New York--As if it couldn’t get any worse for newspaper companies, the slowing economy, coupled with more job searches happening online, have hurt their cash cow: help-wanted ads.

It's a tough market out there but FOXBusiness.com is here to help. Careers is our "On Topic" subject for May, so check often for tips on everything from landing that dream job to how to recession-proof your job.

To counter that, newspaper companies from The New York Times (NYT), to Gannett (GCI) to Tribune (TXA) have increasingly embraced the Internet as a means to protect their help wanted ad revenue stream. The problem is it may not be enough to blunt the impact the Internet is having on the help wanted advertisement market.

“There’s a huge slowdown in help wanted ads," said Jenifer Saba, associate editor at Editor & Publisher, the Northbrook, Ill., trade magazine covering the U.S. newspaper industry. “Help wanted ads usually come back [from cyclical downturns] and this time it’s going to the Internet when it does.”

According to Wachovia analyst John Janedis, in the first quarter print-only help wanted advertisements will be around 40% lower what they were back in the first quarter of 1995.

“The Internet is the perfect medium for the classified business,’’ said Janedis. He noted that 42% of recruitment budgets will be online in 2008, likely moving to 60% by 2012 or 2013. “A lot of the existing recruitment dollars in print are at risk of migration online, even from here,” said the analyst.

For years classifieds, whether its jobs, real estate or automobiles, had been a cash cow for newspaper companies, representing around 40% of a metro papers’ revenue and 50% of its profit, according to Ken Doctor, an analyst at Outsell, the Burlingame, Calif. and London-based  market research and firm cover the  publishing, information and education markets.  

But the popularity of the Internet changed all that. People were turning to Web sites like Craig’s List and eBay (EBAY) to buy merchandise, Monster Worldwide’s (MNST) Monster.com or Yahoo’s (YHOO) Hotjobs.com for their employment needs and Autotrader.com to look for cars. Newspaper companies had no choice but to embrace the new trend.

The earliest form of a defense came from Careerbuilder.com, which is owned by Gannett, Tribune, McClatchy (MNI) and Microsoft (MSFT). The idea behind Careerbuilder.com was to offer customers help wanted advertising in the newspapers as a bundled package of print ads, Internet ads on the paper’s Web sites and at Careerbuilder.com.

Newspaper companies became affiliates of Careerbuilder.com, paying a fee to offer access to the job board to their advertisers. The upside, according to Doctor, was newspapers could charge their customer 5% to 10% more for the bundled package. But some affiliates started grumbling about the fees they were paying, driving partnerships with other Internet job boards.

“Careerbuilder.com started to spawn a new model,’’ said Doctor. Today there are three top job boards on the Web: Careerbuilder.com, Monster.com and Yahoo’s Hotjobs.com. All three count newspaper companies as their partners.

Yahoo, taking a page from Careerbuilder.com, started in November 2006 the Yahoo Newspaper Consortium with seven newspaper companies representing 176 U.S. daily newspapers to share content, advertising and technology. The first phase of the deal called for the newspaper companies to post help wanted ads on Yahoo’s HotJobs.com and use HotJob’s technology for their own help wanted ads on the Internet.

“Newspapers are aligning with job boards and there seeing some success,’’ said Saba at Editor & Publisher. “The problem is you get more money from print ads versus online.”

Wachovia’s Janedis estimates the print help wanted ads is a $3 billion market. “There’s still a fair amount of risk longer term that could be a $2 billion industry,’’ he said. “In the first quarter of 2008 we’ve got help wanted dollars down 27.7% and the compares to the online guys which probably posted about a 5% increase.”

The New York Times, for its part, acknowledges it’s a challenging time for the industry, but a spokeswoman said in an e-mail, that it has been performing better than its peers when it comes to help wanted ads.

Last year The New York Times inked an alliance with Monster.com to create co-branded Web sites and in November joined the Yahoo Newspaper consortium. In February the New York Times, along with Hearst, Tribune and Gannett created quadrantONE, which is an online sales group focused on high end advertisers. Spokespeople at Tribune and Gannett did not return calls for comment. Careerbuilder.com declined to comment.  

While newspaper companies are proactively trying to protect their turf when it comes to help wanted ads, there is the real risk that employee seekers will abandon print altogether and simply place ads directly with the likes of Monster.com or Hotjobs.com. Not to mention the slew of specialty job boards like Dice.com that caters to technology professionals.

Even though newspaper companies have deep relationships with advertisers that span decades it may not be enough when it comes down to basic economics.

“What happens in five years if it looks like more of the recruitment is coming through Yahoo’s Hotjobs,’’ said Outsell’s Doctor. The company may wonder if it can get a better deal going directly to Yahoo and cutting out the middleman, which in this case would be the newspaper. “That’s the huge question in this.”

Still Doctor said that given Newspaper companies are skilled at selling advertisements they may be able to prove their worth to the likes of Yahoo by building bigger and better sales forces.

“The core strength of a newspaper is its sales staff and its relationship to the advertiser,’’ said Doctor. “If they can keep that relationship it doesn’t matter what they are selling.”