Classified Advertising Still Producing Big Money Online

Classified advertising is the most underappreciated and misunderstood category of ads in the online industry.

Newspapers and magazines traditionally provided the bulk of classified advertising and made a tremendous amount of money from it, especially newspapers with the employment, automotive and real estate categories.

That lucrative business has declined dramatically in recent years as advertisers have moved their money from print to online.

But once online, the classified category has largely vanished. Why?

The Internet Advertising Bureau provides quarterly and annual reports about the state of online advertising. These reports rank the following five categories:

1. Search – 38 percent of the total
2. Mobile – 25 percent
3. Banner – 13 percent
4. Video – 7 percent
5. Classified – 5 percent

More importantly, the IAB reports show a steady decline in total revenue for classified advertising. But these numbers are misleading because of how the IAB defines each category.

Classified Revenue is Alive and Well

For literally more than a century, a typical classified ad has been a brief text ad. In contrast, a display ad is a larger format image ad. The first one usually doesn’t have any graphics while the second one does.

The billions of dollars of classified advertising aren’t vanishing. They are simply being absorbed into what IAB calls the search and mobile categories.

Search advertising consists of ads that appear on the search engines — such as Google, Bing and Yahoo! — as well as on their partner sites.

Notice that the great majority of those ads consist of a block of four or five simple and brief text ads and not display graphical ads.

The bulk of what IAB calls search ads is really made up of classified ads in the traditional definition of the word.

Some online purists might argue that the definitions have changed and the word classifieds no longer has the same meaning.

The counter argument is that the IAB definitions are illogical. “Search” is a type of function. “Mobile” is a type of device. “Banner” is a type of display. “Video” is a type of content.

Making Money from Classifieds

It would be a terrible mistake to look at the IAB reports and think that classified advertising isn’t worth pursuing because it is in decline.

But classifieds are doing quite well. They appear all over desktop and mobile sites in two important forms.

The first form is a type of display ad that contains one or more classified text ads. The second and more traditional form is a straight list of ads that may fill an entire page.

It benefits a site publisher to promote these small and simple text ads as a way of generating extra revenue and filling unsold display inventory.

Because of their small size, they are best sold through an automated process or as part of a longer-term contract that allows an advertiser to post multiple versions over a period of time.

Don’t be swayed by faulty terminology. Classified advertising is still quite alive, well and paying big dollars.