According to published reports, newspaper executives at their annual conference received what was described as "startling" news from a team of McKinsey & Company executives - - their classified advertising businesses have eroded noticeably, and are poised to drop as much as 20% more by 2007. The cause of this steep decline: Internet competitors such as, Craigslist and

I want to empathize with these newspaper folks -- we're in different wings of the same business after all -- but for people whose business is gathering and reporting news, they always seem to be the last people to know what's going on. Of course, this may be some form of denial as well. In either case, it's worth taking a closer look at one type of classified advertising, help wanted ads, because what's driving this decline isn't unique to newspapers.

In many markets, newspapers are effectively monopolies, and their pricing tends to reflect that. I've placed more than a few newspaper help wanted ads, and if you're not careful, you can easily drop close to $1,000 for a few lines of type that would generally appear only once. It's not surprising, then, that the McKinsey study quotes a newspaper executive as saying that, "Classified advertising is more profitable than printing dollar bills."

Along comes the Internet, and suddenly the reach of newspapers can be duplicated, and even expanded upon, without the infrastructure costs. It's been open season on newspaper classifieds ever since. Just as significantly, these online competitors realized that without paper, ink and delivery vans they could charge a fraction of the price and still make boatloads of money, a development that McKinsey refers to as "price destruction."

But there is more going on with these online job sites than just lower prices, and therein lies what I consider the most important point of all: these online job sites aren't just competitive businesses; they are better businesses because they've streamlined the hiring process and integrated themselves into their customer's workflow.

Consider the improvements. With newspapers, you would often wait for the big Sunday edition to advertise. Online, you're receiving responses within minutes of posting your ad. With newspapers, your ad is forced into a category, which may or may not be where people are looking (newspaper solution: buy cross-reference ads!). Online, your ad is accessible by category and by keyword, improving discoverability. Online, you reach a national if not global audience, and your ad stays visible longer. These are all what I'd call the "built in" advantages of Web information products. But there is still another level of benefit.

The job sites allow job hunters to post detailed resumes for free, and they sell access to these vast databases so that companies could search for candidates as job hunters were searching for open positions. The job sites built workflow applications for their customers to help them screen, filter and organize incoming resumes. Credit, of course, must also be given to the job boards for turning paper resumes into a digital stream that can be more easily forwarded, stored and archived. The sites offer automated screening tools to pre-qualify candidates, and will even manually screen and select candidates for an employer. On the job hunter side there has been workflow improvement as well. Job seekers can get real-time alerts of new job postings matching their criteria, and can even forward their pre-stored resume to a prospective employer with a few mouse clicks.

In short, the business of help wanted advertising hasn't just been digitized, it's been revolutionized by these new players. And now a new breed of players, companies like, ZoomInfo, Linked-In and Ziggs are bringing still another level of innovation to this business.

And newspapers? High overheads, declining circulations, slow-moving bureaucracies, and a penchant for trying to wish away uncomfortable business changes. Given that it's 2005, what should be startling to the newspaper industry isn't that their classified businesses are in decline, it's that they have any classified business left at all.