Fragmented ad market opens new possibilities

Editor’s note: This three-part series examines structural changes within the classifieds industry, obstacles newspapers have to overcome to stay in the game, and what some publications are doing to differentiate  themselves and to build a heavier online footprint with real estate. (See Part 1 and Part 3.)

Newspaper, car and local real estate agent armed with MLS property sheets. These used to be essential gear for home shoppers.

Not long ago that essential gear changed to home computer and high-speed Internet access, and thus a plethora of online real estate options was born.

Print classifieds businesses, once the go-to point for all real estate advertising, now face challenges as they struggle to stay relevant and maintain market share. In just a few years the number of online classified services has mushroomed, creating a fragmented market with new business models.

Some newspapers are jumping in and forming online partnerships to beef up their listings databases, and maintain a point of contact for consumers.

“In real estate, there are tons and tons of verticals that have emerged and they are competing for usage and advertisers,” said Greg Sterling, a local media analyst with Sterling Market Intelligence. “Verticals” refers to sites that serve only real estate information and listings, such as Realtor.com and HomeGain.

Consumers are using a range of online venues, including search engines, real estate verticals and broker Web sites, and real estate agents are also using a range of online services to advertise.

“This creates all sorts of problems for newspapers,” Sterling said.

To keep up, Sterling and others suggest that newspapers need to beef up their listings content and also syndicate those listings out to other online services like Google Base.

Housing more listings makes a newspaper site more attractive to consumers looking for a large pool of options, and syndicating listings to other sites allows newspapers to offer real estate agents more traffic to their ads, experts say.

Some newspapers have already jumpstarted programs in line with these strategies. Express, a local paper launched a few years ago by the Washington Post, in April launched a Web site, ReadExpress.com that includes a classified partnership with Oodle.

Oodle’s search-engine technology crawls other Web sites and serves up classifieds for ReadExpress so that consumers searching on the site will have a larger pool of ads to view.

“Our listings show at the top of the list,” said Liddy Manson, vice president and general manager of jobs, cars and real estate at Washingtonpost.Newsweek Interactive, which publishes Express. And Oodle’s classified listings appear under those listings.

Advertisers can post an Express online ad in paid categories by placing an ad either on WashingtonPost.com or in the Express newspaper, which is published five days a week and targets Washington, D.C., commuters.

Oodle has more than 17 million classified listings from 60,000 sources. It’s real estate partnerships use a referral model that points traffic directly to real estate broker and agent Web sites.

Oodle has also partnered with the Village Voice for its classifieds on Backpage.com. Under the partnership, Oodle’s listings are integrated into Backpage search results. Advertisers can post classifieds listings free on Village Voice’s Backpage.

Backpage.com is a group of free community classified sites operated by various local media outlets including newspapers, radio stations, and television stations. The Village Voice is just one of many participants in the network, which includes media outlets from San Francisco, Phoenix and Boston, to name a few.

Backpage is strikingly similar to craigslist.org, the online community and classified site started by Craig Newmark in San Francisco that now includes over some 190 city sites throughout the globe. Like craigslist, Backpage is non-commercial in its look and feel, and free of banner ads.

Individual Backpage sites include categories for community activities, events, buying and selling items, personals, job ads, forums and real estate, among other things.

With more classified advertising moving online, the traditional business model is turning upside down, said Faith Sedlin, Oodle’s co-founder and VP of marketing and sales. “The pay-to-publish model is shifting to pay for leads,” she said, referring to a break from the days when advertisers paid a fee to have their ad appear in print to today’s model in which advertisers pay for things like traffic to their Web sites.

But that doesn’t mean newspapers are doomed.

“Newspapers have very interesting opportunities,” Sedlin said. “Their role is changing… they still own that seller relationship,” and can take that ad information and distribute it to other places. “They can really be the seller advocate,” she said.

The challenge for newspapers, media analyst Sterling said, is site traffic volume. “The newspaper has to find a way to get more traffic to its advertisers,” he said.

Newspapers need to improve the online user experience, he said, and also accept third-party content to round out their listings where there are holes, which is what the Oodle partnerships are doing.

The third thing Sterling suggests is that newspapers syndicate their classifieds “so they can ensure they get more traffic for their advertisers.”

Chicago-based Classified Ventures LLC, which is owned by six major media companies, is another example of a group working to establish a stronger Web presence for newspapers’ home listings.

Homescape, a division of Classified Ventures, operates Homescape.com, a site that functions as a national portal for newspapers’ property listings. There are mirror sites at HomeHunter.com and NewHomeNetwork.com.

A group of about 110 newspapers in about 40 states are affiliated with Homescape through a handful of media companies: Belo Corp., Gannett Co., Knight Ridder, The McClatchy Co., Tribune Co. and The Washington Post Co.

Next: A closer look at what two newspaper companies have done to make a footprint in real estate online.

***

Send tips or a Letter to the Editor to jessica@inman.com or call (510) 658-9252, ext. 133.