January 03, 2005

Even the Chron Advertises on Craigslist

Even for a refugee from MSM like myself, the estimate by Peter Zollman that Craigslist is siphoning off $50-65 million a year in potential classified advertising from Bay Area newspapers was shocking.

To put that number in perspective, I'd estimate the San Francisco Chronicle has, after its current cutbacks, about 450 newsroom employees who earn on average about $60,000. That's an annual payroll of $27 million. In other words, the money being lost by the Chronicle, the Mercury, their online operations and other Bay Area newspapers could pay for enough journalists to staff two Chronicle newsrooms.

Since Craigslist only $75 apiece for help-wanted ads, up to hundreds less than what the newspapers charge. The effectiveness, both on a cost and candidate pool basis, of advertising on Craigslist versus the Chronicle is evidenced by the fact that even the Chron buys ads there.

In this ad, the newspaper seeks a promotional copywriter whose duties include:

"Ability to create and edit special advertising sections (advertorials) for the newspaper and its advertisers. The latter is enormous potential source for additional revenue and is very much a part of the San Francisco Chronicle's business strategy." (Emphasis added.)

Apparently, it is also part of the Chronicle's business strategy to advertise in its competitors.

Bob Cauthorn, a former VP at the Chronicle who managed the paper's successful online operation, SFGate, was one of the authors of the Craigslist report.

This story on ClickZ quotes from Cauthorn in the report, saying "Bay Area newspaper executives can only blame themselves for losing their leadership position, 'because they took no action and listened instead to the arguments inspired by fear, lack of vision, and short-sighted greed.'"

The report's suggested antidotes (again, from ClickZ story) - free online classifieds, self-service tools for users, anonymous Craigslist-style e-mail aliases, RSS feeds, free photos with ads - are likely to produce as much dyspepsia among the newspaper business executives as suggestions of more participatory and community journalism do among their counterparts in the newsroom.

Posted by Tim Porter at January 3, 2005 07:36 AM

This happens to me constantly: I meet people who ask me where I work; when I tell 'em the Merc, they ask how things are going, I say, well, terribly. And invariably they say, "Oh, yeah, Craigslist!"

Posted by: tom on January 4, 2005 07:22 AM
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