Thoughts

August 15, 2014

The Surge in Online Classifieds

“Approximately 25 percent of Internet users in the Arab world have used online classifieds. This put the total audience of top regional classifieds websites at an estimate of more than 35 million users per month by mid 2014. ”

f you like to get your hands dirty with an inky, fat and heavy print classifieds newspaper made out of dead trees on a Friday or Saturday morning, and circle classifieds that are of interest using that bold red pen, over a cup of coffee, then you must have noticed that the number of classified ads has shrunk. This is especially true in the autos and real-estate segments, as the volume of ads has fallen over the past couple of years and even more so during the last 12 months.

Where did the classified advertisements go? You won’t have to look far. Just pick up your computer or smart device, do a quick search, or download a regional classifieds app, and you’ll find all you’ve missed and much more.

Between 2000 and 2010, US newspaper classifieds revenue fell from $19.6 billion to less than $6 billion. In fact, today most cities in the US don’t have a classifieds print newspaper.

Europe did not need long to follow. A couple of years ago, France’s most iconic classifieds paper –which was the inspiration behind many of the classifieds prints in the Middle East– decided to stop printing. While we are yet to see leading classifieds newspapers in the region shut down, it’s easy to predict that this may happen in less than 5 years.

A look into the regional print classifieds industry reveals that business from classifieds listings has stopped growing 2 or 3 years ago, while most titles have witnessed 20 to 30 percent decline in revenues and volume of ads last year. This year seems to be following suit.

While this may be bad news for publishers who made a bet on print classifieds, and set a blind eye to the obvious shift to online classifieds, the migration of classified advertising to the Internet has been a win-win for all. This includes consumers, small and medium-sized companies, and online classifieds start-ups and their investors.  The shift drastically improved the experience of consumer-to-consumer and business-to-consumer selling and buying. It also created billions of dollars in value for start-up founders and their investors around the world, which made-up -multiple times- for the lost value in print classifieds. Despite starting mostly with a free offering, online classifieds have been able to prove their success in monetizing users infinitely more than print classifieds, in a far more scalable manner, and with much higher margins.

It is not an exaggeration that more than 50 percent of the 135 million Internet users in the Arab world rarely use a print classifieds newspaper. From a seller or service provider’s perspective, one can get immediate gratification and results by posting ads for free, or paying a small fee, to get premium exposure without having to leave the comfort of his couch or wait for the newspaper print date. For example if you want to sell your car or house, all you’d have to do is pull out your smartphone, take few photos, tick a few boxes, and boom, your advertisement would be online.

From a user’s perspective, spending hours going through print pages and circling ads, setting-up comparison tables, writing down phone numbers and waiting for next week’s edition for new options is now replaced by a sophisticated search that allows you to look for cars by brand, year, body type, fuel type, and price, get in touch by email or phone, and set-up alerts in case what a user wants is not available now, but could become available in the next minutes or hours. The same great experience applies to real-estate, jobs, electronics, services, and whatever buy/sell category you can imagine.

To understand the seismic nature of the shift that happened in the past few years, approximately 25 percent of Internet users in the Arab world have used online classifieds. This put the total audience of top regional classifieds websites at an estimate of more than 35 million users per month by mid 2014. This includes varying using habits from daily to weekly or more, which far exceeds not only the audience of print classifieds, but that of all print media in the Arab world –be it daily, weekly, or monthly.

On a country basis, a leading classifieds website in Saudi Arabia for example reaches 250-400 thousand users a day, depending on the day of the week, while the leading newspaper and leading classifieds weekly in the country prints no more than half this number on their best day. In terms of depth, classifieds websites usually have tens of thousands of postings per day, compared to a maximum of several hundred posts in the daily, and low one-digit thousand posts in weekly print classifieds.

Online classifieds have become so popular in the Arab world that in some countries the leading classifieds website is more popular than Facebook. This is the case for leading Arabic classifieds website OpenSooq.com, which is a leader in its category in several countries including Saudi Arabia, Kuwait and Jordan. With a simple, easy to use website and popular iOS and Android apps, OpenSooq is not only leading in countries that have mature online audiences, but also in countries where the number of Internet users is growing very quickly via smartphones, such as Iraq and Libya.

In expat-dominated countries such as UAE, Qatar, and Oman, English-language generic classifieds website Dubizzle has done well by focusing on business-to-consumer advertising in sectors such as real estate, offering advanced search functionalities, and a more elaborate user interface.

OpenSooq.com and Dubizzle are joined by category leaders who have focused on specific verticals, such as Propertyfinder, focused on real estate in the UAE, and Haraj, the undisputed leader in automotive classifieds in Saudi Arabia.

Globally, online classifieds is a business that is mostly local or regional, where global websites are usually of low value outside their geographical area. The sector is also usually one of the first categories to mature with emergence of regional leaders. This has been the case indeed in MENA, with the business leaders in online classifieds mostly being home-grown start-ups that are now valued at tens of millions of dollars. That’s just for starters, as they have tremendous growth potential ahead of them.  I’d advise you to keep an eye on this sector.