Here are a few key points from the report.

• The lion’s share of local ad dollars — 57.3% — are sucked up by pure-play Web sites that reach users who are not there for the news, but to research products and prices.

• Newspapers can claim a 24.6% share of the total local on-line ad market which is down from the 44.1% share they held just four years ago.

• Top performing newspapers tend to have three things in common. They are less dependent on classified vertical categories, have larger dedicated on-line sales force, and host multiple Web sites.

• Web sites of the biggest newspapers are now generating more than half of their revenues from non-print advertisers.

• Newspapers continue their dangerous dependence on classified, the study found. Classified ads accounted for 63% of on-line newspaper revenue, though the reliance has declined from 71% in 2006 and 77% in 2005.

The report comes with a warning which I believe all newspaper executives already know but it is still worth repeating- Newspapers are growing on-line revenue at over 50% even in a down retail market. In any business that is unbelievable growth. At the same time, newspapers are losing local on-line advertising market share (down 17% in 4 years) and total revenue has been slipping for the past few years.

The full report can be seen here.

As I said, I believe the key executives are well aware of this and have started developing hyper-local, community based products that bring non-traditional advertisers into play. Also, niche programs like the Mom’s initiative at Gannett and Hearst, Gannett’s data center and McClatchy’s partnership with Caspio are going to create some new and interesting opportunities.