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Horizontals Versus Verticals – Who Wins

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In all markets, the online classifieds segment is highly competitive.  The advertiser has significantly more choice than they did in the past.  There are dedicated vertical sites (for cars, jobs and homes) as well as general classifieds sites (horizontal) that service all markets.  Is this a winner take all market or is there room for both horizontal and vertical players.  Simon Baker, the Chairman of the Mitula Group and former CEO/MD of the REA Group in Australia, will discuss what the likely outcome is by looking at what is happing in the highly competitive online real estate segment.

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Horizontals Versus Verticals – Who Wins

  1. 1. Horizontals vs Verticals Who Wins? Simon Baker Chairman
  2. 2. mitulagroup.com The Contestants
  3. 3. mitulagroup.comTítulo de la presentación Horizontal / General Classifieds Sites Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other… • Multiple products and services • Single brand (usually) • Single site • Consistent user experience • Large global teams • Very well funded
  4. 4. mitulagroup.comTítulo de la presentación General Classifieds Sites – Major Players Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other…
  5. 5. mitulagroup.comTítulo de la presentación General Classifieds Sites – Major Players Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other…
  6. 6. mitulagroup.comTítulo de la presentación General Classifieds Sites – Major Players Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other…
  7. 7. mitulagroup.comTítulo de la presentación General Classifieds Sites – Major Players Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other…
  8. 8. mitulagroup.comTítulo de la presentación What is a Vertical Site? Horizontals vs Verticals – Who Wins? Cars Jobs Products Services Other… • Focused on one segment • Usually a range of products offered • Close relationship with the advertiser • Often well funded • Local teams • Sometimes part of a global network Homes
  9. 9. mitulagroup.comTítulo de la presentación Major Vertical Players – Real Estate Horizontals vs Verticals – Who Wins? Cars Jobs Products Services Other…Homes
  10. 10. mitulagroup.comTítulo de la presentación Major Vertical Players – Regional Plays Horizontals vs Verticals – Who Wins? Cars Jobs Products Services Other…Homes
  11. 11. mitulagroup.comTítulo de la presentación Major Vertical Players – Regional Plays Horizontals vs Verticals – Who Wins? Cars Jobs Products Services Other…Homes
  12. 12. mitulagroup.comTítulo de la presentación mitulagroup.com The Battle Ground
  13. 13. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model Horizontals vs Verticals – Who Wins?
  14. 14. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model – Advertisers Horizontals vs Verticals – Who Wins? Need to get close to all advertisers (professional and private) Build awareness of the proposition Sign up advertisers to the products and services Build and maintain relationships with customers and targets Simple go to market processes Leverage technology to get closer 100% of potential advertisers aware and using products and services
  15. 15. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model – Listings Horizontals vs Verticals – Who Wins? Listings life blood of all online classifieds businesses Important to get all listings within a market – professional and private listings Automated upload of quality listings Removal of duplicates and elimination of fake listings Smart search to ensure accurate results for searchers Presentation of listings is important to ensure relevance to the consumer 100% of listings within a market segment at the highest possible quality
  16. 16. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model – Consumers Horizontals vs Verticals – Who Wins? Traffic is important – only if you have enough listings Various approaches to driving traffic with some are more important (and effective) than others Without traffic you can not create leads Limited budgets need to be focused Site needs to be optimised to attract return visitors Brand building also important for the long term Most traffic in the market and the strongest brand for the segment
  17. 17. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model – Leads Horizontals vs Verticals – Who Wins? Important to create engagement with the listings content Engagement will generate leads Lead generation reduces churn of advertisers (critical for long term growth) Lead generation allows classified sites to increase prices for entry level advertising services Provides platform for premium services as advetisers value position and presence on the site (as it generates leads) Communication of value is critical Generating the highest number of high quality (actionable) leads in the market
  18. 18. mitulagroup.comTítulo de la presentación Online Classifieds Growth Model – Monetisation Horizontals vs Verticals – Who Wins? Basic monetisation is from advertising of listings with some models work better than others Additional monetisation from premium advertising services Some sites, depending on market, move to other products and services including print, data, exhibitions, and software Performance leads to pricing increase Profitability and revenue leadership
  19. 19. mitulagroup.comTítulo de la presentación mitulagroup.com The Battle
  20. 20. mitulagroup.comTítulo de la presentación Working with Advertisers Horizontals vs Verticals – Who Wins? Verticals Have dedicated teams on the ground to target the advertisers – often team focused on sub-segments Team tend to focus on each sub-segment Use software to get closer to the advertiser and closer to the listing source Usually a pay to list model as freemium harder to monetise over the longer Build long term relationships with the advertisers through dedicated teams General Classifieds Often don’t have dedicated teams on the ground Usually rely on advertisers to self service Have a broader range of advertisers – professional and general public Usually a freemium model with selected segments paying for upgrades or placements Often control countries from central “HQ” Much closer to the advertisers and in a better position to monetise Less close to the advertisers ✓
  21. 21. mitulagroup.comTítulo de la presentación Building Quality Listings Horizontals vs Verticals – Who Wins? Verticals Direct data feeds from software providers in the target markets Often own the software providers to get direct access to quality listings In early stage markets, verticals sometimes source listings directly including taking of photos and certify quality of each listings General Classifieds Combination of direct entry and XML feeds Harder to “certify” quality of listings from direct entry (especially since free and from general public) Often hard to quality control listings due to generic approach to managing listings across multiple verticals Usually higher quality of listings More variability in listing quality due to multiple input sources ✓
  22. 22. mitulagroup.comTítulo de la presentación Driving Traffic Horizontals vs Verticals – Who Wins? Verticals Clear set of marketing approaches used to create awareness and drive traffic Lower cost include SEO, SEM, email alerts, distribution agreements & PR Higher cost approaches include brand building and traditional media General Classifieds Reliant on traffic from other sections of the site – internal traffic generation Internal marketing redirects traffic Some leveraging of global network and learnings Use of SEO and some SEM Limited brand building and if so, generic not segment specific
  23. 23. mitulagroup.comTítulo de la presentación General Classifieds Sites Partnering Horizontals vs Verticals – Who Wins? + Brazil, Bangladesh,Thailand, and Indonesia
  24. 24. mitulagroup.comTítulo de la presentación Driving Traffic Horizontals vs Verticals – Who Wins? Verticals Clear set of marketing approaches used to create awareness and drive traffic Lower cost include SEO, SEM, email alerts, distribution agreements & PR Higher cost approaches include brand building and traditional media General Classifieds Reliant on traffic from other sections of the site – internal traffic generation Internal marketing redirects traffic Some leveraging of global network and learnings Use of SEO and some SEM Limited brand building and if so, generic not segment specific Significant investment required to build traffic Access to more traffic at lower costs – core part of model ✓
  25. 25. mitulagroup.comTítulo de la presentación Lead Generation Horizontals vs Verticals – Who Wins? Verticals Search more tailored to requirements of the vertical • Map based, • More fields, • Free form searches Additional information and data make it a more robust decision making experience Listings presented in a more informative / engaging manner General Classifieds Generic search used with minor refinements available Poor search experience Minimal or no additional information to assist in decision making process Listings are presented in a very generic manner Pages not tailored to maximise lead generation
  26. 26. mitulagroup.comTítulo de la presentación Search Page – Spain Example Horizontals vs Verticals – Who Wins? Verticals – e.g. Idealista General Classifieds – e.g. Segundamano
  27. 27. mitulagroup.comTítulo de la presentación Search Results – Spain Example Horizontals vs Verticals – Who Wins? Verticals – e.g. Idealista General Classifieds – e.g. Segundamano
  28. 28. mitulagroup.comTítulo de la presentación Search Results Maps – Spain Example Horizontals vs Verticals – Who Wins? Verticals – e.g. Idealista General Classifieds – e.g. Segundamano Not Available
  29. 29. mitulagroup.comTítulo de la presentación Search Refinement – Spain Example Horizontals vs Verticals – Who Wins? Verticals – e.g. Idealista General Classifieds – e.g. Segundamano
  30. 30. mitulagroup.comTítulo de la presentación Lead Generation Horizontals vs Verticals – Who Wins? Verticals Search more tailored to requirements of the vertical • Map based, • More fields, • Free form searches Additional information and data make it a more robust decision making experience Listings presented in a more informative / engaging manner General Classifieds Generic search used with minor refinements available Poor search experience Minimal or no additional information to assist in decision making process Listings are presented in a very generic manner Pages not tailored to maximise lead generation Low number of higher quality leads generated Higher number of lower quality leads generated ✓
  31. 31. mitulagroup.comTítulo de la presentación Monetisation Horizontals vs Verticals – Who Wins? Verticals Usually generate higher quality leads Wide range of products / services to sell to advertisers • Premium advertising • Software • Display advertising • Data General Classifieds Usually generate high volume of lower quality leads Limited advertising options Market leaders can charge for some categories Hard to monetise private listings so focus on industry/prodessional listings
  32. 32. mitulagroup.comTítulo de la presentación Advertising Options – Australian Example Horizontals vs Verticals – Who Wins?
  33. 33. mitulagroup.comTítulo de la presentación Monetisation Horizontals vs Verticals – Who Wins? Verticals Usually generate higher quality leads Wide range of products / services to sell to advertisers • Premium advertising • Software • Display advertising • Data General Classifieds Usually generate high volume of lower quality leads Limited advertising options Market leaders ca charge for some categories Hard to monetise private listings so focus on industry/prodessional listings Ability to extract high revenue per advertiser ✓ Harder to extract high revenue per advertiser
  34. 34. mitulagroup.comTítulo de la presentación mitulagroup.com The Decision – Who Wins?
  35. 35. mitulagroup.comTítulo de la presentación The Long Term Winner is … Verticals General Classifieds Advertisers ✓ Listings ✓ Traffic ✓ Leads ✓ Monetisation ✓ Horizontals vs Verticals – Who Wins? Closer to the advertiser & to the consumer giving a customised experience that generates more leads and better monetisation
  36. 36. mitulagroup.comTítulo de la presentación However Different Markets – Different “Winners” Horizontals vs Verticals – Who Wins? Verticals General Classifieds Established Markets “Winners” Emerging / Early Stage Markets “Leaders” To early to tell! Verticals leading monetisation, advertisers, listings quality General classifieds have the traffic
  37. 37. mitulagroup.comTítulo de la presentación But ... Horizontals vs Verticals – Who Wins? Cars Jobs Products Services Other…Homes General classified sites are evolving and will become a “house” of interlinked verticals
  38. 38. mitulagroup.comTítulo de la presentación General Classifieds Evolving Approach Horizontals vs Verticals – Who Wins? Building out dedicated vertical teams by country (e.g. real estate) Spinning off real estate vertical into dedicated sites Acquiring and operating verticals independently
  39. 39. mitulagroup.comTítulo de la presentación The Real Winners are … Horizontals vs Verticals – Who Wins? Cars Jobs Homes Products Services Other… Top 2 – 3 verticals in each market • Acquistion targets and there are more buyers. • Even if not bought, they can operate profitably. Leading general classifieds in emerging markets • Have the audience and can acquire vertical skills (they have the $) • Have capacity to monetise by building out vertical skills Consumers • Experince can only get better – more listings, higher quality, better search tools Advertisers • More advertising options, larger audiences,competitive rates
  40. 40. mitulagroup.comTítulo de la presentación Horizontals vs Verticals Who Wins? Simon Baker Chairman

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