Growing Online Revenue:Advertising, Sales and Classifieds

Moscow, Russia27 – 28 September 2012

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TopicPresenter

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

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

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Online ClassifiedsMany different types of online classifieds businesses exist.

The Big Three

Recruitment - Jobs Real Estate/Rentals Auto

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Online ClassifiedsBut online classifieds also encompasses directory products, free classified services, and calendars.

Directories Free Classifieds Calendars

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Online ClassifiedsAnd 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,...

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Online ClassifiedsOnline 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 OverviewOnline 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

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Online ClassifiedsThe 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 ClassifiedsWhat 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.

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Online Classifieds - StrategyDepending 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.

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Online Classifieds - Strategy“Go It Alone” strategy requires technology, sales and marketing strengths.

“Go It Alone” OverviewBuild, 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

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Online Classifieds - Strategy

“Build A Network” OverviewPartner with other similar media companies to build a larger audience to compete with national players.

Strengths Required:- Good 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 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.

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Online Classifieds - Strategy

“Partner with National Site” OverviewPartner with a national classified site. National site provides technology; local partner provides sales and marketing.

Strengths Required:- Good offline classified business- Strong local sales and marketing

Risks:- Cannibalization of print by online- National site takes over sales and marketing at the end of the contract

Longterm Strategy:- 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.

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Online Classifieds - Strategy

“Traffic Sponsorship” OverviewSell a national classified site the ability to gain new users by linking their site to yours.

Strengths Required:- Strong local web traffic to main site

Risks:- Traffic fluctuations.- Negotiations

Longterm Strategy:- Focus on traffic growth.

“Traffic Sponsorship” leaves all sales, marketing and technology to the larger national competitors.

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Online Classifieds – Business OperationsAfter 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.

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Online Classifieds – Business OperationsAudience 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.

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Online Classifieds – Business OperationsIncreasingly 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

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Online Classifieds – Business OperationsPricing 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.”

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Online Classifieds – The FutureClassifieds 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.

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Online Classifieds – The FutureMobile classified platforms have boomed in India and Africa.

Roopit.comSMS classifiedsBased in BangaloreFree to list or searchAlso Verse Technologies

Google Trader (goo.gl/trader)•Launched in Africa and Thailand•Allows for free listings•Designed for activity on mobile phones

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Online Classifieds – The FutureClassifieds on Social Platforms like Facebook and Twitter have moved classifieds to a more secure personal platform.

FaceBook/Oodle.comOodle built app inside FaceBookProvides some security, friend or friends of friendsRapidly building audience

CLDmkt.com•Built as an application on Twitter•Simple listing creation•Access listings online, on Twitter, on mobile

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Online Classifieds – The FutureClassified sites are also undergoing a rapid conversion to e-commerce sites with the development of simple mobile payments.

SquareBrings credit card transactions to individualsSimple sign-up and serviceProcessing 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

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Online Classifieds - SummaryThe 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.