Why Newspaper Job Ads are Dead pt. 2: Revenue & Price

This article is part two of four titled "Why Newspaper Job Ads are Dead."
In these articles I'm not trying to say or analyze that newspapers are dead as a whole, I'm only referring to newspapers as a recruitment tool.
My opinions are based in the facts I uncovered and the fact that I lived and worked through these events and is my perspective on them in this four part series.
To read the other parts click below:
pt. 1: A Local Perspective
(other links will appear here as the articles are published)

Newspapers lost their place as king of the recruitment tools for three reasons:
1. declining revenue because of local job websites which led to the loss of a key differentiating factor
2. Price
3. Rise of online and mobile technologies

The first reason newspapers lost their place as the dominate force in recruitment advertising is declining revenue because of internet competition.
This may sound like an obvious statement today, but remember the internet really didn't start hitting the public till 1995.

In 1997 I was the third person hired at a start up internet company called Job Connection.
Job Connection took a look at the national job boards that were just beginning at that time and decided that local internet recruitment was going to be the big thing of the employment world. Something that would fundamentally change the way people found a job.
They, and lots of others nationwide, were right.

I was told by my bosses at Job Connection that classified advertising at the local
Milwaukee newspaper, the Milwaukee Journal-Sentinel, made up  about $100 million in revenue for the paper in 1997.
About $85 million was coming from employment ads.
I would like to point out that I have at present no 1997 numbers to prove that either way, however it is a reasonable conclusion for them at the time given that in 2000 Milwaukee Journal-Sentinel classified advertising revenue was $85.4 million and employment classifieds were responsible for $70.2 million (source:http://www.putnampit.com/milwaukeepress/jssuit.htm).
The Job Connection owners wanted to tap into two tenths of that revenue ($200,000) as a goal for our company.

As the only salesman I accomplished that goal and then doubled it in 1999. Our team expanded to an additional salesperson and we were able to double that goal again in 2000 and were coming close to beating that goal in 2001. At the time Job Connection was the biggest local job board in terms of postings and clients (MilwaukeeJobs took over the top spot in 2001). Given what I know of the competition at the time, I would assume that the three job boards took between $500,000-$1,000,000 in revenue from the newspaper each year from 1998-2000. That figure probably doubled in 2001 with MilwaukeeJobs coming into the picture. $2 million doesn't seem like much compared to $85 million, but that number grew as $2-4 million in annual revenue was being taken by local job boards. Add on top of that the monies spent on national job boards like Monster and Career Builder, and niche job boards like LatPro, Dice, and Jobs4Sales, and you're looking closer to $10 million being lost to internet job boards in the area.

Some of you might be thinking that taking 10 million dollars in an industry where the local paper is still pulling 75 million dollars isn't going to kill newspaper advertising.
It was a start. Remember this was the period of 1997-2001.
The internet boom was on!
Remember all the DotCom companies that were popping up?
The fuel they provided for the economic boom of the late 1990's?
Now days we look back and wonder how did we ever live without our internet connections?  Why were so many companies trying the internet and taking budget away from the newspaper? There was a talent shortage going on (and still is).
Companies were searching for other ideas to reach job seekers.
Companies were willing to try anything to find the employees they needed.

Local internet job boards like WiJobs.com and JobConnection.net were able to position themselves as local alternatives to the local newspaper.
At this time companies were still telling me they "had to be in the newspaper," but they were seeing declining applicants but not enough to give up the paper entirely.
They were willing to try anything, even something as unproven as the internet.
Companies had heard of the national sites like Monster or Career Builder, but thought they were only for big national companies not the little local companies.
When the local internet companies opened up that gave them an outlet to try recruiting on the web. Local companies had a local rep, me, that they could call and an office that was near them to respond to their questions and to build a relationship with. Plenty of companies were skeptical, but that local presence made this new idea less scary.

Price was another factor. Internet ads were usually $100-$300 with full color and were unlimited in size. You could ad color, pictures, logos, anything that could be placed in the ad. 
The same money might buy you a 15 line classified ad.
No pictures. No color.
Placement on the website didn't usually matter as much as in a newspaper. 
Online a small company with a small budget was treated the same as large companies with large budgets. A small retail store could compete equally with a retail giant chain because the cost of getting their ads noticed with additional services like homepage logos and featured ads were affordable to all.
Ads on the front page of the employment section could often run $25,000. That same price could get a company several years of unlimited job ads on many local and national websites.

The factors of talent shortage, new technology (the web), and price all led to more and more companies trying the internet job boards.
So how do we get from $75 million being spent on local newspaper recruitment ads in 2000 to almost nothing today?
Don't forget that 2000 was the last year of the great Y2K hiring boom.
In 2001 classified advertising revenue fell to $67.9 million with $51.6 million coming from employment ads. This was the start of the recession following 9/11/2001 and also the end of the internet boom.(sources: http://www.putnampit.com/milwaukeepress/jssuit.htm
http://www.editorandpublisher.com/PrintArticle/-Milwaukee-Journal-Sentinel-Parent-Revenue-Down-3-1-In-January).

This first recession of the 21st century came on faster than anyone thought. Companies had to trim fast. A logical place to cut was newspaper classifieds.
Internet sites got cut too, but not as bad.
Companies weren't spending $5,000 on an annual internet posting plan, but they were spending money on smaller posting plans because they still needed to replace workers from time to time. When that recession went away, companies were still reluctant to give up their newspaper adverting entirely, but it was much reduced because they saw they could get just as good if not better results from internet job boards. They also had to trim payroll and learned they could get away with less people so they didn't need to advertise as much.

Then came the boom years of 2003-2008. Companies needed to hire again. There was still a talent shortage, and there was the birth of social media sites like LinkedIn, Facebook, and Twitter. This time companies didn't cut money from internet job boards to try these sites, when needed they took more from their newspaper budget (while social media sites are free for subscribers, often there is a cost for companies to set up corporate recruitment pages or to pay consultants to tell them what and how to place content on these sites).

Then the roof fell in in 2008 with the start of the "great recession" whose impact we are still feeling today in 2013. Companies cut everything and everywhere they could.
This time newspapers, national job boards, and local job boards were cut.
Newspapers folded (pun intended) or went to digital editions only.
National job boards sought partnerships or were even being sold (http://www.ere.net/2012/03/22/monster-for-sale-buy-all-or-part-offers-accepted/),
and local job boards folded or were sold (MilwaukeeJobs.com being the only all purpose local job board being left in Wisconsin).

So far I haven't found an exact total for the classified advertising revenue for 2012 to compare the previous stats to, however I can rely on my own eyes and the paper I subscribe to. What was a 64 page Sunday employment section in 1998, is about three pages today. Wow.

Thanks for reading!
Ev
A Heck of A Nice Guy