About a week ago, Facebook made noises about launching classifieds and now MySpace has made a deal to take on job ads. This is the next stage of the classified meltdown. Stage 1: They move from newspapers to new services, like Craigslist and Monster, online. Stage 2: They move into communities like Facebook and Myspace. Phase 3, yet to come: They are distributed, no longer in a centralized marketplace, and technology brings them together.
Posts about classifieds
Every time I say that classified didn’t just move online, it is dying as a category, someone chimes into the comments, arguing that it couldn’t be so. But look at this report from PaidContent. Software, social software, and online functionality are replacing the classified ad. The internet makes connections and ads are supposed to make connections and now they can be made directly:
In the past six months, visits to the big three online recruiters, Monster, Yahoo’s HotJobs, and CareerBuilder dropped by 23.7 percent, 18.4 percent, and 7.1 percent, respectively, Hitwise reports. The reason, BusinessWeek reports, is the rise of social networks and job sites dedicated to matching employers and job seekers in very specific pockets of the job market – sites where musicians looking for work on cruise ships, for example. To cope, The Big Three have been embarking on series of partnerships with newspaper chains – cases in point: Monster’s deal with Freedom Communications, which owns 36 newspapers and eight TV stations; also CareerBuilder.ca’s strategic partnership with portal Lycos Canada to serve up job listings to Lycos searchers.
Huddling together against the cold breath of the future.
Today’s announcement of a big deal between Yahoo and a bunch of midlevel newspaper conglomerates has its benefits for both. But I can’t help but thinking that this is a meeting of old, old-media companies and the new, old-media company, Yahoo.
The benefits: The newspapers will get local functionality they need and new means of selling automated ads they don’t have and they will tame the beast they thought was a competitor. And Yahoo will get more content (can it ever get enough?).
But they’re both trying to maintain old businesses and old models.
Classified hasn’t just moved online; it’s dead as a category. Craig didn’t kill it. He was merely the first and smartest to see that the internet connects buyers and sellers directly. It massacres middlemen. And both newspapers and Yahoo still want to be middlemen. So the real challenge is to figure out how to enable transactions in new ways.
They talk a lot about content but in a linked world, the goal is not just to own more content but to create a new relationship to more of it: ‘We find the good stuff, wherever it is’ which used to be Yahoo’s goal and should be again — and must become the goal of newspapers as well.
They still operate on the media model of getting people to come into a centralized place and so the newspapers hope that people will go from Yahoo’s gathering point to theirs. Except everyone I know who has done a content deal with Yahoo finds that it is not terribly good at sending them traffic because Yahoo — like newspapers themselves — wants people to stay in its world.
Dean Singleton, one of the moguls in the deal and one of the smartest and toughest newspapermen alive, said this in The Times: “There has been a big question asked for a while as to how newspapers will navigate the online future. I think this is the answer to that question.” I sure hope he said more than that (and I’ll bet he did). For this is not the answer. Is it an answer? Maybe. Maybe not. The challenge is to find many answers and relying on a portal has proven to be an incomplete one. Ditto being a portal. The question is not, ‘How do we get enough stuff to get people to come to us?’ That is their old-media model. I think the question is, ‘How do we go to where the people are with what they need and how do we enable them to do what they want to do?’ That is what Google asks itself.
Yesterday, I ranted about newspapers’ failure to invent new ways to serve advertisers, ceding the business to Google. Today I read on Greenslade a discussion of classifieds, Google, and newspapers at the Society of Editors. There is the usual debate in such gatherings: Is Google a friend or foe? I say that’s the wrong question. They should be asking: What is Google doing that we should be doing? How can we be doing it? What will Google do next? Can we get there first? And what can Google do that we can’t and how do we take advantage of that? Google is a reality. Arguing about whether it is friend or foe will do no more good than sitting back and watching it do what you should be doing. Google is still trying to figure out its proper role in this ecosystem. Read the last paragraph from Stephen Brooks’ coverage on Greenslade to see that:
Classified advertising could vanish from newspaper print editions by the year 2020, Guardian editor Alan Rusbridger suggested to the Society of Editors in Glasgow.
Participating in a panel about the media in 2020 that included Nathan Stoll, the product manager of Google News, Rusbridger was up front in saying that he had no definitive answers about the future, writes Stephen Brook. “The honest answer to the question is nobody knows,” Rusbridger told the audience in a lively panel session which included much discussion about how newspapers will survive Google hoovering up much advertising.
“I predict that classified advertising could disappear from newspapers by 2020,” Rusbridger said. Classified adverts from the Guardian print edition were declining by about 9% a year while internet advertising on Guardian Unlimited was growing by about 50% each year – but from a much lower base. The Guardian was attempting to monetise its recruitment revenues with the launch of Guardian Recruitment Services, a full recruitment organisation rather than just a classified advertising service.
“Nobody in newspapers can decide if Google is the friend or their enemy,” Rusbridger said. “The friendly bit is that they drive lots of traffic back to us and we might be able to monetise that. What’s happening at the moment is that Google is hovering up stupendous amounts of money on the back of our content.
Robin Esser, executive managing editor of the Daily Mail, agreed. “The wider the message is spread the better but we need to be able to monetise that.” . . .
The youthful Google News chief said that the company was in the search and advertising business. “We are not content creators”. The next step for Google News is to do a better job in treating original content. “What we try and do is make sure than traffic goes to who properly produced a piece of work.” The Google News search algorithms will be refined to “expose original journalism”. The ultimate aim would be to build an “online ecosystem of publishers that is healthy”.
More coverage from the Press Gazette.
Pounding another nail in the coffin of the print classified business, eBay Motors in the UK (not sure about elsewhere) is going to announce today that it will accept classified ads for cars andpric not just direct car sales, the Telegraph reports.
The move sets eBay in direct competition with companies such as Trader Media, which publishes more than 70 weekly titles focused on classified ads of vehicles for sale. . . .
Car dealers will pay Â£150 a month to list up to 100 cars on the site. One major UK dealer said he paid almost 10 times that to advertise on other websites and in newspapers.
Clare Gilmartin, head of eBay Motors UK said: “This is a market that needs a shake-up.”
I’d try a slightly different pricing model: a set fee for a dealer’s full inventory. Taking a limited number of listings is the way it is done in print ads because space is limited and expensive. Those are retail ads. That is, like a grocery story circular, it doesn’t tell you everything the store has but tries to lure you in with a particularly juicy price for grapefruit.
But in a search world, if you’re the sales agent or advertiser, you want everything you have for sale to be discoverable. If you’re the aggregator, you want to have everything available to be discovered. And the aggregator that makes it all available wins.
This creates an interesting economic equation, though: The sellers learn that their inventory information is of value to the aggregators — and there are still lots of aggregators competing — so the sellers or their agents stand in a position to negotiate prices down. And the next step is distributed: See Oodle or Edgeio, which scrape inventory information (jobs in the case of Oodle) wherever they are. This cuts out both the sales middleman — used car dealer, real estate broker, headhunter — and the closed aggregators — newspapers, eBay, etc. Eventually, the value resides with the buyer and seller directly — you, if you’re buying or selling a car. You’ll recognize that value by keeping more money in a sale, paying nothing or paying less to the sales agents and marketing aggregators now stuck in the middle.
Topix adds local classifieds. Although free, that requires much local traffic to work. Since the company is controlled by newspaper investors, it’ll be interesting to watch the strategy. But I think the lashup of classified aggregator Oodle with the Sun is more intriguing. The cycle of distribution and aggregation will make this world go ’round.
Jemima Kiss reports in PaidContent that Rupert Murdoch’s London Sun has unveiled a new classifieds site, Sun Local, using Oodle, which scrapes and organizes classified listings from around the web. This is the money quote from News Group Digital director David Roddick:
The advantage for us is that we don’t have these verticals running in the paper so we’re not cannibalising our print ads. It’s designed to get us into a space that we don’t currently occupy and being The Sun we wanted to go in with scale.
In other words, this enables anyone who’s not now in the classifieds business — national newspapers, radio stations, TV stations, you — to enter in and go local. Of course, they won’t be making the tens of millions of dollars per category per year that major metro papers have made. But then, in the future, neither will those papers. To the newcomers, it’s new revenue in a business they could enter with scale before. And the revenue may not be from the classifieds themselves. Jemima report: “…the long-term revenue from the site will be worked out later on, but for now it’s Google AdSense.” So when you aggregate audience around advertising, you are able to target other advertising.
So what does it mean to the incumbents? I think they have to play along. They need their advertisers’ ads to be distributed and aggregated so they are found via search and links. And they, in turn, should be aggregating as well.
When I worked in newspaper companies, I quickly learned that FSBO was a dirty word that made publishers sweat. On the one hand, they wanted all those by-owner ads; they needed to be seen as the marketplace for homes. But on the other hand, the Realtors who paid the big bills hated by-owner ads; their lost customers were their competition. So publishers always danced a delicate two-step, trying hard not to promote the FSBO ads even as they counted the bucks from them. The terrible irony is that the real customers — home sellers — were treated like caged animals by both Realtors and newspapers.
But, of course, the cages are gone and the first to escape were the Realtors themselves. When the web came along, real estate agents realized they could deal directly with customers and no longer needed newspapers to create the marketplace. In fact, newspapers realized that they needed the Realtors’ listings for their own online sites — ads became content — and so the Realtors still ended up holding publishers by their delicates. FSBO was still a dirty word.
I saw this coming a decade ago and argued that newspaper companies should go into the real estate business themselves, becoming brokers to get listings into the closed multiple listing services and putting buyer and seller together directly because the Realtors would inevitably abandon papers. I thought I was going to be fired for speaking such heresy.
But now Tribune is going into the FSBO business.
Isn’t it fascinating how desperate companies are now willing to piss off the channels of sales, distribution, and revenue they so coddled and feared for so many year: ABC tells its affiliates to lump it as it distributes directly to consumers; Warner Brothers tells its network to lump it as it distributes around networks; and Tribune tells its Realtor-advertisers to lump it as it enables sellers to avoid Realtors. The question is whether they spent too long coddling the middlemen and forgetting who the real customer was all along.