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

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

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
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”

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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.
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

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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.

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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

10
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.

12
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

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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.

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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 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

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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 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

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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
DescriptionUsesExamplesCosts

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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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Topic Presenter
Agenda

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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.

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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.
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

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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
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

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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 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

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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” - 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

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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 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.

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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 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.

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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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Topic Presenter
Agenda

36
Advertising Networks: Overview
Advertising Networks are everywhere…there are over 300
and more everyday.

37
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
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
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 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/

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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 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.

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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 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.

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Topic Presenter
Agenda

48
Online Classifieds
A cautionary tale : “Now you see them…now you don’t!”

49
Online Classifieds
Many different types of online classifieds businesses exist.
The Big Three
Recruitment - Jobs Real Estate/Rentals Auto

50
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,...

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
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.

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
“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
“Build A Network” Overview
Partner with other similar media
companies to build a larger audience to
compete with national players.
- Good offline classified business
- Strong technology team
Risks:
- Focused competition from national site
- 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
“Partner with National Site” Overview
Partner with a national classified site.
National site provides technology; local
partner provides sales and marketing.
- Good offline classified business
Risks:
- National site takes over sales and
marketing at the end of the contract
- 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
“Traffic Sponsorship” Overview
Sell a national classified site the ability to
gain new users by linking their site to yours.
- Strong local web traffic to main site
Risks:
- Traffic fluctuations.
- Negotiations
- Focus on traffic growth.
“Traffic Sponsorship” leaves all sales, marketing and technology to
the larger national competitors.

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
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
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
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
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
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
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
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
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.

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

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