End of a cycle (or an era) for newspaper RE ads?

Advertising Age, a sister publication to Crain's Chicago Business, reports that newspaper real estate ad sales grew to a total $4.6 billion on the wings of a prolonged housing boom, up from about $2.6 billion a decade earlier. And revenue continued to grow for the past two years, accounting for about 8 percent of newspaper revenue.

But in January major publishers including Tribune Co., McClatchy Co. and Lee Enterprises began to post real estate ad declines, according to the report.

"A lot of the Realtors we talk to tell us the only reason they keep advertising (in newspapers) is that their clients expect to see the ad in the paper," and the greatest threat to newspapers are Web sites with property listings content, said Jim Townsend, a principal at Classified Intelligence ad consultancy, in the report.

Charlie Diederich, vice president of classified advertising for the Newspaper Association of America, said in the article that the growth spurt in newspapers' real estate advertising will likely end this year, and "If we don't find a new growth area, Wall Street is going to keep beating us up."

According to a 2006 survey by media research firm Borrell Associates Inc., the online share of real estate advertising is expected to eclipse newspapers' advertising share and top $3 billion by the year 2010 -- growing from a 3.5 percent share in 2001 to an expected 32.1 percent share in 2006 (see Inman News report).

What's up for debate is whether newspapers are experiencing the beginning of a down cycle in real estate advertising that will rebound with the next housing boom, or whether there is an irreversible shift of ad spending in the works.

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