Improving interactive classifieds: More important than ever

The Los Angeles Police Department recently filmed three short action films to recruit new officers. Theyíll be shown in movie theaters; on the departmentís own Web site, JoinLAPD.com, and on Monster.com.
In a nutshell, that sums up the problem facing newspapers in classifieds.

There are lots more places to advertise than ever. Hiring? Selling your car? Buying a house? Thereís a wide range of options for advertisers, buyers and job-seekers.

To reach young men and women of various ethnic backgrounds and interests, the L.A.P.D. goes into movie theaters. Other employers use billboards, radio, television, Craigslist, direct mail, employment sites like Monster and CareerBuilder, and their own Web sites to supplement ñ or more and more often, supplant ñ newspaper classified ads.
Thatís why itís more critical than ever for your classified services to be complete, comprehensive, local and highly effective ñ in print and especially online. And please, emphasize the local part of that equation, because itís a unique element you can offer that can make your services stand out from those others.

At Classified Intelligence, we follow the changing classified advertising marketplaces. Our global group of analysts watches the trends, with an eye on practical ways to turn them in your favor. We keep in touch with newspapers, Web sites, yellow pages, employers, advertisers and classified-advertising users to see how those changes will affect your business.

With that in mind, here are the key trends weíll be watching closely in 2005. Youíd better pay attention, too. More important, youíd better meet these threats and opportunities head-on.

ìMeg and Craig:î Merchandise classified ads are threatened with ìdeath by EBay.î The company, headed by the brilliant Meg Whitman, is growing its ìcritical massî in merchandise sales, while many newspapers donít have critical mass at all. EBay has spent about $865 million (U.S.) in 2004 buying online classified advertising businesses worldwide, including about $12 million to buy 25 percent of the powerful free-ads community Craigslist.org. Craigslist keeps growing as a tough competitor ñ itís now in more than 65 cities ñ partly because itís run like a counter-culture service for friends, not a traditional business.

Yellow pages and classifieds: This may become the online ìkiller appî for finding local products and services. Combining the strong, frequently updated database of a local classified advertising publication with the rich directory data of telephone yellow and white pages may create the best local online shopping experience for users. Several of these combos launched in 2004; youíll see more in 2005. Weíre even working with one major, telco-affiliated directory publisher on its classified advertising strategy. Uh-oh, newspapers.

Local search: As more users turn first to search engines for products and services, and Google and Overture (among others) surround those results with useful targeted ads, local advertisers are learning to post pay-per-click ads to generate business. If your site doesnít offer easily searchable ads, classifieds and advertiser lists, and contextual ads, you may lose out to ìGoog-erture.î

Pay for performance: ìPay per clickî and ìpay per actionî ads are increasingly popular with advertisers, who like to know exactly what they got for what they paid. Recently a smart newspaper ad executive told me heíd never offer PPC and PPA services; I say, ìNever say never.î One major paper I know is negotiating to give a real estate advertiser a test program of half-page ads that cost nothing up front but generate revenue based on leads delivered by those ads. Fascinating. (Weíll see if it happens.)

Accountability: Advertisers are getting smarter fast about learning how the money they spent on advertising actually brought customers into their stores, home-buyers to their agents, job-seekers to their chairs. Using Web tracking, unique telephone numbers, call identifiers, targeted lead-generation systems and other techniques, advertisers can tell, for example, how much it actually cost to hire each of the people who came in through various specific sources. Powerful. A real positive development for media that deliver results; big trouble for those that donít.

Web-to-print: Many newspaper publishers and non-traditional publishers like directory companies and Web sites are using databases compiled online to output material for new print publications. Great cost-cutting potential; excellent new-product development opportunity.

Self-service ad placement: Customers buy things online. They want to place ads online, too. And when they do, if you make it easy for them, they spend more money. These services are growing steadily, as they should.

Social / professional networking: Sites like LinkedIn, Ryze, Tribe.net and Orkut all purport to help you run your life better through networks of friends, colleagues, and friends-of-friends. Is there a long-term business model here? And will it affect classifieds? Weíll see.

Richer content online: The days of saying, ìSorry, we canít put a picture of your house on our Web siteî or ì Ö in our newspaperî should be over. Sadly, they arenít. Online, advertisers can offer lots of photos, even video clips. They add value to house, apartment, car, even job ads. If you donít offer them, your competitors will.

Each of these trends is changing your classified advertising business. Keep an eye on them. Read my column. Visit our Web site occasionally for free (and paid) reports about them. Sign up for our free ìClassified Intelligence Case Studies.î But more important than watching, ACT. Improve your services. Upgrade your sales force. Add pictures, features and databases to your Web sites. And make your classified marketplace the best ñ the only ñ place to go in your market for jobs, homes, cars and stuff. If youíre that ìmarketplace,î youíll have the foundation of a great business for the future.

By Peter M. Zollman