KB Seminars: Growing Online Revenue: Advertising, Sales and Classifieds; 09/12

Growing Online Revenue:Advertising, Sales and Classifieds

Moscow, Russia

27 – 28 September 2012

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TopicPresenter

Online Advertising Market Overview Ross

Sales Teams: Organization & Motivation Ross

Advertising Networks Ross

Online Classifieds: Local Opportunities Ross

Social Media: Building Audience & Revenue Kevin

Agenda

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Online Market Overview

Growth in regional Internet audiences has created a growing market for online advertising.

46% 33% 51% 41% 54%Penetration Rates

Total Internet Population(millions)

Growth Rates 2010 vs 2011

Source: iabEurope 2012; Gemius, 2012.

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But these audiences are mostly concentrated in Moscow, Kyiv and St. Petersburg.

Regional Internet Penetration, 2010

Russia

Est. Audience Penetration Est. Audience Penetration (millions) (%) (millions) (%)

Moscow 8,421 73% Kyiv ~ 4,500 ~90%St. Petersburg 2,863 59% Odessa 1,193 44%National Average -- 46% National Average -- 33% Chelyabinsk Oblast 1,760 51% Zaporizhia Oblast 528 28%Tomsk Oblast 421 40% Lviv Oblast 695 27%Perm Krai 846 32% Crimea Republic 362 18%Tula Krai 485 31% Kherson Oblast 136 12%Altai Krai 703 29% Chernivtsi Oblast 76 8%Buryatia Republic 280 29%Rostov Oblast 945 22%

Ukraine*

Russian Source: Рейтинг регионов по доле пользователей сети Интернет по итогам 2010 г

Ukrainian Source*: Estimated from Kyiv Post, “Report: Ukrainians browse more, online advertising yet to boom”

http://ria.ru/research_multimedia/20110928/445104870.html#ixzz25ciIsVjb

http://www.kyivpost.com/content/business/report-ukrainians-browse-more-online-advertising-y.html

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Internet advertising in 2011 grew dramatically in Russia and Ukraine and will likely continue to grow until it reaches European averages.

+ 56% +59% -16% +26% +23%Growth Rates

Total Internet Ad Spending, 2011(millions)

Estimated Spending/User, 2011

Source: iabEurope 2012; Gemius, 2012. Note*: Russian estimate does not include €50 to 70 million in online classified spending.

European Avg = € 33

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Over the next two days we will discuss the three major types of online advertising.

DescriptionRelated to site audience/contentSold directlyMultiple pricing models

Directory/database drivenSold directly or self-serveHigh volume, low price or free

Search engine drivenSold by technology companies w/ specialized sales teamsDriven by page views and clicks

Display

Search/Context

Classifieds/Directory

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Online Display Advertising

Display Advertising ElementsAdvertisers: Who are they?

Advertising Standards: What are they?

Pricing Models

Advertising Management

First we will start with Online Display Advertising and focus the discussion on the following elements.

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Online display advertising is dominated by national, international advertisers in Russia.

Distribution of Online Advertising Spending, 2011

Source: ACAR, 2012

By Industry

1. Renault-Nissan 885 2. Proter & Gamble 590 3. Nokia 472 4. MTS 472 5. Samsung 448 6. Megafon 448 7. Beeline 413 8. Unilever 342 9. Sberbank 295 10. Microsoft 283

By Advertiser(rubles millions)

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Local advertisers tend to adopt online advertising much more slowly than national/international advertisers.

Local Online Advertising Trends

Source: Borrell Associates, 2012; eMarketer, 2012.

Online Ad Mix – US Example (US $ billions)

Obstacles to Local Advertising

Relative risk to the business

Lack of understanding/familiarity

Target audience (local) too small or difficult to track

Measurement

Generational issues

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The sales and marketing challenge to generating online advertising revenue is two-part.

1.How to attract a portion of the national/international advertising budgets?- Do you offer sufficient size to interest them?- Is your online reach to the local market important?- Is some aspect of your market important for the sales/marketing of their service (e.g. sports equipment, airlines,…)- Is it easy to buy your ads? Credit process? Sales channels?

2.How do you encourage local advertisers to trust you and try online ads?- Do you have any ability to educate them?- Do you have any way to reduce the risk in trying online advertising? - Can you work with the advertiser to develop a verifiable way to prove the value of online advertising.

Find creative ways to use your traditional products to introduce your online products to both types of advertisers.

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One of the most common actions to attract local and national advertisers is “standards”.

Value of Standards

Cost: Lowers the costs of ad creation and ad serving

Creative and Clarity: Allows for greater creativity in ad design and creates a clear distinction between ads and editorial.

Access: Helps support media’s ability to deliver online sites quickly, with no delays because of large non-standard ads.

Support: Provides media with support to argue against unreasonable advertiser requests.

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Online advertising standard are fluid, global and set in most European markets by an industry association of advertisers and media – The Internet Advertising Bureau.

iab Europe

Education and Events

News and consulting

Research and measurement

Standard setting

New standard development

IAB Contacts: iab Europe =

www.iabeurope.eu Iab Ukraine (affiliate) =

www.uair.org.ua iab Russia = iabrus.ru

http://www.iabeurope.eu/

http://www.uair.org.ua/

http://iabrus.ru/

http://www.iabeurope.eu/

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Online advertising standards are defined by two key attributes of each ad.

Ad size: Defined in terms of the width and length of an ad unit measured in pixels.

Weight: Defined as the size of the advertising file in megabytes (MB).

Other: For new or emerging ad units there are new attributes constantly being defined:- Length of video play- Automatically play or user initiate play- Duration of ad placement in games

Ad standards are constantly evolving – let’s look at the current standards ad standards most commonly used for news media sites.

http://www.iab.net/guidelines/508676/508767/displayguidelines

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Pricing for online display advertising must address two questions:

What is the revenue model? What are you selling the advertisers?- Fixed Price by position; by time of day or week- Price per thousand ad impressions (CPM Pricing)- Price Per Action taken by the reader- Hybrid pricing of two of the above items

What is the price level? For each unit purchased how much does the advertiser pay?

Setting pricing levels require you to consider several factors. The three key factors are:- Competitive Prices- Ad Availability/Inventory- Audience size/reach/uniqueness

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Fixed price models offer many advantages for local news media and advertisers who are still new to online advertising.

Fixed Price Models

Used broadly worldwide:- Schibsted (Norway)- SCMP (Hong Kong)- Gannett (USA)

Ad positions are fixed and limited in number

Each ad position has a price for some fixed period of time:

For example: 1 leaderboard on the homepage for 1 week

Inventory grows by adding positions or splitting positions by time of day/day of week.

Price levels generally set relative local TV, print and outdoor.

PRO’s: Familiar sales pitch

Easy to verify/document for advertisers

Easy to price

Easy to track and serve

CON’s Not easily included in national

advertising pricing models

Creates some risk of under performance for advertisers

May under value sites with high traffic growth rates.

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Increasingly CPM Pricing models are the standard for national and international advertisers.

CPM Pricing Models

Driven by national/international agencies and advertisers.

Ad inventory determined by - Number of ads on each pageX Number of pages served (Page Views)= Total Ad Impressions

Advertisers purchase blocks of ads by the thousands.

For large sites (> 1mm page views), ads are often run in “rotation”, called “run of site” ROS.

Price levels are set in relation to competitive online price ranges. Range has two ends:- High = price points of competitive media.- Low = Ad Network Price + cost of sales.

Calculating Ad Inventory:

1.5 million page viewsX 3 ads/page 4.5 million ad impressions

Price Calculation:

Advertiser purchases 2 million ad impressions for P 300 per thousand

2,000 (thousands) x P 300 = P 600,000

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CPM Pricing models also have pros and cons.

Pro’s of CPM Pricing:Easily understood and incorporated into national/international advertiser programs.Maximizes inventory value in high demand situationsRotating ads keep site fresh and up-to-date

Con’s of CPM Pricing:Complicated sales and verification process for advertisers new to onlineRequires ad serving technology – AdRiver, OpenX, Google DoubleClickCan result in substantial unsold inventory in low demand situationsCan result in advertisers “cherry-picking” only the best times/days of the week to run their ads

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Price per action advertising is the most sophisticated and often used by e-commerce advertisers like ozon.ru or amazon.com.

Price per Action Models

Used extensively by e-commerce advertisers

Advertisers only pay when the reader performs some pre-defined action:- Click- Register- Purchase

Used heavily by ad networks like Yandex Direct and Google AdSense

Frequently added as a bonus on top of CPM purchase.

Works best when content is related to advertising category.

PRO’s: Direct link to ad effectiveness

High yields on very highly targeted content – electronics, travel, directory…

Simple to implement

CON’s Does not perform well on most daily

news sites; performs best on “features related content” like travel or product reviews

Can be difficult to track and verify for actions beyond “click”

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Depending on a website’s media mix, there are progressively sophisticated technologies to manage advertising.

Manual Staff managed

Best for:- Fixed price models- Low ad volume sites- Local advertiser sites

___

Staff salaries

CMS Based CMS includes a simple

tool to upload and manage advertisers

Low volume fixed price or CPM priced models

Bitrix, WordPress, Joomla

Software – free Staff salaries

Ad Server External technology

which manages display/tracking of ads

Often linked to external ad networks

Moderate to high volume CPM/Network advertising

AdRiver, DoubleClick, OpenX

Software – Priced Per Thousand Ads Served

Staff salaries

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Media sites over 1 million monthly page views use one of three different ad serving technologies to manage ad placement and tracking.

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Russian Version:

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Developing online display advertising requires focus on advertiser needs, standards and pricing, and efficient management.

Advertiser Needs:Be prepared to address very different needs from national/international and local advertisers.

Standards and Pricing:Online ad standards help attract advertiser by reducing costs and increasing flexibility

Ad Serving and Management:As site traffic and advertising volume grow, ad management needs will become more complex and require more sophisticated tools.

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TopicPresenter






Agenda

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Sales Teams: Organization & MotivationIt’s all about people solving problems for people…

… using your products and audience at a price they are willing to pay.

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Sales Teams: Organization & Motivation

In order to organize the most profitable sales effort, the first step is to define the universe of potential advertisers.

How many advertising accounts do you estimate are available?- Locally, regionally, nationally- Currently advertising; not advertising- Current clients, past clients, non-clients

Why do they need you? What products can they use to achieve their goals?

What are their business goals for their advertising?- Brand awareness?- Store traffic?- Product sales?- Other?

What are the costs of serving each group of clients?

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The first step in organizing sales is looking for groups of advertising with common needs.

Few

Very large

Occasional

Brand Awareness

High

High

Moderate

Large

Regular/Frequent

Store Visits/Awareness

Moderate

High - Moderate

Many

Moderate/Small

Occasional

Store Visits

Low

Low - None

Very Many

Small

Infrequent

Sales

None

None

Advertiser #

Budget Size

Ad Frequency

Need

Agency Role

Online Experience

Advertiser Groups

National Major Regional Local Small Business Individuals

For Example

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Our example sales channels might have the following characteristics.

National Major Regional Local Small Business IndividualsStrategic

Investment: Low High High - Moderate Moderate - Low

Staffing: - Online Experience - Online Experience - Online Experience - Online experience- Agency Experience- Occasional/

Infrequent Contacts

- Ability to articulate package online needs

- Frequent, regular contact

- Ability to identify online opportunity

- Ability to train/coach online tools

- Occasional contact/seasonal

- Ability to describe standard online packages

- Infrequent individual contact

Compensation: - Mostly Commission - High base, some commission

- High commission; liveable base - Balance between commission & base

- Commission grows over certain sales quota

- Commission on sales increase on previous year

- Commission on new accounts

- Commission on revenue/new accounts

- Commission on sales revenue and new account creation

Marketing Needs:

- Standard materials (brochure, media kit, website)

- Creative proposals- Ad Design

- Account identification (Lead Sheets)

- Call centre- Online self-service platform

- National Rate Card- Network of sites

- Online training/support for advertisers

- Online training/coaching

- Respond to RFP's

For Example

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Based on these example characteristics, sales channels might look like the chart below.

National Advertising Representative Agency

Ad Network

Standard Product

High Price

Sales Channels

National Major Regional Local Small Business Individuals

For Example

Account-based Sales Force

Custom Advertising Packages & Prices

Region or Industry-based Sales Force

Standard Ad Prices &Packages

Limited Customization

Call centre

Self Service Online

Standard Ad Prices & Packages

Sale

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Pro

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Pri

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Let’s look at an example if how sales, product and marketing work together to make some money in print and online.

Advertiser Group: Travel/Real Estate Category – Resident HotelsAdvertiser Need: Increase rental inquiries

Solution:Product: - Created a new online directory of residence hotels for the city. - Quarterly print update of the directory

+ Distributed to HR Directors/ Executive Search Firms+ Mailed on request

Marketing:- Seminar on online marketing (annually)Sales Effort:- Large Clients Direct Sales Call- Single Hotel Seminar invite/sales- Small Occasional Clients Direct Mail/email; follow-up call

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The example – At Your Service – from the South China Morning Post, Hong Kong continues to deliver profits and expands each year.

“At Your Service” - OverviewAverage Annual Revenue = Over $ 1 million

Direct Margin = Over 50%

Annual expansion to other cities/countries:- China (12 cities)- India (9 cities)- Thailand (7 cities)- Australia (5 cities)- Singapore- Malaysia

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Motivating sales is a constant effort that requires a continuing investment in :

Training: Sales training continually upgrades the quality and effectiveness of your sales force. One of the most important assets at a local media operation is the local sales force.

Incentives: Incentives includes more than just commissions. Depending the goals or challenges facing the sales team, incentives may include:- Sales Contests- Instant Bonuses- Awards

Advancement: As the company’s revenues grow looking for organizational ways to give sales people more responsibility.

Recognition: Providing for company and external awards and contests.

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Special Issues: How to organize online sales?

Three models for online sales organization in a larger traditional media company. Separate, Stand-alone: Create a special, independent online sales team.Pro: Creates focus and expertise for online salesCon: Creates an internal tension and competition with traditional sales

Outcome: May see early gains in online sales; but creates strong internal friction.

Combined/Integrated: Existing sales is trained and expected to sell online advertising in addition to traditional advertising.Pro: Develops/trains the existing sales force in the techniques of onlineCon: Traditional sales may see no value in selling low-priced online ads without a special commission.

Outcome: Online ads sold occasionally, but often included as bundled “bonus” buys.

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Special Issues: How to organize online sales?

Three models for online sales organization in a larger traditional media company.

Hybrid – Integrated with SupportIntegrate sales with existing sales selling both traditional and digital. Create a special incentive program to reward the sale of low-priced online ads. Add internal online advertising specialist(s) to support with internal training, online advertising development.

Pro: Reduces internal conflict. Develops internal staff. Con: Requires more staff than simple integrated sales effort.

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Sales organization has to start with the advertisers’ needs and then continually evaluate the costs of sale and the effectiveness of the organization.

Advertisers: What types of advertisers are you serving and what do they need?.

Sales People: What skills do they need to have to cultivate the advertiser account?

What type of compensation do you need to balance the needs to provide customer service for regular advertisers while also bringing in new advertisers.

Go to Market: How to best reflect the needs of the advertiser in what the advertising opportunity is (the product), the sales and marketing team that makes the sale and the price that is charged.

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TopicPresenter






Agenda

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Advertising Networks: Overview

Advertising Networks are everywhere…there are over 300 and more everyday.

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Advertising networks are designed to address the unique issues that face advertisers in the digital media market.

Digital Advertising IssuesToo many publisher sites to choose from. Too much supply.

Difficulty at identifying high quality content:- High ad performance- High quality content- High quality audience

Challenge to integrate advertising performance metrics across hundreds of sites.

Difficulty in managing ads across multiple sites.

Ad Network SolutionsAggregates ad inventory from multiple sites.

Typical network may include many thousands of sites.

Divides ad inventory by quality of ad performance; type of ad content

Provides simple consistent metrics to track ads across network sites

Manages for ad efficiency (pricing, distribution, …)

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Successful ad networks require strong sales and marketing and strong technology to compete.

Advertisers

Sale

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Mark

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Ad

Data

base

Ad

Serv

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Network Sites

$$

$$

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$

$

$

$

$

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Target Tech•Contextual•Behavioral•Demographic•Brand•Geographic

Ad Networks

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The complexity and rapid evolution of online advertising has resulted in increasing specialization in ad networks.

Open vs. Blind• Open networks allow the advertiser to select specific brands/sites

within the network.Example: Gourmet Ads

• Blind networks only allow the advertiser to buy specific advertising actions (views/clicks) but not know which sites will display the ads.Example: Google AdSense for Content

Thematic Networks: Aggregate particular types of content to attract very targeted advertising groups – generally by industry. Examples: Active Youth Network, FishingAdvertising.org

Behavioral Networks: Allow advertisers to target audiences based on other actions they have taken on the network of on the web.Examples: Eloqua.com, Aggregate Knowledge

Advertising Network Types

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Geographical Networks: Aggregate traffic from online publishers in a particular region or area.Example: AdZouk.com

Technology/Media Networks: Networks that aggregate/serve traffic based on a unique media or technology type – mobile, video, audio, RSS

Examples: Video (YouTube), Mobile (InMobi), Audio (TargetSpot).

Advertising Network Types (continued)

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Advertising Networks: Pricing

Advertising networks establish prices based on one of two general models.

Traditional Volume Based Pricing (CPM Prices)• Prices set on supply and demand; competition• Frequently subject to negotiation and discounts depending on the

advertiser• Mostly used in Open, Branded networks and thematic networks

Ad Auctions (Price per Click/Per Position)• Audience behavior standardized

to simple measureable unit – The Click, the mouse over

• Advertisers bid per action, price per click

• In text ad units, advertisers can also bid on position

• Pricing is dynamic; changes by day of week or location.

Advertising Network Pricing Models

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Advertising Networks: Evaluation and Selection

Choosing an Advertising Network, the online publishers must balance the potential for additional revenue with the costs of implementation and the risk of cannibalization.Maximize Network Revenue:

• Which network contains the most relevant advertisers to your publication? To your audience?

• Which network has incentives to maximize pricing to advertisers?• If a blind network, does the network bring in new advertisers who

might not buy your brand.

Minimize Cannibalization Risk:• Does the network sell advertisers you would sell directly, current

advertisers?

If so, they should be “blind” networks. So, the advertiser cannot compare the price from your sales team and their sales team.

Low Cost of Implementation:• Is advertising implementation simple and low cost?

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Advertising Networks: Evaluation and Selection

Specific Ad Network evaluation criteria include:

Advertiser Volume and Type:• The larger the volume of advertisers the high bid prices tend to be in

an bidded network.• Are the advertisers likely to be new advertisers?

Advertising Unit Controls:• How much control does the advertising network give you over which

advertisements to run and where to run them?- Controls prior to campaign- Controls during campaign

Network Metrics:• What network metrics do they offer and can you use them to improve

your own sales effort? • Can you audit site and revenue performance easily from the metrics?

Revenue Share/Payments:• What is the maximum revenue share from the network?• What payment methods are available for the ad network to pay?

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Advertising Networks: Affiliate Networks

Affiliate Networks are a special case of an ad network offered by ecommerce companies like Ozon.ru and Amazon.

Affiliate NetworksAudience Action and Payment:

• Affiliate Networks pay for audience actions that deliver potential qualified sales leads to online retailers.

• The payment per action can be a significant % of the purchase price of the item being advertised.

Affiliate Network Usage:• Affiliate networks work best when a product or product category is

being reviewed or discussed.

We call this the purchase funnel. Consumers research on your sites, just before they buy.

Most common affiliate categories are travel, books, electronics,

Amazon Affiliate Program: affiliate-program.amazon.comOzon.ru Affiliate Program: http://www.ozon.ru/context/partner/

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Advertising Networks: Creating A Network

Many leading online media companies have come together to create their own online advertising networks.

Creating A NetworkTechnology: Do you have access to or can you build an ad serving technology?

• There are multiple ad serving technologies that can be used to build a private ad network – Google DoubleClick for Publishers Network Builder; AdFox.ru

Audience: Can you create a network with combined audience that is unique in some compelling way for advertisers?

• Ad network audiences require marketing to attract advertisers and their agencies. How would you sell your network’s audience?

Sales and Marketing: Do you have access or can you build a network sales and marketing team?

The type of team and their backgrounds will depend on the type of network and audience you develop.

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Advertising Networks: The Debate

Should you use online advertising networks? This is often an intensely debated topic.

Online Advertising Networks: Pros and ConsPros:

• Provides revenue at relatively little cost for content sites.• Can attract new advertisers from outside the market• Most are relatively easy to implement/add to your site• Creates a baseline for establishing the value of your site’s advertising

inventory.Cons:

Can create confusion for other advertisers and potentially cannibalization.

Can serve ads that are inappropriate.

Website Headline: “Corpse Found in Samsonite Suitcase”Ad Unit: Buy Samsonite Suitcases Here!

Can create a revenue dependence that is hard to stop.

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TopicPresenter






Agenda

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Online Classifieds

A cautionary tale : “Now you see them…now you don’t!”

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Online Classifieds

Many different types of online classifieds businesses exist.

The Big Three

Recruitment - Jobs Real Estate/Rentals Auto

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Online Classifieds

But online classifieds also encompasses directory products, free classified services, and calendars.

Directories Free Classifieds Calendars

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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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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(millions)

Source: Company reports, 2011; eMarketer, Avendus

€70 – 100 mm

€15 – 25 mm

Classified Advertising OverviewOnline revenue is often from print revenue

Fundamentally changes the nature of print classifieds

Requires data to manage the 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

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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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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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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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“Go It Alone” strategy requires technology, sales and marketing strengths.

“Go It Alone” OverviewBuild, 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

KP22.ru

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“Build A Network” OverviewPartner 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

“Build a Network” builds on a group of similar like minded media sites to seize a larger part of the online audience for classifieds.

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“Partner with National Site” OverviewPartner 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.

“Partner with National Site” strategy recognizes that national sites have strong technology and local media have strong local sales and marketing.

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“Traffic Sponsorship” OverviewSell 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.

“Traffic Sponsorship” leaves all sales, marketing and technology to the larger national competitors.

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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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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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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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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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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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Mobile classified platforms have boomed in India and Africa.

Roopit.comSMS classifiedsBased in BangaloreFree to list or searchAlso 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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Classifieds on Social Platforms like Facebook and Twitter have moved classifieds to a more secure personal platform.

FaceBook/Oodle.comOodle built app inside FaceBookProvides some security, friend or friends of friendsRapidly building audience

CLDmkt.com•Built as an application on Twitter•Simple listing creation•Access listings online, on Twitter, on mobile

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Classified sites are also undergoing a rapid conversion to e-commerce sites with the development of simple mobile payments.

SquareBrings credit card transactions to individualsSimple sign-up and serviceProcessing 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

http://www.youtube.com/watch?v=g1IqjY88YuM&list=UUoqhYEFzLMs2KYdih18I3yQ&index=0&feature=plcp

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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.