Category Archives: Classifieds

Goodbye Pennysaver: Is There Life Left in Shopper Publications?

Is there life left in local, broadsheet “shopper” publications that highlight home and trade businesses and things for sale? Not according to OpenGate, a $3 Billion LBO firm that abruptly laid off workers for Pennysaver USA, the industry’s largest company, which it purchased in 2013 from Harte Hanks for $22.5 Million. At that time, the company had annual revenues of nearly $200 million and had 800 employees in California.

Other shoppers remain in business, such as American Classifieds (Thrifty Nickel) and many locally or regionally-owned Pennysavers. The name “Pennysaver” goes back to the 18th Century, and is not exclusive.

Our guess is that OpenGate didn’t see a clear path to profitability and decided to simply pull the plug (apparently, without paying final wages.) Core advertisers and consumers have many alternative options on Craigslist and other sources, and OpenGate didn’t seem to have a plan that would have upgraded Pennysaver to a hyperlocal, searchable and mobile-oriented model. That’s where things need to go.

We look across the aisle, for instance, to Cox Target Media’s Valpak, a coupons and advertising business. It has thrived on a hyperlocal publishing strategy, and has developed a robust digital strategy. Valpak has just announced a great Apple Watch app. But PennySaver wasn’t going there.

Theoretically, we still find Shoppers an appealing alternative sales channel. They are generally 100 percent commission, and many products could theoretically be added to their bundle (Google, et al). WebVisible, at one time, teamed up with American Classifieds to pursue such a model. PennySaver, itself, teamed up with Antengo, a mobile classifieds service. But that was discontinued when OpenGate came on board.

Facebook Goes Up Against Craigslist and eBay (Sort of)


Craigslist has outlasted its challengers, and remains the platform to beat for classifieds, or “things to sell” marketplaces. eBay, similarly, remains a leader for the sale of goods – although most are not geographically oriented. Amazon is also active in that space.

Can Facebook, with its huge volume and trust networks, cut into their business? It is going to try via a new “For Sale” offering that allow users of its groups to post items for sale. Items are listed with prices, photos, descriptions, pick-up location and prices. They can also be listed as “available” or “sold” to let buyers know what’s still on the market.

The listings are currently free – and probably won’t go into the paid areas that provide the bulk of Craigslist’s revenue: apartments, cars, jobs and “personal services.” But if Facebook decides to provide a greater emphasis on classifieds, it could conceivably move into transactions (and commissions). It could also open the service up beyond its groups to have more of a geo-orientation.

It isn’t the first time that Facebook has been used for classifieds. Oodle, a large classifieds platform that launched in 2005, took over a nascent Facebook classifieds service in 2008 and focused on Facebook’s huge scale to offer items for sale to friends and groups within the service. Oodle was sold to QVC several years ago.

It also isn’t the first time that online groups have been used for classifieds. In their heydays, Yahoo Groups and Big Tent – each with hundreds of thousands of users — had active lists of classifieds. Many associations and groups currently host classifieds on their websites and pages.

The classifieds project is the latest transaction-oriented effort from Facebook, which may want to diversify its revenue beyond advertising. Facebook has been experimenting with various transaction models for several years, including tests with virtual gift cards, deals and virtual currencies. Facebook has also developed an Amazon-like capability to enable transactions on other sites by collecting credit card information on its profiles.

Gannett’s Deal for Cars.com

In a move that shows a deep commitment to the future of classified/vertical advertising, Gannett has announced it will buy out its newspaper partners in Cars.com and take sole possession of the #2 car site (which trails only Cox’s AutoTrader in the online auto marketplace.)

It will pay heartily to do so, paying $1.8 billion for the 73% stake of Cars.com that it doesn’t already own. That sets a value for Cars.com of $2.5 billion — an impressive amount, but still $500 million less than what the highest estimates called for.

An “economic event” around Cars.com and its sister company, Apartments.com, had been considered an absolute certainty by insiders since Summer 2013. This was mandated by the sale of The Washington Post; and the deep debt of other newspaper partners, notably The Tribune Co., and NY Times Co. Apartments.com was sold this April to CoStar Group.

Some have questioned whether Gannett is paying too heavily for Cars.com at 11.5 x earnings. We don’t comment on these issues, but note that the online auto space has gone through a lot of consolidation, boosting the prospects for more car-maker advertising; and is set for a new era that will likely go beyond dealer advertising and leads to include all kinds of transactions; dealer services such as scheduling; and perhaps other revenue producers. The increased dependence on mobile channels will also play a factor in online auto’s growth.

The Cars.com news was accompanied by Gannett’s announcement that it is separating its newspaper properties from its 46 TV stations and its rich collection of digital properties (i.e. Cars.com, Career Builder, Pointroll, BlinQ, ShopLocal, DealChicken, Clipper Magazine, KeyRing). The newspapers will keep the corporate name, while a new name will be found for the TV/Digital group (perhaps an extension of its recently announced G/O Digital brand?)

The spinoff of the newspaper properties will presumably placate Wall Street’s needs to see media companies unencumbered by newspaper and magazines, which are felt to be in an inevitable — if slow — decline. It follows similar moves by Scripps, Belo, Tribune, News Corp. and Time Warner.

The prospect of Gannett holding its newspaper-developed brands such as Cars.com, CareerBuilder and ShopLocal outside of its newspaper company shows how little synergy is seen with today’s newspaper industry (although the grandfathered Cars.com newspaper owners will hold a five year period of exclusivity to sell Cars.com following the sale.)

Should Cars.com have been kept with the newspaper group anyway? To do so would have forced Gannett to saddle the newspapers with debt from the sale.

Zillow to Buy Trulia; Will Pursue Twin Brand Strategy

Zillow is buying Trulia, its chief rival, for $3.5 Billion in stock. The two companies – both nine years old — have a lot of overlap currently. But after the deal closes in 2015, they will seek to develop two differentiated marketplaces for real estate-related information, which includes house sales, rentals, mortgage and related national and local advertising.

As the acquiring company, Zillow would focus on “top of funnel” awareness advertising. Trulia, meanwhile, would focus more on specific agent-related, final purchase (or rental)- related advertising. According to ComScore, Zillow attracted 83 million unique visitors in June, while Trulia attracted 53 million. Roughly half of Trulia’s visitors do not visit Zillow.

The proposed purchase price, roughly $70.53 a share, represents a 25 percent premium over Trulia’s current stock price. Combined revenues from both companies could produce $721 Million in 2015 under present conditions, according to estimates by Benchmark Research. Separately, the companies estimate $100 million a year in cost savings by eliminating redundancy. Under terms of the agreement, Trulia CEO Pete Flint will report to Zillow CEO Spencer Rascoff.

In our view, the primary goal of the acquisition isn’t to build the one-two punch of differentiated real estate sites, or even to maximize cost savings from eliminating overlap. Mostly, it takes Trulia out as a rival company, and per GeekWire, it also ends apparent merger talks between Trulia and Move.com, the #3 Real Estate site that controls the NAR’s Realtor.com site. (It also isn’t the first time Trulia has considered selling itself. Google apparently was interested in buying the site in 2009 when it was pursuing a major listings effort).

Over the next several years,the effort to differentiate the two sites make more sense than to collapse them into one brand. Such a strategy would be reminiscent of what AutoTrader.com has accomplished with KBB.com; The Weather Co. has accomplished with Weather Underground; and what Match.com has accomplished with the purchase of several dating verticals.

Winning national advertising dollars is especially viewed as a key growth area. Zillow has budgeted $45 million in marketing dollars this year to accelerate that effort. Zillow, perhaps best known for its controversial Z-Estimates, sees a unique advertising market among speculative home browsers, targeting everything from landscapers to auto companies. Trulia, meanwhile, has been less controversial than Zillow in the Realtor community and might be a better brand for Realtors to work with.

Will there be anti-trust issues? Both Zillow and Trulia tend to draw from Realtors and brokerages that are digitally minded in their advertising. Zillow head Rascoff, however, suggests that the market is nascent and represents less than 3 percent of the $12 Billion market in real estate advertising.

We don’t know about that. The reality is that the two companies actually tie up a great deal of the linkages between real estate advertising and distributors, such as the search engines, local media companies and others. But ultimately, it probably falls short of real anti- trust concern.

Zillow CEO Spencer Rascoff at a recent BIA/Kelsey conference

Craigslist’s Revenue Up 101%; Measuring Its Impact

There have been several game changers in local. One is Google search. Another is Yelp reviews. Another has got to be Craigslist.

Craigslist started out as a totally free community site focused on recruitment. In recent years, it has incrementally added paid sections – partly to make them more manageable – and it is beginning to make real money from these. According to “conservative” estimates compiled by our friends at AIM Group for its annual Craigslist report, the site’s revenues grew 101 percent in 2013 from $166.5 Million to $335.7 Million.

While Craigslist now serves 700 markets around the world, AIM Group says the vast majority of the revenue comes from 54 markets. The dollars largely come from Craigslist’s affordable fees for recruitment in 28 markets, and its auto ads, which were just introduced in 4Q 2013. AIM estimates that 79 percent of Craigslist’s revenue comes from recruitment; 16 percent comes from autos; and the remaining five percent coming from things like “therapeutic” listers in New York City. The site’s fees range from $5 to $75.

Yet, the site stays true to its roots as an altruistic community resource by not charging for “private party” person to person ads – recruitment ads are just charged to agencies and companies; and auto ads are just charged to dealers.

The question we’ve asked in the past is whether Craigslist is vulnerable. It still seems easy enough to produce a better classifieds site. eBay Classifieds – started after eBay was unable to take over Craigslist — is a much better site in terms of user experience, with links to social media, easy photo uploads, etc.

To be sure, Craigslist is — as AIM notes — “the same drab user experience” as it has always been. Under the hood, however, AIM notes that Craigslist has finally started improving the site. Suddenly, listings are mapped; there are new ways of searching for goods and services; there is a picture gallery view; and even a way to save thumbnail photos. Moreover, by imposing fees on dealer auto ads, it has become easier to find autos for sale — spam entries have been significantly cut back.

Does all this suggest that Craigslist is now poised to become a state-of-the-art site that truly serves the needs of its users as we move into the mobile age? Not necessarily. But Craigslist has probably done enough to keep its critical mass of listers, and users.

eBay Gets Into Wanted Ads Via Rewarder


image: Crowdsourcing.org

eBay generally focuses on helping things get sold. But it has never had a “wanted” section. Now it has tipped its toes into ‘wanted” via a new partnership between eBay Classifieds and Rewarder.

Rewarder, a San Francisco-based expert network was founded two years ago by former Intuit/StepUp executive Kendall Fargo and backed by Granite Ventures. The network now has 750,000 experts, who “have a passion for helping people , but don’t want to do it for free,” says Fargo. “It’s an extension of the ‘sharing economy’” pioneered by AirBnB, Uber and others, he suggests.

While there are plenty of free expert resources, they don’t provide you with the detail you need, and they are not a personal solution, Fargo says. Things you want to own, such as cars and products, receive the most “wanted”queries. And the queries are very sharable via social media and other sources.

Mobile also plays a big role in the network. A lot of it is impulse. More than 200,000 people are using the mobile app. Would I use it to find a cat hotel during a car trip this summer? No. That’s more of a social survey. But you’d use it to learn how to start a cat hotel.

Here’s how it works: Rewarder receives the query, including reward amount; sends out alerts to the expert solution; and sends out a payment to the winning solution. Rewards vary widely but many are in the $10 to $50 range. A reward for finding a lost poodle was posted for $100. Another person posted a $50 reward for building a travel itinerary for Sydney, Australia. More than $14 Million worth of rewards are currently posted.

Fargo notes that 30 percent of queries are settled within six hours. “It is a matching and mashing system,“ he says.

Digital First ‘Complements’ Cars.com with Tracking, Other Services

What does a newspaper company do when it loses its affiliation with a major vertical brand? That was the question for The San Jose Mercury News and some of the other Digital First Media papers on New Years Day, when the company’s partnership with Cars.com ended.

The Digital First newspapers knew that most car dealers wouldn’t want to abandon an existing relationship with a partner like Cars.com, a major source of leads and online presence. The answer? Change the value proposition that local car dealers had with the newspaper. For instance, it could complement the Cars.com relationship by developing a service agency-like model. Specifically,it could track where the dealers’ leads came from, and provide actionable information about these active car shoppers.

To this end, Digital First signed up with Cupertino-based TapClassifieds, and its growing, 15 person TapClassifieds Auto division. As part of its program, TapClassifieds evaluates websites, landing pages, text emails and credit applications as they come in. It also clean ups a dealer’s inventory to make landing pages more aesthetic, and to track results.

Tracking dealer results from Craig’s List – a major channel for dealer visibility and source of leads — has proved especially important. The site switched to a premium classifieds model Dec. 3, killing a dealer’s ability to “spam” the site –along with a dealer’s rivals. Consequently, dealers needed to review their efforts on Craig’s List, and pursue alternatives.

Another major task for TapClassifieds: make sure that listings on sites like Craig’s List and eBay Motors are compliant with their regulations. They must remain compliant with the site’s terms of use or see their accounts shuttered without warning or recourse.

“It’s a far cry from the old days, when people would just want to see inventory,” said TapClassifieds COO Jeff Herr, a longtime digital newspaper vet who left MediaNews Group two years ago to join the startup. “There are many, many tasks that you need to do to support the dealer. We are a service bureau.” Pricing for the service runs $15 per month per car, adds Herr.

Digital First has been testing the model with Bay Area auto dealers, and it has now announced a strategic partnership to take the program across all of its markets. DFM properties in Philadelphia, Connecticut, Texas and New Mexico are already up and running.

For TapClassifieds, Herr says that autos are the tip of the iceberg. RV Dealers, real estate and vacation rentals will each launch soon. “Real estate is unplowed Earth,” he notes.