Online ads stiff competition for newspapers.

Newspapers could lose as much as $5 billion in classified revenues to Internet competitors by the year 2003.

The gap in projected revenue for newspaper classified ads if there were no Internet and the actual revenue with the Internet will only. widen with time, reports Forrester Research Inc. The company says that eventually the "Internet will eliminate classified ads as we know them."

The 90 classified advertisers Forrester interviewed around the country spent an average of $382,000 on all media in 1997. While 11 percent of that was on the Internet, these advertisers planned to reallocate an average of 22 percent of their newspaper classified spending to the Internet by 2000.

Currently, classified advertisements constitute a $17 billion market that represents an average of about 40 percent of all advertising revenue for newspapers, according to the Inland Press Association and the Newspaper Association of America (NAA).

The future, as Forrester sees it, may look bleak. But Kevin McCourt, NAA's Director of Real Estate Advertising and Online Classifieds, says that although the classified advertisement market has become more competitive, newspapers are still in the game.

"Newspapers are still the first place people go," McCourt says. "Newspaper classifieds will change, but I think they'll still be around for a while."

He says that while many classified advertising directors are "worried more about continued revenue gains, there's a great sense of optimism, in part due to newspapers embracing the Internet."

That, he says, is key. Newspapers must evolve with the technology or lose out. He notes two factors that put a newspaper at risk for losing classified advertisements: ignoring the Internet or taking some steps to utilize the Internet, but not communicating with advertisers to let them know what improvements have been made.

And newspapers are getting the message. More than two-thirds of NAA member newspapers publish classifieds in print and online as a package deal. About 650 to 700 dailies publish their classifieds online.

In St. Louis, the Riverfront Times sees the threat of online classifieds, but has accepted the challenge.

"We've decided to go the other way - to embrace the electronic age," Kenny Stocker, classified advertising director for the RFT, says. "We're trying to make a positive out of it. It is the wave of the future. Are we worried about it (the online competition) enough to make sure our online product is good? Yes."

McCourt says the competition comes in two forms, cross category competitors and product line competitors. Cross category competitors provide classified advertisements for many categories, often in a directory form. Product line competitors focus on one category, providing more in-depth services. Examples include Career Mosaic, CyberHomes, Microsoft's CarPoint and Autobytel.com.

Product line competitors are most changing classified advertising because they offer extended services such as pictures of cars or houses, resume posting services and databases and additional product information or job hunting tips.

The RFT made the first move toward expanding its online classifieds about a month ago when it added an option to include links in online line ads. Links connect the advertisement to another website, often the home page of the company or individual advertising. Links increase the cost of the ad, but also allow an advertiser to connect the reader to pictures, resumes or company profiles and more detailed information. Stocker says links are a new trend, and he expects them to increase in the next quarter.

Online classifieds also rank above print classifieds in their ability to provide national listings. A person using most online classifieds can search for homes, cars or job offerings across the country. Newspapers, wanting to expand their service in the realm, often outsource a national service like AdQuest3D, Classified Warehouse or CareerPath.com. Often, the national site will have the newspaper's logo on it when accessed from that paper's website.

"Consumers might not even know the technology was being outsourced," McCourt says.

CareerPath.com, for example, was co-founded in 1995 by the Boston Globe, Chicago Tribune, Los Angeles Times, The New York Times, San Jose Mercury News and the Washington Post. Financial backing for CareerPath.corn is provided by Knight-Ridder, New York Times Company, Times Mirror Company, Tribune Company and The Washington Post Company, as well as Cox Interactive Media, Gannett Company and Hearst Corporation. Currently, 90 newspapers are affiliated with CareerPath.com.

At any given time CareerPath.com has about 340,795 jobs listed. Each month 1.1 million people visit the site, according to Media Metrix.

CareerPath.com offers career management information, including interactive chats/bulletin boards with career experts and the ability to post resumes.

Services for the job seeker, such as posting resumes and searching for jobs are free. CareerPath.com charges employers to search the resume database and to post job listings. Companies now can post jobs directly on the site without posting in a newspaper. About three-fourths of the ads come from newspapers, but the ratio of newspaper-based ads to direct ads is expected to even out next year.

Having the newspaper's name on the site is important, McCourt says, because people trust the quality of a newspaper. He says that when people pay for classified ads, as they do in newspapers, they are less likely to be just fishing. Often, she says, free Internet ads attract less-than-serious advertisers. Also, he says, newspapers are more sensitive to issues like fair housing and other laws. For example, you cannot sell anything illegal through a newspaper.

"It's just a safer place to shop," McCourt says.

To help newspapers utilize that trust, NAA created a symbol, similar to the Good Housekeeping seal, to identify newspaper-affiliated sites. McCourt says two-thirds of customers in a recent survey said they were more likely to respond to advertisers on newspaper-affiliated sites than on other sites.

Another advantage he says newspapers have is that advertisers get print and online ads in one package, which should generate more response for the advertiser.

Stocker agrees that print classifieds still have value.

"We feel that print media is still the best way to meet the masses and the passive reader," Stocker says.

The St. Louis Post-Dispatch was contacted for comment, but did not respond.

Leigh Muzslay is a St. Louis free-lance writer