Thursday, March 24, 2005

Net stomps newspapers, Yellow Pages

This may come as small comfort to the investors in eToys and Pets.Com, but the Internet today definitively has supplanted newspapers and the Yellow Pages as the place to let your fingers do the shopping.

In two separate studies, researchers found that 70% of U.S. households now commence their search for merchants and services on the Internet and that 76% of buyers consult the web when shopping for a new car.

The Internet's gain is a loss of share for the Yellow Pages and newspapers, says the Kelsey Group-ConStat, author of the first of the two new studies. Where 75% of consumers consulted the Yellow Pages before making a purchase in 2003, 62% use the phone book today. While 73% of people consulted the newspaper in 2003, 70% check it now. In the same period, as illustrated below, the Net has grabbed 10 more percentage points to tie with newspapers at 70% utilization.

"This puts the Internet on par with newspapers as a local shopping information resource, with the Internet likely to surpass the impact of newspapers in the very near future," says Neal Polachek, senior vice president of Kelsey. ?Traditional local advertising media must find ways to evolve or risk losing dollars to the new advertising options available to local and small businesses.?

In a separate study of consumes with access to the Internet, Keynote Customer Experience Research found that 76% of auto buyers visit a manufacturer's web site, 75% visit dealer web sites and 65% visit third-party sites like Kelley Blue Book, Cars.Com, Autobytel or Yahoo Auto. By contrast, only 53% of the wired respondents used newspapers, a formerly "traditional medium of research," in their quest for the ideal wheels.

The third-party auto sites are valued by consumers as independent and convenient sources of comparative information among competing models. Kelley Blue Book is rated tops by consumers and Cars.Com comes in second.

Interestingly, Cars.Com is owned by Classified Ventures, a consortium of six newspaper companies who wisely pooled their want-ads and other resources about 10 years ago in hopes of building a significant presence for themselves on the web. Classified Ventures also runs Apartments.Com and Homescape.

The appeal of Cars.Com is the wide inventory of vehicles available for sale, complete with detailed information about individual cars and trucks. The problem is that the extent of the inventory depends to a degree on the success of newspapers in selling want ads, a business that has been poached by everyone from Craig's List to eBay to Yahoo -- especially Craig's, which lets you run an ad of any length for absolutely free.

Like chicken soup, Cars.Com couldn't hurt. But it alone isn't going to save the newspaper industry's matzo balls.


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