The Classifieds Market Moves to Services

The New York Times has a report about three start-up companies that try to sell services on top of online classifieds platforms such as Craigslist. The three companies, vFlyer, Postlets and Mpire, basically try to help advertisers to design, position and publish their ads in an efficient way.

I'm not really surprised about the increasing popularity of this new kind of service. Obviously, the idea of charging for the pure publication of classified ads (what newspapers have been doing very profitably for many decades) has been disrupted away by free platforms such as Craigslists, Oodle, SimplyHired and others. Pure publication will be free in the future, and to the most part it already is. There is money to be made only in two kinds of services:

• Positioning of ads in an effective way, optimized for the target group. Not every ad works best on Craigslist.
• Reduction of transaction costs for everybody involved, especially for advertisers. This includes ad production, automated posting, response tracking, ad management, analytics etc.

VFlyer, Postlets and Mpire are offering exactly this type of service. However, they are currently focusing on the ad-production and automated publishing aspect, which in my opinion is too narrow and easy to imitate. It gets much more interesting as soon as you are able to cover an advertiser's whole value chain.

According to the NYT article, Postlets' founders were surprised that their service is used mainly by professionals such as real estate agents or car dealers. Frankly, I think it's quite obvious why business users like this kind of service. Professional advertisers have the highest transaction costs from putting ads on various platforms, so they respond well to any kind of help with this problem.

I think there's still a great market opportunity in the market for online classified services. But it's a proposition that is interesting mainly for business users, not so much for consumers. And you need to go beyond just publishing ads to higher-level services that can't be imitated so easily. And by the way: Newspapers are still important in many markets, so thinking cross-media doesn't hurt.

Comments

[Ad Production Company]

Nicely post of "The Classifieds Market Moves to Services".