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


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  • Chinese Internet penetration is about 40% and growing at around 10 10 15% p.a. Mostly smart phone and mobile modem enabled.
  • Chinese market = €6.4 billion in 2011, growing at around 50%+
  • http://www.iab.net/guidelines/508676/508767/displayguidelines
  • KB Seminars: Growing Online Revenue: Advertising, Sales and Classifieds; 09/12

    1. 1. Growing Online Revenue: Advertising, Sales and Classifieds Moscow, Russia 27 – 28 September 2012
    2. 2. 2 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 Agenda
    3. 3. 3 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.
    4. 4. 4 Online Market Overview 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”
    5. 5. 5 Online Market Overview 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
    6. 6. 6 Online Market Overview Over the next two days we will discuss the three major types of online advertising. Description Related to site audience/content Sold directly Multiple pricing models Directory/database driven Sold directly or self-serve High volume, low price or free Search engine driven Sold by technology companies w/ specialized sales teams Driven by page views and clicks Display Search/Context Classifieds/Directory
    7. 7. 7 Online Display Advertising Display Advertising Elements Advertisers: 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.
    8. 8. 8 Online Display Advertising 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)
    9. 9. 9 Online Display Advertising 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
    10. 10. 10 Online Display Advertising 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.
    11. 11. 11 Online Display Advertising 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.
    12. 12. 12 Online Display Advertising 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
    13. 13. 13 Online Display Advertising 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.
    14. 14. 14 Online Display Advertising 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
    15. 15. 15 Online Display Advertising 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.
    16. 16. 16 Online Display Advertising 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 page X 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 views X 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
    17. 17. 17 Online Display Advertising 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 situations Rotating ads keep site fresh and up-to-date Con’s of CPM Pricing: Complicated sales and verification process for advertisers new to online Requires ad serving technology – AdRiver, OpenX, Google DoubleClick Can result in substantial unsold inventory in low demand situations Can result in advertisers “cherry-picking” only the best times/days of the week to run their ads
    18. 18. 18 Online Display Advertising 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”
    19. 19. 19 Online Display Advertising 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 DescriptionUsesExamplesCosts
    20. 20. 20 Online Display Advertising Media sites over 1 million monthly page views use one of three different ad serving technologies to manage ad placement and tracking.
    21. 21. 21 Online Display Advertising Russian Version:
    22. 22. 22 Online Display Advertising 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.
    23. 23. 23 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 Agenda
    24. 24. 24 Sales Teams: Organization & Motivation It’s all about people solving problems for people… … using your products and audience at a price they are willing to pay.
    25. 25. 25 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?
    26. 26. 26 Sales Teams: Organization & Motivation 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
    27. 27. 27 Sales Teams: Organization & Motivation Our example sales channels might have the following characteristics. National Major Regional Local Small Business Individuals Strategic 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
    28. 28. 28 Sales Teams: Organization & Motivation 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 Sales Channels Product/ Pricing
    29. 29. 29 Sales Teams: Organization & Motivation 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 Hotels Advertiser 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
    30. 30. 30 Sales Teams: Organization & Motivation The example – At Your Service – from the South China Morning Post, Hong Kong continues to deliver profits and expands each year. “At Your Service” - Overview Average 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
    31. 31. 31 Sales Teams: Organization & Motivation 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.
    32. 32. 32 Sales Teams: Organization & Motivation 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 sales Con: 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 online Con: 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.
    33. 33. 33 Sales Teams: Organization & Motivation Special Issues: How to organize online sales? Three models for online sales organization in a larger traditional media company. Hybrid – Integrated with Support Integrate 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.
    34. 34. 34 Sales Teams: Organization & Motivation 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.
    35. 35. 35 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 Agenda
    36. 36. 36 Advertising Networks: Overview Advertising Networks are everywhere…there are over 300 and more everyday.
    37. 37. 37 Advertising Networks: Overview Advertising networks are designed to address the unique issues that face advertisers in the digital media market. Digital Advertising Issues Too 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 Solutions Aggregates 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, …)
    38. 38. 38 Advertising Networks: Overview Successful ad networks require strong sales and marketing and strong technology to compete. Advertisers Sales&Marketing AdDatabase AdServer Network Sites $$ $$ $$ $$ $$ $$ $$ $$ $ $ $ $ $ $ $ $ Target Tech •Contextual •Behavioral •Demographic •Brand •Geographic Ad Networks
    39. 39. 39 Advertising Networks: Overview 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
    40. 40. 40 Advertising Networks: Overview 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)
    41. 41. 41 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
    42. 42. 42 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?
    43. 43. 43 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?
    44. 44. 44 Advertising Networks: Affiliate Networks Affiliate Networks are a special case of an ad network offered by ecommerce companies like Ozon.ru and Amazon. Affiliate Networks Audience 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.com Ozon.ru Affiliate Program: http://www.ozon.ru/context/partner/
    45. 45. 45 Advertising Networks: Creating A Network Many leading online media companies have come together to create their own online advertising networks. Creating A Network Technology: 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.
    46. 46. 46 Advertising Networks: The Debate Should you use online advertising networks? This is often an intensely debated topic. Online Advertising Networks: Pros and Cons Pros: • 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.
    47. 47. 47 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 Agenda
    48. 48. 48 Online Classifieds A cautionary tale : “Now you see them…now you don’t!”
    49. 49. 49 Online Classifieds Many different types of online classifieds businesses exist. The Big Three Recruitment - Jobs Real Estate/Rentals Auto
    50. 50. 50 Online Classifieds But online classifieds also encompasses directory products, free classified services, and calendars. Directories Free Classifieds Calendars
    51. 51. 51 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,...
    52. 52. 52 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 Overview Online 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
    53. 53. 53 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, …
    54. 54. 54 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.
    55. 55. 55 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.
    56. 56. 56 Online Classifieds - Strategy “Go It Alone” strategy requires technology, sales and marketing strengths. “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 KP22.ru
    57. 57. 57 Online Classifieds - Strategy “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 “Build a Network” builds on a group of similar like minded media sites to seize a larger part of the online audience for classifieds.
    58. 58. 58 Online Classifieds - Strategy “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. “Partner with National Site” strategy recognizes that national sites have strong technology and local media have strong local sales and marketing.
    59. 59. 59 Online Classifieds - Strategy “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. “Traffic Sponsorship” leaves all sales, marketing and technology to the larger national competitors.
    60. 60. 60 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.
    61. 61. 61 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.
    62. 62. 62 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
    63. 63. 63 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.”
    64. 64. 64 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.
    65. 65. 65 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
    66. 66. 66 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
    67. 67. 67 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
    68. 68. 68 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.