Advertising dollars at U.S. print newspapers continued to fall in the third quarter, declining by 7.4 percent, according the latest industry report.

The Newspaper Association of America said Tuesday that total advertising dollars spent on print advertising fell 9 percent to $10.1 billion from the same period last year, led by a 17 percent tumble in classified advertising.

Online advertising now accounts for 7.1 percent of overall newspaper ad spending, up from 5.4 percent in the third quarter of 2006. The industry group said this demonstrated the importance of newspaper Web site advertising.

Within the print advertising category in the third quarter, classified ad spending dropped 17 percent. Real estate advertising fell 24.4 percent to $1 billion as the nation experiences a steep decline in home sales fueled by a crisis in the subprime mortgage lending sector.

At the same time, broader economic issues are impacting our industry the same way they are impacting other media – the continued fallout from declines in the housing market clearly affects real estate, recruitment and retail advertising, NAA President and CEO John Sturn said. Newspaper companies continue to take aggressive measures to prepare for the future during a period of economic challenges for the industry.

Classified advertising, once considered the major source of income for newspapers experienced a big drop drop. Within classified ads, job ads dropped 20 percent to $882.4 million and automotive ads were down 18 percent to $796.6 million.

Online advertising at newspapers climbed 21 percent to $773 million in the latest period compared with a year ago.