After two years of steady growth, the AAN CAN classified network has hit a rough patch. The slowdown began in October, when sales were down about 20 percent from the prior year. The decline accelerated in November and has reached 40 percent so far in December.
“The decline in sales has really put a crunch on our budget,” says AAN Executive Director Richard Karpel, who notes that the slowdown arrived, coincidentally, at the same time the association’s new fiscal year began in October. “AAN CAN now represents about 70 percent of our budget, so this sales slump is a major concern.”
AAN’s FY03 budget is $1.17 million. Karpel says the organization is already $34,000 below plan two months into the new fiscal year even though the budget factored in a 10 percent reduction in AAN CAN sales. As a result, he has postponed all discretionary spending and cut back the hours of two employees.
There is no single factor that explains the sales slowdown, but an analysis of lapsed advertisers indicates that ad agency business has dropped the most.
AAN CAN was started in November 2000. By the end of that fiscal year, it had generated $750,000 in revenue for the association. That figure grew last year to $880,000. However, through the first two months of FY03, the program generated revenue at an annual rate of only $575,000. Karpel notes that if that trend continues it would leave AAN with a deficit at the end of the year of $225,000.
“Obviously, we can’t afford a shortfall of that size,” he says. “We’re going to do everything we can to turn it around, but if we can’t we’re going to need to cut spending and find new ways to raise revenue.”
AAN CAN ads are sold both by the association and by classified reps at member papers, who were responsible for almost half of the ads sold during the first two years of the program. Member papers receive a 25 percent commission on all AAN CAN sales.