Local classified advertising boosting newspaper sites. (Media & Technology).

Tribune Co.'s announcement last week that revenues at its interactive division rose 17 percent in the fourth quarter from the previous three months was another signal that the strength in online advertising lies in the newspaper classified market.

Earnings at the Internet unit of Tribune, owner of the Los Angeles Times, were flat over the third quarter, which the company attributed to higher spending on online brands Career-Builder and cars.com.

But Don Grenesko, Tribune's senior vice president for finance and administration, said in a conference call with analysts that the division would be cash-flow positive in 2003. The company did not break out revenues for the group.

An October 2002 report by Jupitermedia Corp., which tracks online activity, found increases in all categories of online classified advertising in 2002 and projected sustained growth through 2007.

Total online classified ad revenue reached $1.24 billion in 2002, up from $1.06 billion in 2001, and Jupiter projects that figure to hit $2.34 billion by 2007.

Classified ad growth

The trend is seen across the Web sites of the region's newspapers, where traffic is said to be up significantly, driven by the desire for immediate access to news and growing popularity of Internet classified advertising.

John Zappe, vice president of new media at Los Angeles Newspaper Group, a subsidiary of MediaNews Corp., owner of 12 L.A.-area papers including the Daily News and San Bernardino County Sun, said online revenues were up across the chain.

At the Daily News, online revenues grew 30 percent in the six- month period ended Jan. 30, compared with the year-earlier period, Zappe said. The Sun's revenues doubled in the same period, and traffic at its Web site was up 428 percent in December 2002 over December 2001, said publisher Bob Gray.

Visitors to Dallas-based Belo Corp.'s Riverside Press-Enterprise Web site, pe.com, averaged 3 million page views per month during 2002, up 18 percent over 2001, according to Paul McAfee, Belo Interactive's news and operations manager for pe.com.

"Classifieds and local advertising get the most hits," he said. Advertisers, he said, appear to be responding to this growth, and "our rates for classified ads increased with this."

McAfee said Belo moved 18 months ago to feature breaking local, national and global news from 7 a.m. to 7 p.m. -- hours when readers where usually at the office and could only access the computer for news, which helped feed the growth in traffic.

The site started registering users in November 2001, asking for demographic details before allowing access to articles, a move that initially resulted in a 30 percent drop in page views. But he noted that volume recovered soon after that.

Registration effect

A report released last summer by the Online Journalism Review at the Annenberg School at USC, said unique visitors at latimes.com totaled 2.4 million before the introduction of mandatory registration. Visitor levels dropped by 12 percent after registration was introduced, the report said, and it is not clear how much, if at all, it has rebounded.

The report also said the Times classified ad department bundles online classified ads with print buys, with the revenue "unbundled" internally and allocated pro rata to print and online.

Times officials would not return calls.

In San Bernardino, besides classifieds, traffic increases were attributed to more breaking news updates and video features, Gray said. Web operations there have "been profitable over the past 12 months, with revenue doubling and operating profit tripling," said Gray, who declined to give specific numbers.

The Press-Enterprise shares the same template with many of Belo's other newspapers. "Having a network of sites helps amortize costs like infrastructure investment," said Card.

Still, he said, the room for growth is great. "There is very little local Net advertising know-how at these newspapers. They have a hard time sharing local information and doing targeted advertisements," said Card.

The ultimate vision is newspapers becoming a local yellow page directory, where online searches return paid sponsors. "This is a big opportunity, and newspapers are making big strides towards making money off local advertising," he said. "The Holy Grail is offering a paid local search online."

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