Although half of most weekend newspapers still consists of classified ads for cars, jobs and real estate, this may soon cease to be the case. The online space has transformed the classified advertising sector and two recent reports reveal the way real estate advertising has been affected so far and how it is likely to evolve in the next few years.

According to the Newspaper Association of America, US print classified advertising revenues totaled $17.3 billion in 2005, a number that has remained largely unchanged over the last decade. Interestingly, while the total revenues have remained steady, the revenue mix between real estate, automotive, employment and other classified advertising sectors has changed significantly. Real estate, for example, grew from making up 18.6% of total print classified advertising in 1996 to 26.8% in 2005. Conversely, employment classifieds have fallen from a high of 44.4% in 2000 to 29.6% in 2005. Automotive has remained relatively steady at around 30%.

While revenues from print real estate classified advertising seem to have grown steadily over the last five years, despite the emergence of the Internet, new data from Borrell Associates indicate that an increasing proportion of all real estate advertising spending will be done online in the future. By 2010, Borrell Associates expects 32.1% of the $9.6 billion spent on real estate advertising to be done online. This is up from 17.7% in 2006.

Additional findings from Classified Intelligence also confirm the changing dynamics of the real estate advertising sector. In a survey of more than 100 real estate agents conducted with, 58% of respondents indicated they are raising their advertising budgets this year, but the majority said they would be spending the bulk of their money online on their own Web sites. Free Web sites such as Craigslist and Googlebase are also attracting an increasing proportion of real estate agents over traditional mediums such as local print.

One survey respondent perhaps typifies the feelings of many in the real estate game:

"Print publications are no help. The Web provides more information to the customer and less wasted phone calls. It’s the only way to go. I think in five years, 95% of my advertising will be done on the Internet."

Additional findings from the report include:

  • 19% of respondents spent less than 20% of their total ad budgets on newspaper print ads
  • 17% steered clear of print paper ads altogether
  • 61% did not buy into online newspapers at all
  • 69% did not spend on local niche publications online
  • 58% stayed away from local search ads
  • 21% put 10% of ad budgets toward local newspaper sites
  • 12% spent 20% on local newspaper sites
  • 16% put 10% of budgets toward online niche publications