Newspapers will likely be losing billions of dollars in classified ad revenue to non-newspaper online classified ad sites by 2007, according to McKinsey & Co. execs who addressed the Newspaper Association of America's annual conference, reports AdAge. Luis Ubinas and Jochen Heck said the proliferation of sites such as monster.com, realestate.com and craigslist.com is undermining newspapers' hold on classifieds.
They warned that newspapers could lose $4 billion of classified revenue by 2007 - some 20 percent of their 2004 classifieds revenue and nearly 9 percent of the $46.6 billion in total ad revenue last year - if the trend spreads to automotive and real-estate classifieds.
The problem, according to Ubinas, is what online's pricing is doing to the classifieds model, terming it "price destruction."
