS.COM.)
But local sites, ramping up operations in many areas, haven't yet focused on classifieds yet partly because they're so busy competing with each other. And so far, nobody has cut notably into newspapers' classified revenues.
In today's deal, CBS TV stations in New York, Boston, and San Francisco are expected to be among the first to offer the new service, which also will be available to radio stations in the future.
In April, Classifieds2000 announced a similar deal with 11 TV affiliates of several networks owned and operated by Granite Broadcasting, which has introduced the service in Detroit, Austin, Texas; Buffalo, New York; and San Jose, California.
At least one analyst was bullish about the trend. "A few well-placed ads on TV may result in much higher business results than a huge Web site on its own," Gregory Wester from the Yankee Group said.
Classifieds2000 is essentially agnostic in the battle over online classifieds. CEO Sani El-Fishawy said he is happy to work with anyone, including newspapers, to provide his back-end services to aggregate their want-ad efforts.
"It's an opportunistic kind of thing for us to get pulled in by the broadcast medium," he noted. "Granite found they can create effective classified solutions that generate revenue that they wouldn't have seen before."
Newspapers have monopolized local classified advertising for so long that both prices and profit margins are rich, leaving plenty of room for rivals, online and otherwise, to cut rates and still make money.
"The threat to newspapers is real, but often overblown," added Wester. "These types of announcements are more a call to action for newspapers than a victory dance by these start-ups or broadcasters."
But newspapers haven't faced the threat at a standstill. CareerPath.Com aggregates job ads from major newspapers nationwide, which charge little or nothing for the added online exposure. AdOne has put together a similar service for more than 400 smaller papers.
The San Jose Mercury News, an online pioneer among newspapers that milks rich profits from Silicon Valley employment classifieds, has moved its job ads online into its Talent Scout site, which also includes job-oriented editorial content.
Gregory Aarons, a recruitment advertising manager who handles both print and online job ads for the paper, said the Merc has lost no revenue yet to online competitors, but he's following Net rivals.
"The Internet is still used primarily as R&D," he added. "I haven't heard of major companies talking about return of investment on the Net, although our competitors talk about how inexpensive it is to use.
"Many advertisers are still strong print users, even though they have a Web presence," Aarons said, insisting that Talent Scout is not a defensive move by the paper. "It's all about the quality of what can be provided both to advertisers and end users, not so much the quantity of listings."
Still, Talent Scout editor Mark Hull keeps an eye on competitors. "Everyone realizes just how lucrative classified advertising is," he said. "Microsoft is coming into classifieds, and [so is] the Wall Street Journal. It's no surprise that TV wants to enter more strongly."