Online classifieds: Classifieds sellers focus on the web

It relaunched its online recruitment pages online last April to follow

this user migration.

"I definitely think the classified market's future is online. At the
moment, consumers view the internet as their main source of
information," says Amy Lennox, head of online at media agency Manning
Gottlieb OMD.

Traditional publishers, which have long relied on classified revenues,
are seizing the opportunities. In December 2004, Associated Newspapers
forked out £14m for the UK's largest property site,
Findaproperty.com, having already paid £36m for Jobsite.com in
March 2004. Meanwhile, others are focused on building their own new
brands. Trinity Mirror, Northcliffe, Guardian Media Group and Newsquest
are partners in Fish4, set up to offer an online home for their
classified ads and now thriving under various brands, including
fish4jobs and fish4cars.

But, it's not only the offline players that have the muscle to drive
consolidation. In May, eBay bought London jobs and flats web site
Gumtree.com, while its international classifieds site, Kijiji, has been
picking up shares in its rivals.

Rupert Murdoch has admitted that newspaper groups have struggled to
adapt online, but some traditional publishers have expanded
successfully. Directory and magazine brands like Yellow Pages, Thomson,
BT, Auto Trader and Exchange & Mart have all carved out sophisticated
products online.

According to Jonathan Williams, head of marketing at Trader Media Group,
while online advertisers still give a lower yield than those in
magazines, volumes are growing fast. TMG publishes 13 regional Auto
Traders and a raft of other magazines, each with a web presence, and 85
per cent of its listings are exclusively online. Both off- and online
have their own sales teams, but the separation isn't total given that
35,000 private print ads are booked each week on the site.

"The magazines offer different branding and exposure to dealers," says
Williams. "It's a fine balance, but we are selling 320,000 copies every
week. We have seen a small decline, in line with classified magazines as
a whole, but it hasn't been significant, and we are now seeing some of
those people coming online."

The richest classified market on the web is automotive. In April, the
most visited classified site was Autotrader.co.uk, with 0.24 per cent of
all traffic and 33.1 per cent market share, followed by ebaymotors.co.uk
with 0.23 per cent and 31.9 per cent respectively, according to
Hitwise.

"Cars are a commodity that sit very well with the functionality of the
internet," says Nolan Mills, senior marketing manager at UBM's Exchange
& Mart, which Hitwise says gets 1.5 per cent of the UK's automotive
classified browsers. "Motoring is the core element of our business,
accounting for more than 90 per cent of our traffic, and online is
increasingly critical to our advertisers for response. In many
instances, they prefer online's key benefits of control and
convenience."

The same characteristics drive online directories. Thomson and Yellow
Pages share roughly 90 per cent of the £850m advertising market
offline, but directories are having to fight harder on the web where
search engines like Google and Yahoo! are the first port of call for
most users. "Directories viewed search engines as competitors not so
long ago," says Warren Cowan, chief executive officer of search engine
marketing specialist Greenlight, which works with Thomson. "But, now
they are realising there are many more information and research points
online that a consumer can use to find information."

It's just four years since Yell.com went up against the search engines
with the slogan 'Don't search, just Yell.com', but in April it announced
a deal with Google to offer business listings and content for its UK
local search offering. Yell.com president Dr Eddie Cheng says: "The deal
with Google is very simply this: historically, we've always submitted
our advertisers to search engines, but it was a bit hit-and-miss and
there were all kinds of reasons why submissions could be more or less
successful. Essentially, this formalises our position with them. At the
moment, 90 per cent of our usage comes directly to our site."

Keyword search

Cheng says Yell.com is one of the few dotcoms to have turned a
consistent profit and has been in the black since 2001. Its annual
results, published in mid-May, reveal turnover growth of 40.3 per cent
and 141,000 searchable advertisers. "In the last three years or so, we
have finally hit a home run; the product has been taking off, with great
usage and great penetration of the advertiser base," says Cheng. He
thinks the key to supporting both offline and online businesses lies in
their differences. "We have always positioned Yell.com not as Yellow
Pages online but as something more. The book is very driven by
classification and boundary base, and those are two areas we're trying
to move away from online."

The fact that directories such as Yellow Pages and Thomson have always
been classification-driven has limited their appeal to customers in
sectors such as retail as they've had to guess which category will fit
their enquiry.

Online, keyword search has changed all that. "If you want to buy an
iPod, you can look under anything from 'Record Stores' to 'Computer
Stores', but people just want to put in the word 'iPod'," says
Cheng.

Thomson Local has doubled traffic to its site through an aggressive
search-engine optimisation strategy to improve its visibility on major
search engines like Google, Yahoo! and MSN. "We have been quite
realistic about the things happening in the marketplace," says Brian
Harrison, general manager for Thomson Directories' Internet Development
Group. "What we really do is connect buyers and sellers. If we know
people are going to the internet to look for products or services, we
need to have an appropriate vehicle that allows the sellers to
communicate with the buyers. When people go online, some will go to an
online directory like ThomsonLocal.com, but others will go straight to
search engines."

Sales strategy

Thomson Local provides information on about two million businesses in
the UK. Its classified sales are driven by packages such as Business
Finder, a priority listing product for companies without a web site, and
WebFinder, a pay-per-click search-engine marketing service. While
Thomson has discrete sales teams for online and offline, Harrison says
the sell is as integrated as possible. "We have a multi-product
portfolio strategy and all our sales reps are trained in that," he says.
"When we sit down with a business, it is important to be able to explain
that people are looking for them in different places."

Clearly, any new brands have their work cut out if they are to compete
with their multi-channel rivals. Online directory service 192.com has
taken a novel approach. It uses data from Dun & Bradstreet, Thomson and
BT to fill any information gaps.

"We are different to the Yells and Thomsons of this world, which are
very geared towards classified searching," says managing director Keith
Marsden. "We're trying to be a one-stop shop for anyone who wants
information on people or a business. No one directory is complete, no
matter what anyone tells you."

192.com aims to score further points by offering data from Companies
House and others. This premium service will come with a new revenue
model; while basic name, address and telephone number searches are free,
mining down further into the data will require users to buy search
credits, starting at £24.99 for 100. Classified ads are the next
stage of the plan. "When we decided to go into the advertising model,
our initial thought was that the majority of businesses in offline
directories understand a single model that says they pay a fixed amount
and appear in a particular publication," says Marsden. "Typically, they
don't understand the pay-per-click model. So, in the initial phase of
our advertising product, people will pay a fixed fee for a one-year
period."

Given that the key market for classifieds, both on- and offline, is
SMEs, can the classified sites afford to shake up the traditional
payment model?

For most of the online market, a bidding system controls the prominence
of a client's ad in the search listings for a particular keyword. The
fixed nature of directory ads is often cited as their major failing,
which is why businesses jostle for position at all times, depending on
how much they bid and how intelligently they play the system.

Rate systems

Not everyone favours that model, however. Yell.com charges a flat rate
on the basis that "most of our customers don't feel like sitting in
front of a computer for an hour in the evening, managing their keyword
programme," says Cheng. "We see ourselves as the outsourced marketing
partner of our customers, so we always have a preference for a fixed
rate card. The decision we took was to rotate our advertisers to give
each one a chance of coming up, and this is a key differentiation."

Meanwhile, a new system from search marketing firm Miva (formerly
Espotting) attempts to monetise a classified ad at the very point when a
customer phones the advertiser. According to pay-per-call, which has
launched in the US and is coming to the UK later this year, advertisers
in the Miva listings only have to pay when a customer rings through to
the number on the ad. Whereas pay-per-click demands the client has a
site, pay-per-call only requires a listing. "The traditional advertiser
listed in Yellow Pages is paying a certain amount of money to make sure
he is in the book, but there is no guarantee that he will get any
calls," says Miva's chief marketing officer, Seb Bishop. "Traditional
advertising pushes a message to the consumer, but what we have created
here is a 'pull' medium."

Although the internet tends to deliver a younger market, consumers may
lack some of the trust that the offline brands have managed to build
up.

"I think people sometimes get cynical about the results they find
online," suggests Richard Davies, planning and client services director
at online media agency Equi=Media.

And while many small SMEs have taken to online classifieds, the larger
brands still appear to be weighing it up. "If you look at the larger
advertisers in a big, paper directory and try to find them in a search
engine, you won't necessarily see them," he points out.

Evidently, there's a bright future for paid-classified advertising
online, along increasingly sophisticated lines, and it is likely to be
driven by at least some of the big, offline brands. For paper to
survive, it needs to evolve.

TOP WEB SITES FOR CLASSIFIED ADVERTISING

Autotrader.co.uk

Since its launch nine years ago, featuring nothing but the classified
listings of the paper product, Autotrader.co.uk has established itself
as one of the 16 most-visited web sites in the UK. In April 2005, the
site attracted 4.2 million unique users, generating 45.4m vehicle
searches and 218.8m page impressions.

Jobsite.co.uk

Founded as a multi-sector online recruitment service in 1995 by three
brothers - Keith, Graham and Eric Potts - when the UK internet had only
40,000 users. It was relaunched as part of the GoJobsite European
network in 2001, but reverted to its original name in 2003. It claims
2.25 per cent of all traffic to the largest classified sites.

Yell.com

Founded nine years ago, Yell.com has been in profit since 2001-02 and
now generates more than 20m searches a month. According to May's annual
results, its turnover growth of 40.3 per cent reflected a 36.9 per cent
rise in searchable advertisers to 141,000, including the 23,000 who do
not advertise in its printed products.

Jobcentreplus.gov.uk

Under the umbrella of the Dept for Work and Pensions,
jobcentreplus.gov.uk provides guidance for people looking for a job and
claiming benefits. Employers can advertise their vacancies for free.
More than five million job details are viewed each week through the web
site, making it one of the top 100 most-visited in the UK.

Ebaymotors.co.uk

While little needs to be said about the success of online marketplace
giant eBay, the company's stand-alone automotive web site has built up a
steady following in its own right. The web site currently receives more
than two million visitors each month, and it claims that a vehicle is
sold every two minutes.