Downturn in real estate ads could spell trouble

A decline in real estate ads – which primarily run in the business section and sections that daily business sections put together — could spell trouble for many newspapers, writes Bloomberg’s Tim Mullaney.

Mullaney wrote, “A 14 percent decline in spending on real estate ads in the first quarter accelerated in the second period, estimated media consultants Borrell Associates in Norfolk, Virginia. Sales will drop by more than one-third by 2011, Borrell predicted.

“The collapse is especially significant because home-sale ads propped up newspapers last year, after automotive and employment spending declined. Real estate accounted for $5.16 billion, or 30 percent of all classified spending at newspapers, where overall advertising totaled $46.6 billion in 2006, according to the Newspaper Association of America.

“‘Two billion dollars a year is going to come out of newspapers,’ said analyst Matt Booth at Kelsey Group in Pasadena, California. ‘It’s going to be tough to make that up.'”

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