Local Display Flat, Real Estate Classifieds Strong in Q1

National ad networks show double-digit growth

Driven almost exclusively by strong real estate advertising, classified revenue remains the bright spot in the 2003 first-quarter among AAN members, who are otherwise witnessing flat or only slight growth compared to the first three months of 2002.

The two major national advertising networks, AWN and Ruxton, however, are showing double-digit revenue increases although both of these trends are in comparison to a dismal first quarter in 2002.

“We ended the first quarter at $2.4 million in gross sales, and we were at $1.9 million last year,” says Mark Hanzlik, executive director of the Alternative Weekly Network, which represents more than 150 publications. “So we’re up about 27 percent over last year’s first quarter, but of course that was a disastrous quarter last year after Sept. 11.”

The trend continues to be increased sales from a large number of smaller accounts, but not as many “big hitters,” says Hanzlik. “Diversification is keeping us going, because we don’t have any big, large core accounts that are holding us together,” such as the large national buys from tobacco companies that have dried up. And Hanzlik says his sales director reports no one is cracking those big national accounts right now.

“We’re all operating even leaner and meaner, and people are working harder than ever, but it is getting tough,” Hanzlik says. “But our grassroots effort is still alive, which kind of feeds this diversity. So we have papers calling from the ends of the country with a three-paper buy, or a four-time quarter page; those are small sales, but that’s still happening, which is good news.”

New Times President and COO Michele Laven also views the company’s sales growth with conservative optimism. New Times’ national advertising division, the Ruxton Group, has seen a 20 percent increase in sales for the first quarter.

“I guess I would put an asterisk on that saying last year’s first quarter was horrible,” says Laven. “Normally I’d be excited about 20 percent growth. We have a long way to go.”

Year-to-date local revenue for individual papers in the New Times chain is up 8 percent over the first quarter of last year, Laven says, with real estate classifieds the bright spot.

“We’re 14 percent up [in real estate]. Help wanted is flat compared to last year,” she says. “It’s really been rentals and real estate growth that has led the way.”

Individual alternative newsweeklies report the same strength in classified sales with virtually no gains in display.

“Our display sales are approximately flat. Our classifieds are up somewhere in the vicinity of 12 to 15 percent,” says Richard Meeker, publisher of Willamette Week in Portland, Ore. “In our business, two-thirds of our revenue is display, and one-third is classified. So that would mean that if you are flat on the display side and 12 percent or so growth on the classified side, overall for the three months we’re up about 4 percent.”

Meeker says the biggest bump is coming from rental advertising, as well as improvements related to an advertising department reorganization.

Real estate classifieds are “just charging ahead” in Chicago and Washington, D.C., says Jane Levine, COO and executive vice president of Chicago Reader Inc., which also owns Washington City Paper.

“Display in Chicago is pretty much flat year to date,” says Levine. “Display in Washington, D.C., is up single digits. Classifieds in both cities are up double digits … Real estate is booming in both cities. Recruitment help wanted isn’t declining anymore, but it hasn’t really turned the corner. It’s just kind of hanging out there at the low level that it got to six or nine months ago.”

Meanwhile, some smaller, more isolated markets are faring differently.

In Boise, Idaho, for example, a change in ownership at Boise Weekly has turned the paper around sharply in a positive direction, the economy notwithstanding.

“We are 28.5 percent up quarter over quarter, and that’s for display,” says Publisher Sally Barnes. “And then classified is up 92.7 percent.”

Barnes and her husband, Bingo Barnes, bought the weekly in the first quarter of 2002. “A year later we have made huge gains in this market. We’ve repositioned the paper and made absolutely huge progress.”

Part of that progress is due to a renewed emphasis on classified sales and a new classified manager, Barnes says.

A similar move has also helped at the Missoula Independent, according to Publisher Matt Gibson.

“Display advertising is up slightly [over the first quarter last year], but we’ve continued to have impressive growth in classified advertising,” he says. “Real estate is critical to us, and we’ve invested a lot of additional resources to build our classifieds, which is why we’re getting a payoff there.”

However, the slowing economy, which has been further rocked by war and terrorism, seems to have finally caught up with the region, says Gibson.

“Overall we didn’t meet our projections for the first quarter, and business was particularly bad beginning around the first of March, which seems to be an association with things heating up in Iraq,” he says. “I would say that in Missoula, advertisers got stingier as the threat of war seemed more and more immediate. And it’s continuing now. We’ve had a bad trend going on for six or seven weeks now.”

Gibson says his revenues dipped in the fourth quarter of 2001 after the terrorist attacks, while other AAN papers began to note a slowdown in late 2000.

“Now, talking with other people in town, it appears that the local economy here is really weak,” he says. “Perhaps we’re running a year-and-a-half behind the rest of the country. My sales manager tells me he believes there’s going to be pent-up demand once the international conflicts are resolved to everyone’s satisfaction. I hope that’s true.”

And so does the rest of the industry.

“Trying to prepare our strategy for this upcoming year, I don’t think that the economy has given us a break at all,” says New Times’ Laven. “I’d love … to get a break in our favor. But once again, I think we’re running a better business today because we have been forced to … so there are always bright spots.”

John Ferri is a freelance writer based in Tacoma, Wash.