On a typical weekday more than 55 million newspapers are bought, evidence of the enormous power, importance, and influence wielded by U.S. dailies. And yet, despite such vast circulation, the future of the American newspaper industry is unclear -- in part because real estate marketing patterns are in flux.

According to the Newspaper Association of American (NAA), newspapers have seen circulation declines for many years: Some 62.8 million papers were sold on weekdays in 1985, a number that fell to an estimated 55.6 million papers in 2001.

Some of the circulation decline is plainly due to Internet growth, and yet the newspaper industry is far more robust than online competitors.

Robert J. Coen, the senior vice president and director of forecasting with Universal McCann, one of the world's largest advertising agencies, says that in 2001 newspapers sold advertising worth $44.3 billion while the Internet racked up ad sales of $5.8 billion.

So despite declining circulation, newspapers remain a media powerhouse. But will circulation decline as Internet usage grows? Will ad revenues melt away?

If you're a newspaper publisher you can look at the world and see disturbing trends. Department store advertising has been hurt as retailers merge and fold. Classified ads for jobs and cars are being challenged by online sites. As to real estate, brokers have turned increasingly to the Internet. Why? Because that's where an elite group of brokers find transacting consumers online.

The National Association of Realtors, in its most recent Profile of Home Buyers and Sellers found that buyers in 2001 used both newspapers and the Internet equally in the homebuying process -- 41 percent of the buyers surveyed used both media. The catch is that newspapers and the Web were not always equal. In 1997, for example, 51 percent of the buyers used newspapers as a primary information source while just 18 percent relied on the Internet.

According to a study developed earlier this year by Borrell Associates, real estate ads are worth $3.5 billion annually to newspapers. The report, entitled Real Estate Classifieds: Big Changes Ahead For The Home Listings Business, also explains that direct revenues from brokers do not represent the total benefit to publishers: Newspapers with strong real estate sections also get revenue from related advertisers such as mortgage brokers, hardware stores, and furniture outlets. In effect, real estate is hugely important to newspapers.

But while paper-based newspapers are important as we start the Internet era, some brokers are finding success with fewer local ads. The Borrell report, which is available through NAA, offers the example of Barbara Simmons, owner of Realty World Equity Center in Thousand Oaks, CA. Simmons, according to the study, now obtains "a remarkable 30 to 40 leads per day" online -- and her newspaper ad budget has dropped from $4,000 to $200 a month.

So are newspapers still in the ad picture?

The answer is "yes" and one reason is that brokers are still learning to use the Internet. For example, NAR's 2001 Profile of Residential Real Estate Brokerages shows that among all residential firms, two-thirds get less then 5 percent of their leads from the Internet.

For those who have not found success online, it's hard to ignore a medium that sells more than 55 million papers on a weekday (59 million on Sundays) and is a major source of real estate information for millions of prospective buyers and sellers. Let's put it this way: If 41 percent of all buyers use newspapers as a core information source, it means more than 2 million buyers a year use their daily paper to ferret out the best real estate offerings.

What seems to be happening is that web-savvy brokers are turning increasingly to the Internet. Seven percent of all residential firms are getting 20 percent or more of their leads online, says NAR, a number which tells us that 93 percent are not.

Alternatively, much potential online business is being lost -- if 41 percent of all buyers are getting real estate information from the Internet but most brokerages obtain 5 percent or less of their business from the web, someone isn't answering their e-mail, designing effective sites, or sending out localized newsletters.

What we're seeing is evidence of a technological divide: A growing volume of online business is going to a small number of astute brokers who have mastered the communication values represented by the Internet. If this pattern continues long enough, a number of today's firms will be out of business -- not because they're bad brokers, but because they're weak communicators.

As to newspapers, today they're an influential resource for realty consumers but they no longer have an effective lock on local news or classifieds. The dailies can remain significant as long as they deliver quality leads to brokers at a competitive cost, otherwise broker ad dollars will increasingly and inevitably migrate online.

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