Craigslist CEO: We’re No eBay Front

Let the conspiracy theorists have their day. Craigslist is going to continue to do things in its own merry way. It doesn’t expect to step up its activity with minority owner eBay, it isn’t worried about competition, and it isn’t especially embarrassed about its hard-to- search, thin-featured, plain-vanilla technology. All of this according to Craigslist CEO Jim Buckmaster, speaking Feb. 1 at the SIIA Summit in New York.

Buckmaster painted a picture of a company that is focused on reaching as many markets as possible and as quickly as possible – while broadening its demographics, which started with “20-30 somethings, but is now skewing older, with lots of users in 40s, 50s, even 60s.” Next up is the targeting of dozens of smaller markets.

While most of the site is free, and will remain so, Craigslist is charging $75 for recruitment ads in the Bay Area, where it has a dominant position. Buckmaster scoffs, however, at former SF Gate GM Bob Cauthorn’s SWAG that Craig has “sucked $50 million” out of the market, mostly at the expense of The San Francisco Chronicle and SF Gate. “It sounds high to me,” he said.

Real Cities Revenue Up 50%

Real Cities, the national network run by Knight Ridder, has lost several key members of its executive team in recent months. That’s almost always a bad sign, especially given all the other problems that Knight Ridder faces. The network is also facing competition from Centro and others that smell an opportunity to simplify local buys for national advertisers.

But things may not be as bad as they look. In fact, Knight Ridder claims that Real Cities revenue is up more than 50 percent in the last year. Part of this is due to a general boom in national advertising in newspapers – some of which trickles down online. It is also attributable to a 25 percent boost in reach, with major sites like The Houston Chronicle newly coming on board in 2005.

How does the rise of Real Cities’ fortunes translate to its affiliates? An online publisher at one of affiliates told The Local Onliner that “Real Cities is a useful network, but we’re certainly not seeing 50 percent growth from that relationship.” Translation: We’ll hang in there until something better comes along.

IYP/Search Case Study: Morris Communications

Morris Communications is well known within the newspaper industry for being a highly entrepreneurial media company, especially in its pursuit of new, Internet-based revenues. In the summer of 2004, Morris launched Yellow Advantage, a hybrid of online search and Yellow Pages products. Yellow Advantage is branded as “a new breed of Yellow Pages.”

Since its launch, Yellow Advantage, or a similarly-branded product, has been introduced in 20 Morris markets, ranging from Ardmore, OK (circulation 10,800), to Jacksonville, FLA (circulation 167,229). It is powered by Interchange, which provides the search technology, licenses the listings, and supplements Morris’ local advertisers with an extensive network of national advertisers. (Disclosure: Krasilovsky Consulting provides strategic consulting to Interchange).

Revenues from Yellow Advantage aren’t critical to Morris’ bottom line today, although it has a positive return on investment. Strategically, it plays a more important role. It helps defend the papers from increasingly local-oriented search engines and Yellow Pages. At the same time, it extends the range of newspaper advertising to existing advertisers, and reaches out to small business customers that don’t normally advertise in the newspapers (or their websites).

How Many Local Advertisers Are Online?

It is oft-repeated that there are “300,000 local advertisers online.” But it doesn’t strain the imagination to suggest there are at least 400,000. And that’s just on the search and pay per click side. Overall, there may be more than 900,000 local businesses advertising online.

It is all guess work on our part, but here is how we calculate. Google is close-lipped, but it is thought to have over 150,000 local advertisers. Yahoo Search Marketing (Overture) might have another 100,000. And then there are the localized efforts run by the remaining portals, and many smaller players to contend with, including the contextual networks, the social networks, and various other local services.

And all this is just for search and clicks. Looking at more traditional local advertising products (i.e. enhanced listings), the number of local online advertisers swells exponentially. Why does it matter how many local advertisers are really budgeting for online? Because the higher number shows that most local sites are really underperforming.

Google’s Froogle Ramps Up on Local

Google’s Froogle has been an also-ran among the giant comparative shopping sites, being out-distanced by the likes of eBay’s Shopping.com and Scripps’ Shopzilla. Indeed, Google’s apparent inattention to Froogle has been a mystery.

But this week, Google turned on the burners for Froogle. It announced that it will provide sales-and-inventory search programs for big box and local merchant retailers with ShopLocal, and StepUp, a Bay Area startup that now provides online inventory search for 1,200 retailers in 8,000 locations. Roughly 75 percent of StepUp’s merchant base, or 900 retailers, come from outside the Bay Area. StepUp also has 250 Bay Area specialty retailers, grandfathered from its acquisition of MarketSquare.

The Froogle announcement is actually the first concrete manifestation of GoogleBase, a do-it-yourself classifieds and Yellow Pages builder. While few details of GoogleBase have been released, its mere existence has caused some consternation with local media and commerce companies, who now finally understand that they’ll be directly competing with Google.

Broadcast Interactive Evangelizes for TV Websites

It’s no surprise that TV station websites remain underwhelming in most markets. They still think of the Web as a promotional platform. But since 2003, a number of stations have begun to remake themselves, leveraging their local presence with content and advertising. Some are making a dent in the local advertising market, with earnings running from $300,000 to over $1 million in larger markets.

Station groups like Clear Channel are doing it on their own. Most, however, have signed partnerships with TV website specialists, whose ranks include WorldNow, with 147 stations; Internet Broadcasting Systems, which has 70 stations, including many top markets; and relative newcomer Broadcast Interactive Media. Broadcast Interactive will have 70 stations by the end of the year, but mostly in smaller markets – the disadvantage, perhaps, of starting after WorldNow and IBS.

BIM Chief Timur Yarnall shared his sense of where the marketplace is going with The Local Onliner. The best situations for TV Websites are when they go local and create new revenues from new customers, rather than bundling in existing contracts with car dealers and other traditional TV advertisers, says Yarnall. Homebuilders, real estate brokers and mortgage advertisers are examples of new customers who haven’t previously worked with TV stations. “The website clinches it. Otherwise, these guys would not have gone near TV.” More from our discussion is below.

TorStar Goes With LiveDeal for Local Auctions

For a short time, eBay experimented with a Local Trading unit, which specialized in autos, sofas and other things “too heavy to ship.” But in 2001, it closed down the unit, which didn’t fit into its plans for eBay Autos, greater transaction fees, etc. By doing so, eBay took the chance that it would be left vulnerable to competitors filling the void.

Sure enough, jump to 2005, and a flurry of companies are ready to take advantage of the increasingly clear relationship between local auctions, classifieds and transactions. One of them is Santa Clara-based LiveDeal.

Launched by a former eBay engineer in 2003, the 25-person company lists 200,000 items for sale every day, and gets about 500,000 unique viewers a month. LiveDeal’s big news this month is that it has landed $4.8 million in financing, including $3 million from TorStar, the progressive publisher of The Toronto Star and dozens of smaller community and daily papers in Ontario. Other investors in this round include Draper Richards, a VC firm, and individual Silicon Valley investors.

We had the opportunity to talk with Vice President of Development Steve Harmon about the company’s progress. Details from the conversation, and more background, continues below.