Category Archives: Verticals

Craigslist Adds More Premium Fees; $5 for Auto Dealer Ads

Craigslist is going to begin charging used car dealers $5 for 30 day placements, beginning December 3. The new fee is the latest stage in the slow evolution of Craigslist to a partially premium site that still offers free services to individuals while charging lower-than-market rates to commercial enterprises.

The classifieds leader, which serves 486 U.S. markets and 214 overseas markets, imposed $5 fees on event tickets last year. It previously imposed $10 fees on “therapeutic” ads for sex workers and others; $10 fees for apartment listers in New York; and in some markets, $25 for recruitment ads (but $75 in San Francisco). Most of Craigslist revenues are earned in its top 28 markets – it remains a steadfastly urban site — and the vast majority of its revenue comes from the recruitment ads.

According to tallies by AIM Group, Craigslist currently has 3.9 million auto ads in its top 28 markets. Some of its markets (i.e. Dallas, Miami, Houston, Seattle and Phoenix) are clearly more car-centric than others .

The AIM Group suggests that just 10-15 percent of the sites used car ads might be dealer ads. Based on that estimate, we’d calculate that such ads might bring $1.95 million to $2.925 million per month, or roughly $23.4 million to $35.1 million per year. Smaller markets might bring in another 5 percent .

In our view, the imposition of dealer fees for used cars are mostly a good thing. They will likely end the surfeit of “fake” car ads designed to get consumers to the dealer. They’ll also make the ads easier to manage, as dealers currently post (and repost) ads in an effort to stay on top of the listings with high volumes of ads.

The repostings have hurt Craigslist efficiency, as the same Honda Accord EX 2013 would come up multiple times in user searchers. The imposition of apartment fees in New York similarly were something of a public service for all involved.

The downside for auto dealers is they still need to do a credit card payment for each listing, car by car. Industry analysts, however, suggest that Craigslist might be developing a bulk signup program.

One question we have is whether the auto fees precede a similar program for real estate. Craig’s List has been aggressively blocking both auto and real estate hyperlinking to prevent third party sites from piggybacking its content.

Another question we have is the competitive threat posed by Craigslist to car sites and other vertical sites. We have seen a growing use of Craigslist by various vertical players (apartment managers etc.) . We believe that the auto community is less vulnerable than other verticals, however, given the sophisticated search, tech and content features provided by leading auto sites.

Facebook/Google Vertical Wars: Facebook Recruits a Google Auto Exec

Facebook isn’t obvious as a major competitor for auto advertising. But Google certainly watches Facebook’s every move in autos, as it worries that advertising that might have otherwise gone to its services is being cannibalized by social media.

Is it paranoid? We don’t think so. The car makers are definitely focused on digital spending, but social media represents a real alternative to Google’s assortment of search, video and display. Facebook represents 65 percent of all social media conversations about autos, per JD Power.

Earlier this year, Facebook added the capability for auto marketers to target shoppers based on car makes and models and their online purchase histories. And yesterday, Facebook grabbed Google’s Detroit-based Auto Industry Director Michelle Morris, a seven-year Google vet, to help lead auto sales. Morris is expected to engage current Facebook clients, including Hyundai, Nissan, Volkswagen, Ford, Chrysler,GM , Toyota and Subaru while also developing new relationships.

“With Facebook’s offerings, automotive marketers can build and strengthen brand opinion, consideration and loyalty while maximizing efficiencies at every level of the purchase funnel,” noted a Facebook press release.

Recent ComScore data shows that social media automotive spending is up 130 percent, and that 14 percent of all online auto ad spending is now spent online. Nissan outpaces the rest of the industry by spending 20 percent of its online spending on social media. Most of the social spending is geared around boosting engagement, influence and credibility, and includes a mix of auto forums and “mass” social media.

At Interactive Local Media in San Francisco Dec. 10-12, we have great keynotes from Facebook VP of Product Marketing Brian Boland and Google Director of Global Mobile Solutions Brendon Kraham. You can register here.

JD Power Auto Roundtable: Digital Auto Ecosystem Shifts

With the majority of U.S. auto buyers now using online and mobile in their research, the auto sites are clarifying their individual roles in the auto ecosystem – and making adjustments where necessary.

This week, a panel of car site leaders at the JD Power Auto Roundtable in Las Vegas – including Cars.com, Edmunds.com, Kelley Blue Book and TrueCar.com — suggested there were two extremes among them. On one side, you have the national verticals that are the successors to the classifieds industry and provide rich information about cars and the buying journey, lead by AutoTrader.com and Cars.com. On the other side, you have sites focused more on providing price estimates for autos, such as Edmunds, Kelley Blue Book and TrueCar.com.

Finding a balance between pricing and dealer engagement has been the industry’s challenge.

“Price, while important, is not the sole principal,” said Cars.com SVP Alex Vetter. Most people want to know who to buy from and the quality of the service department. Taking care of customers post sale means a lot to them and they will pay more than the lowest price.

Indeed, a focus on price is seen as a “race to the bottom. “As marketers, we are touting unique value propositions, product quality and things we want to promote.” Vetter notes that Cars.com’s deep editorial content, and growing mobile channel, provides context and relevance for the site’s network of 20,000 dealers.

Edmunds.com President and COO Seth Berkowitz , however, suggested that the presentation of price really is important – so long as it is provided in a rich context. By providing price points that have been paid by other customers, along with price quotes by the dealers, better trust is fostered with consumers. When dealers make promises and keep them, we’ve seen a 10% bump in satisfaction ratings, said Berkowitz – an important boost, as dealer profits are often made less from sales as loyalty efforts such as car trade ins and service.

Berkowitz said that the site now works with 6,000 dealers and is becoming more dealer-centric, rather than relying so much on advertising from the manufacturers. The site’s revenue split is currently 60 percent advertising, 40 percent dealers. By next year, it should be 50/50.

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SevaCall: Qualified Service Leads in 90 Seconds

Fast, efficient service leads has been a goal of numerous companies since the commercialization of the Internet. Richard Rosen and his team at FastCall411 pioneered the space seven or eight years ago, although their service was initially limited to hiring car service. The first car service to respond to queries would win the job.

Several new entrants have jumped into the space. ReachLocal has launched ClubLocal, a service that automatically sends out service pros to customers that send in a query. The pros, who provide discounted service, are sent out based on price quotes, reviews and other criteria.

Another new entrant is SevaCall (i.e. save a call), a five person startup based in Potomac MD that sends out leads to service providers, who can then automatically respond to customers – hopefully, within a 90 second window. The service allows up to three service providers to call consumers, who can do their own price and service comparison, set a service window, and hire who they want.

President and COO Manpreet Singh says the service, which raised $1.3 Million in first round funding, is filtering its leads to find the ideal service providers. It eventually will use call management software to filer leads based on pricing, job types done, ratings and reviews, and even inflection points.

Some service pros are being sent leads for free as an introduction to the service, but Singh tells us that the average lead cost is now $13. It is offering services in more than 50 categories, including taxicabs, florists and accountants. More than 6,000 zipcodes are currently being served, including zips in Atlanta, Boston and Kansas City.

ReachLocal Focuses on Verticals: A Look at its Eyefinity Deal

ReachLocal is now largely focused on providing integrated marketing solutions, including search, retargeting, promotions and process management. As part of this effort, it has also introduced three new brands: ReachCommerce, a process management service; RealLocal Edge, a lead conversion service; and ClubLocal, which allows consumers to book and buy home services online.

It is also drilling down on key verticals, such as auto and health care. The company, which works with 32,500 advertiser locations, recently announced a big deal via is ReachLocal Health Care division to sell the integrated solutions for clients of Eyefinity, which provides business services for eye doctors. Eyefinity will receive compensation for referrals to its franchisees.

ReachLocal HealthCare director Golda Hartman, who is a physician herself, runs a team of 130 sales specialists. She says the division has seen 70 percent year-over-year growth. It makes total sense for digital marketers such as ReachLocal to seek deals with optometrists and other media specialties, she says.

“They do everything in their practices, from business solutions to keeping electronic media records,” she says. The key is to be able to customize not only by vertical, but by type of business and location.

“We look at every individual practice,” notes Hartman. A private practice, for instance, may want to focus on new business or patients that require specialties, she says. Hospitals might focus on other strengths.

ReachLocal CEO Zorik Gordon is keynoting our upcoming Leading in Local: SMB Digital Marketing event in Austin Sept 11-13, along with leaders of Google, Facebook, Twitter, YP, YPG, Gannett and many others. You may register here.

Schedulicity Makes Case for ‘A-Comm’

The scheduling space is heating up, with a number of key vendors competing for SMB business, companies such as Groupon and Merchant Circle acquiring and integrating scheduling companies into core activities, and new companies such as MyTime attempting to aggregate all the players.

Bozeman, MT-based Schedulicity is one of the key players in the space, selling scheduling and related services for a range of $19.95 to $39.95 per month, depending on the number of users. The company has attracted “tens of thousands” of SMB accounts, booking 1.25 million appointments per month. This week we talked with CEO Joshua Spitzer was promoted to CEO. We talked to Spitzer this week about his vision for appointment- driven SMB commerce (or “A-Comm”)

Spitzer’s first major development is the revamp of Schedulicity.com. In its new guise, it is not only a portal where people book local services, but one that also focuses on customer analytics and consumer discovery of new services. The discovery effort is a major initiative and was launched in late March.

“We facilitate impulse purchasing of services,” says Spitzer. He notes that every person who books a service via Schedulicity is a potential user of the new portal, and is a strong potential customer of all.

“If they used us to book a hair appointment, they may use us for their next massage or to book an appointment in another industry vertical,” says Spitzer.

Meanwhile, Schedulicity’s development continues unabated, covering 60 verticals. Spitzer says the company remains focused on landing SMBs, which he says is always the hard part. A key part of its strategy is to work with third parties such as CosmoProf, a division of Beauty Systems Group, LLC for hair stylists.

“Developing a valuable supply of appointments is difficult,” says Spitzer. “For starters, you not only have to sell to service providers, you have to change the way they do business.” But the ROI is proven – especially if they use Schedulicity as a promotional engine to help drive new customers for unfilled times.

The company, in fact, has two promotional products that are the beginning of efforts to diversify revenue streams: “Pop Up Offers” allow the company to distribute last minute deals to replace cancellations, etc.; and “Deal Manager,” a self-serve product that enables merchants to run their own daily deal type promotions. Additional functionality will be introduced “later this summer.”

GrubHub, Seamless Merge; Mobile Drives Food Ordering Growth


Photo: CNN

Online restaurant ordering and discovery giants GrubHub and Seamless have agreed to merge their operations, creating a single company. Chicago-based GrubHub currently serves more than 20,000 food ordering establishments in 500 cities, while New York-based Seamless serves more than 12,000 food ordering establishments in 400 U.S. cities plus London.

GrubHub CEO Matt Maloney, who co-founded the company in 2004, keeps the CEO job. Seamless CEO Jonathan Zabusky becomes president. Zabusky recently came on to spin off the operation from Aramark, the corporate catering giant.
The two companies had been going head-to-head in a number of their markets. Both share a vision of the food ordering business being rapidly transformed via smart phone.

We had an extensive discussion with Zabusky in March. At that time, he noted that Seamless had two million regular users and grossed $85 Million in topline revenues in 2012. It projects $100 million in top line revenue in 2013, with major growth seen in coming years.

The company has had a strong foothold in the corporate market, providing food ordering and delivery to law firms, tech firms and investment houses. But its major effort has been focused on the consumer side, which has been experiencing year-over-year growth of 60 percent.

The company has 300 people in three major offices, as well as field based sales. While it is best known for its strong business in Manhattan, where it recently opened a 28,000 square foot facility, Zabusky notes that the company has a strong presence in 13 major U.S. markets. He added that Seamless had “a major national expansion strategy,” and was well-situated to execute it with a customer care center in Salt Lake City.

The key to growth, said Zabusky, was to keep selling new products and features to its food establishment partners. “We don’t make money unless they make more money.”

Zabusky noted that Seamless has been processing electronic order forms, and providing electronic terminals, along with table side ordering apps. Generally, its focus is to move restaurants away from fax machines, and away from phone calls and paper, which he says remains the segment’s biggest competition.

With Seamless, restaurants move up to a “multi-platform portal,” where they could “view, confirm and track orders,” he said. Restaurants also leverage Seamless and its vast network for discovery and retention. For instance, it offers different deals on different days to keep customers coming back. “It is very different than the daily deals space,” he said.

The industry’s transformation via mobile, however, is expecially key. Zabusky says it represents 40 percent of the total business, up from 10 percent a year ago. But for online food ordering, mobile doesn’t just represent a phone. The company’s best customers use the PC-based Web, phones and tablets, he says. “Thirty percent of the mobile volume comes from the iPad.”

After the merger is completed, major competitors for the combined company will include Living Social, which has recently bet big on online food ordering; Delivery.com, which claims a roster of almost 10,000 restaurants in 50 cities; and Eat24.com, which covers 20,000 restaurants in 1,000 cities across the country.