The TV Analogy
Believe it or not, there was a time when newspapers earned more money from national advertising than they did from classifieds. In 1950, national ads accounted for 25 percent of the total ad-revenue pie, versus 18 percent for classifieds (see chart 1). By 1995, national ads accounted for only 12 percent of total ad revenues, while classifieds checked in at a whopping 38 percent. Preliminary numbers for 1997 put classifieds at an even-larger 41 percent.
Why the dramatic shift? Many factors are involved, but the rise of television is clearly the biggest. In 1950, TV was a fledgling industry-only about 5 million U.S. households even owned a set (chart 2). By 1955, that number had skyrocketed by a factor of six, and it's been increasing steadily ever since.
The effect on national advertising has been seismic. In 1950, newspapers captured more than four times the national-ad revenues of TV (chart 3). Only five years later, TV had caught up. Today, TV is the undisputed king of the category-it garners more than six times the national-ad dollars of newspapers.
The lesson is clear and disturbing: The last time a major new technology arrived on the scene, it stole a huge chunk of our revenues.
Now the question is, will the Internet have the same effect? Will it steal our classified ads in the same way TV stole our national ads?
The answer is yes-and maybe.
Yes, the analogy works from a purely technical perspective. TV is more effective than newspapers at reaching a broad national audience, and has therefore become a natural medium for national advertising. The Internet offers a number of features that enhance classifieds (searchability, no length restrictions, the ability to drill down for more information, virtual tours, online agents, etc.), and thus is certain to become the medium of choice for classified advertising, just as soon as enough people get Internet access.
Maybe, though, the Internet won't "steal" our classifieds. Maybe we will master the Internet before our Internet-based 
competitors master the business of classified advertising. To borrow a popular computer-industry phrase, maybe we will eat our own lunch before someone else eats it.
The crucial point is this: We must act now. Compare chart 4 with chart 2, and you'll see that the Internet's growth curve looks strikingly similar to TV's-only the Interent's time scale is in months, not years.