US Newspapers Face $4bn Ad Losses to Internet

22 April 2005

The boom in internet advertising could signal major revenue losses for US newspapers.

The warning comes from consulting giant McKinsey&Co at this week's Newspaper Association of America's annual conference where delegates heard that up to $4 billion (€3.05bn, £2.08bn) of classified ad revenue could disappear into online coffers by 2007.

The figures add up to around 20% of newspapers' 2004 classified revenues and just under 9% of $46.6bn total revenues.

And, says McKinsey analyst Luis Ubinas: "Online is capturing all the growth."

He told delegates the internet effect on 'help wanted' ads began as early as 1995. Two years ago, those ads were 50% off from levels that would be expected had decades of previous trend lines held true.

If automotive and real estate trends go the same way, massive losses are inevitable, he says, and gone too the days when classified ads were a "better business than printing dollar bills".

Fellow analyst Jochen Heck had words of comfort, however, saying newspapers could fight back by ensuring "compelling content" around listings; automating ad-ordering processes; and developing a finer understanding of local markets.

Adds Mort Goldstrom, the NAA's vp of advertising: "It's not too late ... but the door of opportunity is closing quickly."

Data sourced from; additional content by WARC staff