Discussion of online classified markets with particular relevance to Russian and Ukrainian online markets

1. Growing Online Revenue:
Advertising, Sales and Classifieds
Moscow, Russia
27 – 28 September 2012

2. Agenda
Topic Presenter
 Online Advertising Market Overview Ross
 Sales Teams: Organization & Motivation Ross
 Advertising Networks Ross
 Online Classifieds: Local Opportunities Ross
 Social Media: Building Audience & Revenue Kevin
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3. Online Classifieds
A cautionary tale : “Now you see them…now you don’t!”
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4. Online Classifieds
Many different types of online classifieds businesses exist.
The Big Three
Recruitment - Jobs Real Estate/Rentals Auto
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5. Online Classifieds
But online classifieds also encompasses directory products, free
classified services, and calendars.
Directories Free Classifieds Calendars
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6. Online Classifieds
And there are dozens of other specialty sites - a few examples.
Dating/Matrimonials Education/Course Listings
And many more, often very successful specialty sites – motorcycles,
surfing, biking, wedding services, pets,...
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7. Online Classifieds
Online classified advertising in Russia and Ukraine is in the early
years of development, but still represents a potentially large market.
Estimated Online Classified Market Classified Advertising Overview
(millions) Online revenue is often from print
€70 – 100 revenue
mm
Fundamentally changes the nature
of print classifieds
Requires data to manage the
€15 – 25 mm
business online and in print
Cost accounting information
critical to managing the transition
from print to online.
For comparison: US = € 2.0b
India = €130 mm
Source: Company reports, 2011; eMarketer, Avendus
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8. Online Classifieds
The online classified market in Russia and Ukraine has attracted
many large international competitors.
Alexa
Rank Site Category Corporate Ownership Alexa Rank Site Category Corporate Ownership
#18 Avito.ru Free Classifieds Privately Held - Accel Partners (US) #30 Slando.ua Free Classifieds Allegro Group/Naspers (S. Africa)
#27 Auto.ru Auto Privately Held #59 Work.ua Recruitment Privately Held
#28 Slando.ru Free Classifieds Allegro Group/Naspers (South Africa) #88 Rabota.ua Recruitment Grupa Pracuj (Poland)
#45 Drom.ru Auto FarPost Group (Vladivostok) #119 Freelance.ru Recruitment Privately Held
#50 HH.ru Recruitment Mail.ru (Naspers 29%) #164 Avtobazar.ru Auto Privately Held
#62 TIU.ru Directory Allegro Group/Naspers (South Africa) #187 OLX.com.ua Free Classifieds Naspers (South Africa)
#92 IRR.RU Free Classifieds Trader East Media/Hurriyet (Turkey) #192 Infocar.ua Auto Privately Held
#150 OLX.ru Free Classifieds Naspers (South Africa) #195 AutoUA.net Auto Privately Held
#218 Rabota.ru Recruitment RDWmedia.ru #308 Jobs.ua Recruitment Privately Held
#241 Molotok.ru Free Classifieds Allegro Group/Naspers (South Africa) #434 AutoPortal.ua Auto Privately Held
#304 Autonews.ru Auto RBC Holdings/Handelsblatt (Germany) #476 Domik.net Real Estate Privately Held
#338 AutoRambler.ru Auto Rambler Group
#351 Job.ru Recruitment Trader East Media/Hurriyet (Turkey)
#401 FarPost.ru Free Classifieds FarPost Group (Vladivostok)
Due to its small size and unique language, the Georgian online
classified market is dominated by a few local competitors
– MyMarket.ge and sister sites, jobs.ge, HR.ge, …
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9. Online Classifieds
What do you think are the main characteristics of the online
classified markets in Russia and the Ukraine?
Databases: All are powered by structured databases of content:
- Auto = Make, Model, Year, details, …
- Real Estate = Location, Size, details, …
- Jobs = Job Category, Job Title, requirements, …
Content: Content is mostly contributed by the user/advertiser.
Transactions: Most sites do not complete the transaction.
When a site enables a transaction to be completed (payment paid, product
delivered), it is an e-commerce site.
The basics of the site are still the same.
Local: Very few large competitors exclusively local.
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10. Online Classifieds - Strategy
Depending on the type of classifieds and your company’s strengths,
there are several different local classified strategies to consider.
Go It Alone: Build, sell and market your own classified advertising site.
Build a Network: Work with other local media to create more audience,
build one site together; each partner markets and sells the site separately.
Partner with National Site: Work together with a national classified site.
National classified site provides technology platform, perhaps national
marketing and sales; local partners sell and market in locally.
Traffic Partnership: Sell a traffic sponsorship to a national partner; do not
create or sell local online classified advertising.
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11. Online Classifieds - Strategy
“Go It Alone” strategy requires technology, sales and marketing
strengths.
KP22.ru “Go It Alone” Overview
Build, sell, and market an independent
classified site.
Strengths Required:
- Dominant offline classified business
- Strong local sales and marketing
- Strong technology team
Risks:
- Focused competition from national site
- Cannibalization of print by online
Longterm Strategy:
- Dominate locally; expand regionally
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12. Online Classifieds - Strategy
“Build a Network” builds on a group of similar like minded media
sites to seize a larger part of the online audience for classifieds.
“Build A Network” Overview
Partner with other similar media
companies to build a larger audience to
compete with national players.
Strengths Required:
- Good offline classified business
- Strong local sales and marketing
- Strong technology team
Risks:
- Focused competition from national site
- Cannibalization of print by online
Longterm Strategy:
- Dominate locally; expand network
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13. Online Classifieds - Strategy
“Partner with National Site” strategy recognizes that national sites
have strong technology and local media have strong local sales and
marketing.
“Partner with National Site” Overview
Partner with a national classified site.
National site provides technology; local
partner provides sales and marketing.
Strengths Required:
- Good offline classified business
- Strong local sales and marketing
Risks:
- Cannibalization of print by online
- National site takes over sales and
marketing at the end of the contract
Longterm Strategy:
- National site wins; exit classified business.
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14. Online Classifieds - Strategy
“Traffic Sponsorship” leaves all sales, marketing and technology to
the larger national competitors.
“Traffic Sponsorship” Overview
Sell a national classified site the ability to
gain new users by linking their site to yours.
Strengths Required:
- Strong local web traffic to main site
Risks:
- Traffic fluctuations.
- Negotiations
Longterm Strategy:
- Focus on traffic growth.
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15. Online Classifieds – Business Operations
After selecting your strategy, there are two key areas that need some
planning – content acquisition and audience acquisition.
Content Acquisition: The Problem of The Chicken & The Egg
- Classified sites with no content have no audience
- How do you get the content to start?
Source #1: Offline Classifieds
- Create an automated/manual post system to ensure that each offline
classified ad is included on the new online site.
- Evaluate reverse publishing from online to print.
- Evaluate charging for cross-posting online to print, print to online
- Technical integration can be difficult and time consuming process
Source #2: Aggregation
- Create an automated tool to “copy” free classifieds from other sites
- Create a process to input classifieds from free-standing bulletin boards.
Source #3: Consumers Direct
- Create pricing and promotional offers to encourage new posts.
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16. Online Classifieds – Business Operations
Audience acquisition often requires large amounts of marketing
support to start.
Audience Acquisition: How do I generate trial?
- What can I do to get people to try the site?
- Post an Ad? Respond to an Ad?
Source #1: Offline Marketing
- Use your own in-house media to create awareness and generate trial
+ Contests that link print and online classifieds (e.g. treasure hunts)
Source #2: Online Marketing/SEM/Social
- Make your site as visible to search engines as possible
- Track views per ad; evaulate buying search traffic to guarantee ad views
- Evaluate creating a social media page for your classified site
+ Distribute ads on the page.
Source #3: BBS Seeding
- Find local BBS’s where you can cross post important ads to generate trial.
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17. Online Classifieds – Business Operations
Increasingly online classified advertising takes a free plus premium
services model.
Free: Most general classified sites, many directories and calendar sites are
free to post a standard listing.
For completely free to post sites, all revenue is from contextual ad networks,
like Yandex Direct and Google AdSense.
Many free classified sites require commercial sellers to pay.
Free + Premium: In these models, a standard basic ad is offered free to
generate content. Then the client is allowed to add new features for small
additional fees.
Typical Premium Features include:
- Pictures - Bulk upload
- Web links - Anonymous email contacts
- Video - SMS notification
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18. Online Classifieds – Business Operations
Pricing can also involve bundling and upselling from your offline
product.
Upselling: Adds a special premium usually to the print ad to automatically
cross post to the online site.
- Upsell is often calculated as a percentage of the base price
- Upsell % are generally small, but should reflect all the costs of cross
posting and some margin
Bundling: Used especially with small businesses and frequent classified
users to encourage volume buying.
Typical bundle might be volume packages – Buy two get one free.
But a cross media bundle may also work to encourage online users to try
print.
“Place your ad online for free and
get 50% off of the price of a classified ad to also include it in print.”
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19. Online Classifieds – The Future
Classifieds meet a simple need to publish small bits of structured
information.
In the simplicity is the source of the speed of their evolution.
Online Classified Trends
Mobile: The emergence of classifieds in India and Africa have created
demand for mobile posting, access and payments.
Social: The growth of FaceBook and other social media have created a new
way to post and distribute classifieds.
Payments: Mobile and online payment processing have made online
classified sites much more like online e-commerce sites.
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20. Online Classifieds – The Future
Mobile classified platforms have boomed in India and Africa.
Roopit.com
SMS classifieds
Based in Bangalore
Free to list or search
Also Verse Technologies
Google Trader (goo.gl/trader)
•Launched in Africa and Thailand
•Allows for free listings
•Designed for activity on mobile
phones
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21. Online Classifieds – The Future
Classifieds on Social Platforms like Facebook and Twitter have moved
classifieds to a more secure personal platform.
FaceBook/Oodle.com
Oodle built app inside FaceBook
Provides some security, friend or
friends of friends
Rapidly building audience
CLDmkt.com
•Built as an application on Twitter
•Simple listing creation
•Access listings online, on Twitter,
on mobile
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22. Online Classifieds – The Future
Classified sites are also undergoing a rapid conversion to e-
commerce sites with the development of simple mobile payments.
Square
Brings credit card transactions to
individuals
Simple sign-up and service
Processing US $ 8 billion in 2011
M-Pesa/SafariCom
•SMS enabled banking system
•17 mm ises in Kenya/10 mm in
Tanzania
•Creates bank accounts for people
with bank services
•Provides for simple person to
person transfers
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23. Online Classifieds - Summary
The online classifieds market is a small but rapidly growing market in
Russia and the Ukraine and will present both opportunities and
challenges.
Strategy: Know your strengths and weaknesses.
- When to enter the market?
- Why to enter the market? Protecting core offline classified revenue? Or
new business?
- When to exit the market?
Operations: Be aware of the need to stimulate classified content which will
build audience.
Pricing models need to reflect the competition and internal costs.
The Future: The simplicity of the model results in rapid fragmentation and
the evolution of new features.
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