Functional. Fast. Free. These three attributes are most likely the reason that online classified companies such as Craigslist have flourished on the Web, and it's the latter of these qualities that poses the greatest threat to newspapers. As more and more line ad buyers migrate to the Internet to hock their goods, services, jobs and junk at no cost, what's a business whose budget relies heavily on advertising sales to do? "A decade ago you could pick up your alt-weekly and you could find a band or a roommate, a job, sell your crap, get laid, find out what the lefty politics in town were. ... All those things have become unbundled, and that's a big threat to what [alt-weeklies] are," says Tim Keck, publisher of The Stranger and president of Index Newspapers, LLC, which owns The Stranger and the Portland Mercury.
The need for alt-weeklies to rethink their online advertising was confirmed in a recent report on real estate advertising by Borell Associates, Inc. (The report is available
here for AAN members.) According to the authors, "Alternative newsweeklies that have ignored the movement to free and instant listings along with user ad entry are ignoring new revenue models that will bury their traditional classifieds business in the next few years."
Enter backpage.com, Village Voice Media's packaged brand of a free online classified service that the company's Vice President of Sales and Marketing Carl Ferrer describes by invoking those aforementioned "three F's." Backpage.com is designed for media outlets interested in competing for a piece of the Web-based classified market share by offering all the same features of their competitors, along with a number of add-ons that users can purchase at a typically nominal fee.
In the alt-weekly realm, services like backpage.com have become increasingly popular as papers search for strategies to keep their product marketable and in step with new technology. Since the launch of its first site in March 2004, backpage.com has added more than a dozen alt-weekly partners from outside Village Voice Media's own holdings. More are scheduled to join the ranks in the coming months. "We understood early on that we had a concept that would be a solution for other people in the industry," says Ferrer.
And backpage.com isn't the only solution. Avenews, developed by Salt Lake City Weekly, has launched sites for 17 AAN member papers since last fall (more are scheduled to go live soon), while a few papers have turned to Verican and other companies. Fogster.com, a community-based site designed and operated by Embarcadero Publishing, is used by the six newspapers Embarcadero owns: Palo Alto Weekly, Pacific Sun and four papers that are not AAN members.
Free online classified sites hosted by newsweeklies are able to offer something their online-only counterparts cannot: a user-friendly module backed by a readily available support staff and a reputable print product. Newspapers hope that these elements, coupled with advanced features and options, will give them a competitive edge in meeting the needs of their increasingly tech-savvy readership. Additionally, newsweeklies hope such ventures will help them generate revenue to offset some of the downturn in classified advertising yields they've experienced or are anticipating in the near future. While it may be too early to judge whether these new sites will have that effect, staff members at papers that currently have a free classified site told us they've enjoyed small successes.
It's hard to say how much revenue alt-weeklies have lost or will lose as a result of Craigslist and other competitors, but many -- especially those in the large markets where Craigslist has gained the most traction -- have been feeling the crunch for some time. The San Diego Reader became backpage.com's first media partner outside the VVM newspaper group in December 2004, motivated in part by concerns over the looming encroachment of their classified revenue base. "We had been watching Craig for a couple of years and were getting increasingly nervous about how strong they were getting and debated about different ways of attacking it," says Howie Rosen, the paper's operations director. "With the Craig phenomenon, there's a tipping point in every city. It's not clear when that is, or what that is, but there's certainly a point at which they just accelerate."
For the alt-weeklies with which we spoke, launching a free online classified site has been a project that reaps positive results. It does, however, necessitate both administrative and financial investments. Whether companies choose to go with a solution provided by an outside source or to develop a free online classified site on their own, money must be spent to get there. Once the site is up, many prefer to give it regular oversight. "There's more administrative work than we had ever anticipated," says Linda Franks, a classified advertising manager at Palo Alto Weekly. She spends a significant amount of time combing over the ads that are posted on fogster.com. "It's not an unmanageable amount, but more than we thought it would be," she explains. Franks says she also regularly spends time answering questions about the service and providing technical support to users.
But the biggest trade-off for alt-weeklies may lie in the way that free online classifieds work. After all, this new model forces papers to give away advertising that at one time came with a price tag. Investors like Rosen say that it's a necessary risk -- beginning to offer a free-classified service is inevitable if papers are concerned with staying marketable. "It's the wrong game to play to try and defend every last dollar that you have in print by not offering something free online," he says. For papers that are adverse to change, he warns, "Craig will just eat [them] alive."
Marketing strategies such as upselling to print ads and offering Web-based upgrades have helped alt-weekly classified sites generate revenue. Users -- both individual and commercial -- have shown that they're willing to pay for premiums, so newspapers have made them available. Starting for as little as $0.10 per week, users can pick from a wide range of upgrade options such as online sponsor ads, guaranteed print placement and color accents that highlight their Web postings. According to Ferrer, between 5 and 10 percent of backpage.com users purchase upgrades.
It may be too early for most papers to claim their online advertising is successfully generating revenue, but a few have already benefited financially from their online classified products. At the San Diego Reader, where most ad upgrades in the "buy/sell/trade" category -- the most popular section of its classified site -- cost under $3 for private party users, and start at $5 for a guaranteed print option in the newspaper, the site overall has grossed an average of $20,000 per month. Rosen says a significant amount of this revenue is new. Similarly, The Stranger launched a new and improved classified site last July that features more free-listing options, and it has since enjoyed revenue increases, particularly in real estate and employment where the majority of ads aren't free. "Before this, we never were a huge classifieds force in Seattle and now we're growing. It's the most growth in ads that we've ever had," says Keck. The Stranger's new site was designed by DesertNet and conceived in collaboration with three other AAN papers. Keck estimates that the revenue from classified sales at the paper is up somewhere between 5 to 10 percent in some categories, though he's wary about labeling the new online venture a golden goose. "I think that this is a long haul in figuring out how it works and figuring out how you can make some money off of it," he says.
Online classified sites may also help some alt-weeklies reach clients that were not interested in the print product. Robby Robbins, classified manager at Independent Weekly in Durham, N.C., says the paper's new Avenews-powered site that debuted just two months ago has already been a magnet for area businesses that were once a hard sell for the weekly's print version. "We tried for years to cold call these services and [they've declined]. But allowed to come on their own accord, we're finding that there are companies running ads with us now who hadn't before," he explains. Some new clients who are opting to place ads for free online are also choosing to pay for ads in the paper's print edition, he says.
While alt-weeklies of course have an interest in turning a profit, staffers interviewed for this story also expressed a desire to build a Web-based community via their online classifieds -- a valuable asset, they say, in helping their publications stay relevant in the long term. "Good things come from owning some kind of community of readers or online users," says Rosen.
Marc Brancaccio, sales director of Salt Lake City Weekly and Avenews, says that alt-weeklies are in a unique position to be at the forefront of Web-based community-building, because they take their innovative cues from the local communities that they serve -- unlike Craigslist, which uses a one-size-fits-all model. "Newspapers like ours have been doing it for years, and our products, as a result, are much more flexible and relevant to the local marketplaces that they serve. It's just a logical leap that we do the same thing for readers online. Culturally, we have a step up," Brancaccio explains.
In order to maintain momentum, alt-weeklies will need to be vigilant in improving their free online classified products. "To think that you can just create something that's kind of a quasi-Craigslist and then just let it sit and watch it work won't get you results," says Rosen. "You continually have to be changing it and tweaking it." Indeed, as similar products become available on the Internet, it becomes ever more pressing for papers to keep abreast of the needs of their own communities.
Brancaccio says he sees big changes in the future that will require alt-weeklies to overhaul the way they think about utilizing Web features like free online classifieds to turn a profit. "I look at classified ads as turning into more editorial content so that other things can be sold around it," he explains, suggesting that the most creative brands will branch out further, creating a true online marketplace where items such as concert or theater tickets might be sold. "It's not just that the media has changed. People think that print and online are just different types of media, and they are, but they also work completely differently. As a result, we have different opportunities."
