The way to capture the story of classified advertising in the 21st century is simple, says Peter Zollman, a former newspaperman turned interactive media and digital classified consultant. Imagine an “X.” The line that sweeps down, left to right, is that of major U.S. newspapers’ classified advertising revenues. The rising line is Craigslist’s.“Just compare the two, the change is very dynamic and very telling,” says Zollman, a founding principal of the AIM Group, U.S.-based international classified advertising consultants and a scheduled speaker at NOAH 2013 in London.
It’s a raw story of disruption, but it’s also striking that the product itself, the classified ad, from Avito to eBay, is a natural on the Internet. The Norwegian media group Schibsted, one the best examples of a traditional newspaper publisher that has transformed into a digital dynamo, is fond of saying “the Internet is made for classifieds and classifieds are made for the Internet.” Indeed, classified advertising is thriving, with more ordinary people than ever using them to buy and sell — it’s just now the marketplaces they flock to are online.
Disrupting yourself is a feat few pull off. Schibsted did it by setting up aggressive dedicated classified sites and acquiring successful start-ups. As traditional newspaper groups fought to protect local classified monopolies and their margins, Schibsted took the opposite approach and cannibalized the business’s jewels, such as Aftenposten, Norway’s largest newspapers, established in 1869.
(Schibsted Media Group’s CEO Rolv Erik Ryssdal is also scheduled to speak at NOAH 2013 in London.)
“Of course it’s tough to see that the traditional business is suffering. At the same time, you must look into the future and that’s the only way to do it. Very often the problem with this industry is we have a very defensive way of thinking. We want to protect business rather than occupy new territories. If you think that way in business, very often you become a loser,” says Schibsted Sweden CEO Raoul Grünthal. “You must try to win the game,” he says, “not only to protect your business; it’s a state of mind.”
Speak to more than one online marketplace CEO and you will quickly get the sense that if the industry had a theme song, it would probably be Abba’s “The Winner Takes It All.”
“We believe this business is about being the market leader,” says Andrea Piccione, the CEO of Italy-based Real Web, who was previously eBay’s general manager in Italy, another scheduled speaker at NOAH. Real Web’s assets include real estate sites Immobiliare.itand Eurekasa.itand insurance sites Facile.it, Assicurazione.itand Mutui.it, as well as Seguros.esin Spain, Oferty.netin Poland and Spiti24 in Greece.
“The power to execute is much, much bigger if you are the market leader so we want to have the privilege to keep investing and keep innovating that only the market leadership provides,” says Piccione.
At Schibsted, “We are here to win” has been enshrined as one of the company’s core values. Being number one is the best way to guarantee a critical mass of buyers and sellers who turn to your site first, says Martin Frey, the CEO of Blocket.se, Sweden’s most popular classified site. This is a concept that Blocket.se has now taken into 30 other markets. Schibsted bought the company so it is now a subsidiary of Schibsted Classified.
“For the Blocket concept, we believe it’s a winner takes it all market,” Frey says. “So when we go into a new market, the goal is to become number one. But we go in for the long term because we know it’s going to take some years to become number one. If we don’t believe that we will become number one, then we don’t believe that we should be in that market.”
Do today’s digital classified leaders think their industry could be on the brink of another wave of disruption? “Absolutely” Frey says, echoing the answer of every CEO Informilo spoke to for this article.
Across Schibsted, teams are constantly looking over their shoulders for upstart rivals, he says. Copycats are not a concern, but what Frey says they do worry about is someone coming along with a completely new model for classifieds. “We haven’t seen any signs of that, not internationally either, of any totally new ways of running a classified site, but we have to look out for that.”
Schibsted Sweden’s Grünthal says the lessons of the past decade have prepared the company for the next big disruption, whatever it may be.
“If you do it once, it’s much easier to do twice,” Grünthal says. “Also I think we were a little bit lucky because the first time we really tried this — to disrupt ourselves — it was in the classifieds business and it was successful. Of course it’s much easier when you have had a success to take a second step. Media groups that are not successful in their first digital step have much more difficulties in taking a second one.”
For Schibsted, keeping its edge requires constant innovation. Teams are constantly tweaking and developing to make transactions easier and safer. “Most of the innovation is just about improving rather than breakthroughs or big bangs,” Frey says.
Simple additions can have a big impact, AIM’s Zollman says. He points to the example of Turkey’s sahibinden.comgeneral classified site, which started a feature a few years ago where you could move a free ad to the top of the listings for around a euro. “It was easy, it was effective and it was cheap and they made millions of euros,” he says. ”Now top up is a very, very common feature at classified companies all over the world. It’s a small fee but they do that hundreds of thousand of times or even millions of times.”
Classified innovators are also always looking for new sectors to venture into. In Sweden, for instance, Schibsted is branching into the personal finance sector. “We think it is a market that is really being disrupted right now,” Grünthal says, stressing the importance of being entrepreneurial and working with entrepreneurs who can bring in new expertise and products.
That entrepreneurial mindset is crucial for succeeding in classifieds, whose core is individuals selling things, says Real Web’s Piccione. “This is probably the best industry for an entrepreneur,” he says.
“We come from a technology background, so we want to offer consumers new technology ahead of the competition,” he says. His company prides itself on its top-rated mobile apps, which include features such as giving users the ability to search real estate listings by drawing a circle with a finger on a city map.
The print classified market was not very developed in Turkey before the Internet. So for sectors like job classifieds, “the market pretty much moved on directly to online,” explains Yusuf Azoz, CEO of the country’s first career portal Kariyer.net. Azoz is also a scheduled speaker at Noah London. He sees massive opportunities in Turkey where only half of the country’s 2.4 million registered companies have made the transition to digital. Of the 600,000 companies that Azoz believes could benefit from online recruitment, just under 50,000 deal with Kariyer, “which means we have only tapped 8% of the addressable market.”
Ever-improving technology will be key to expanding its market share. “Online classifieds businesses need to exploit mobile, social media and also big data,” Azoz says. In addition to seeing the number of job applications submitted by mobile rise to 15% of the total, the company has developed a popular big data product called “Career Map.”
“Career Map guides university students, graduates and even high school seniors in their career planning,” Azoz says. “The platform is online and uses Kariyer.net’s CV database in order to visualize the career graph of Turkey. Users can enter the faculty and university name of where they study and get real statistics about which industries, departments, cities, and so on, graduates are currently working in.”
One of the biggest benefits of classified advertising’s tech revolution is that it makes winning ideas scalable, says Schibsted’s Grünthal. “The big change is it tends to be a global business when it becomes digital,” he says, adding Schibsted’s central focus is Europe but the company is excited by opportunities in BRIC countries. “We would never have been able to create the same global structure in a print market; that’s impossible. But in a digital market, it’s perfectly possible for a Scandinavian company to have global ambitions.”