Craig Donato (Oodle): Social Media Will Fundamentally Change the Classifieds Game

Continuing my coverage of the latest BIA/Kelsey conference Marketplaces 2010. In last session of day one, we had the opportunity to listen to Craig Donato, Oodle‘s CEO. I’ve been a fan of the Oodle model since they launched (aggregated classifieds platform with a centralized database and distributed content). They power Facebook’s classifieds section (quite a partnership in itself). I hadn’t heard Donato speak in a long time and I was happy to see that his thoughts were right on the money as far as I’m concerned.

Craig Donato CEO Oodle

Past Flickr picture by mixmoo

Highlights/insights:

  • Social media will fundamentally change the game of classifieds
  • Classifieds are inherently social as they always finish with a face-to-face interaction
  • Identity and reputation play a big role in the future of classifieds
  • Discovery through trusted recommendations is bringing a new era of social discovery
  • We’re going from search engine optimization to social media optimization. He gave the Facebook page and Twitter profile examples, where you build a fan base and followers that share and join the conversation
  • An interesting insight from their Facebook integration: the newsfeed is the new important real estate for businesses.The more people comment on an individual “activity” on Facebook, the more it gets viral and gets pushed to your friends.

The BIA/Kelsey blog has a small summary of that presentation.

What is MySpace?

Day 1 of the Kelsey Group’s MarketPlaces 2009 conference. Jeff Berman, President, Sales & Marketing for MySpace, was on stage for a keynote address.

Of note in his presentation:

  • Jeff described MySpace as a “social portal” halfway between a portal and a social network
  • 40% of online moms in the US are on MySpace each month
  • Their classifieds section, powered by Oodle, generates 500K postings a month
  •  They’re recently introduced MySpaceID, their equivalent of Facebook Connect or Google FriendConnect
  • When asked how do they differentiate MySpace from Facebook, he answers that Facebook is a social utility, a very powerful, elegantly designed, communication platform. But that there are no licensed music content and no licensed video content in it like you find in MySpace.
  • When asked “what is your USP?”, Berman said ” Massive content platform, social discovery around music”.
  • When asked if they’re interested in “local”, he started by replying that they’re careful before they go in a space because they don’t want to upset their large user base. They need the right model. They also need a foreseeable revenue component but he did say local was interesting to them.
  • Questioned about their target market, the MySpace exec said “everyone”

Here is the Kelsey Group blog summary of the presentation.

What it means: a couple of thoughts. First, I got the feeling that MySpace is in this bizarre brand/product positioning situation. They’d like to be Facebook and embrace social networking to the max but they’re not there yet. At the same time, the music/video component of the platform is what makes it compelling to a lot of users. If you’re a new music group, you need to be on MySpace and personally, I often start my search on the site when I want to listen to new acts bypassing search engines completely. I also like the level of activity in their classifieds section. Not bad at all! Finally, on the “local” question, I decoded from Berman’s answers that MySpace is not going to play in “local” in the short term. They’re still trying to find a model that will work. So, what is MySpace? A music/video site? A social network? Given that they’re owned by News Corp, I think they should morph into a “social entertainment” destination and platform. The launch of MySpace ID (now available on Yahoo! by the way) should increase their relevancy in the social ecosystem.

Can a Hulu-Like Play Save the Newspaper Industry?

I was re-thinking about my recent blog post about the importance of Hulu for the TV industry.  A strong “national” brand unifying various media players under the same umbrella while allowing individual players to have their own unique “brands”. For example, you can find The Colbert Report on Hulu but you can also find it on the Comedy Central site.  You can find it on CBS’ TV.com also (powered by Hulu) and on DailyMotion (via an agreement with Comedy Central). You can possibly find illegal versions on other video sites and illegal copies on torrent sites as well. In Canada, you’ll find Colbert on the CTV site.

So, having a “national” hub that aggregates content from, what common sense would call, “competing” players doesn’t prevent other “national” and “regional” brands to co-exist with the same content and it allows TV networks to compete on an equal footing with “national” video portals like YouTube. That works as long as industry players have a stake and a say in the evolution of the “national” hub, and that’s the case with Hulu.

Seemingly unrelated, Google just announced that they were pulling the plug on their Print Ads initiative (where Google was reselling newspaper advertising to their network of advertisers). Many people were watching and hoping this might help support print newspaper ad revenues. It was clearly not going anywhere.  Google said in their announcement “We believe fair and accurate journalism and timely news are critical ingredients to a healthy democracy. We remain dedicated to working with publishers to develop new ways for them to earn money, distribute and aggregate content and attract new readers online.” Yahoo! also has agreements with newspapers to help them monetize their online traffic via a unified ad platform called APT. This seems to be going well but again, newspapers don’t necessarily control their destiny in that agreement.

Now, this got me thinking about the newspaper industry ecosystem in general. Players in this space usually compete with other “regional” players offline (New York Times, New York Post, etc.) but are also competing against “national” brands online, usually aggregators (for example, Google News). I just realized that…

TV industry challenges = Newspaper industry challenges!

I believe it might be time to build a new national brand and platform in the newspaper industry. A “Hulu for news” that integrates national and local news from all major newspaper outlets in the US, citizen journalism content and social media tools. A startup that’s staffed with the most web-savvy new media people, that understand where traditional media comes from and where it’s going but that are not locked in old paradigms. Other interesting technologies for that venture would be the Topix.com platform and content and the Oodle national classifieds platform. This initiative would allow syndicating of news and ad content through widgets and APIs. Content could be displayed on “local” newspaper sites and re-syndicated to smaller sites. I’ve read somewhere about similar past initiatives that failed (can’t find the source now) as offline competition was creating too much of a hurdle for anyone to align. But I think the industry might be at that critical juncture point where they absolutely need to agree to cooperate online while competing offline. Who will take the leadership of this initiative?

Update: Jemima Kiss from the Guardian says “if newspapers start thinking like startups, they might just have a chance.” I agree.

A Look Back At 2008’s Most Important News and Trends in Local Search and Social Media

As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):

  • The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
  • Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
  • Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
  • Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
  • Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
  • Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
  • Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
  • Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
  • AOL buys into the social-networking game with Bebo. A cool $850 million…
  • Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
  • Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.

A Look Back At 2008's Most Important News and Trends in Local Search and Social Media

As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):

  • The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
  • Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
  • Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
  • Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
  • Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
  • Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
  • Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
  • Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
  • AOL buys into the social-networking game with Bebo. A cool $850 million…
  • Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
  • Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.

A Look Back At 2008's Most Important News and Trends in Local Search and Social Media

As the year ends, here are, in my humble opinion, the most important news and trends of the year in local search and social media (in no specific order):

  • The major challenges of the newspaper industry. Declining print readership, challenges with monetizing the Web, user fragmentation, lay-offs, stock value decline, etc. 2008 was a very difficult year for the newspaper industry and I don’t think 2009 will be easier with the slowdown in ad spending.
  • Mobile, iPhone & the app store. The launch of the iPhone 3G and the arrival of new “iPhone-killers” devices signaled the beginning of a real tipping point in mobile local search and social media usage. The launch of the iPhone app store also created a new ecosystem leveraging the iPhone’s installed base. At the end of 2008, building an iPhone application is as “hot” as building a Facebook app was a year ago.
  • Social Media (Facebook, Twitter, Friendfeed, LinkedIn). Continued usage/buzz growth in social media especially around these four Web properties. Social and user-centric functionalities are a must-have today. Some difficulties around monetization of social media inventory though.
  • Identity (Facebook Connect, OpenID, Google Friend Connect). With the rise of social media come major challenges around personal identity on the Web. Large social properties want to become that official provider of identity. Will explode in 2009.
  • Local video. This was the hottest new ad product at directory publishers everywhere. I’m convinced that the technology is now a commodity but I’m wondering if the product itself will also become a commodity in the near future (i.e. you need videos in your local search site like you need maps, URLs and click-to-talk buttons)
  • Sobering presentations from directory publisher executives at each Kelsey conference in 2008. More realistic, a clearer view of opportunities and challenges in the industry (great assets, local search industry is booming but erosion in major metro areas, etc.). What used to be said behind closed doors is now mentioned openly.
  • Drastic drop in directory publishers stock prices. Deadly combo of credit crunch, slowdown of the economy, too much debt and market perception. Idearc is delisted after losing 99% of its value. RHD also loses 99% of its value. Similar (although less drastic) situations in Europe and Canada.
  • Microsoft’s failed Yahoo takeover (a proposed buy-out at $31 a share) occupied a good portion of tech news early in the year. This would have a created a very interesting company to compete against Google (desktop technology + social media + search). Jerry Yang, Yahoo!’s co-founder, made sure the deal wouldn’t go through. Yahoo!’s share is now hovering around $12.00.
  • AOL buys into the social-networking game with Bebo. A cool $850 million…
  • Geolocation in browser (geode, loki, Google Gears). We’ve seen the first elements of this in 2008 but this is a potential game changer, transforming every web site into a local destionation
  • Facebook replaces their own classifieds with the Oodle platform. In a move I found very surprising, Facebook outsourced local classifieds clearly showing that they don’t realize they’re in the local search space.

On Atomizing Your Business Model: The Newspaper Industry

Continuing our series on the atomization of content and business models, today I look at the newspaper industry.

First, from the user point of view: online (vs. the print version), it’s much more difficult to find the glue that will make your news container (your URL) stick together. if you have a strong brand (the New York Times, for example), people will navigate directly to your site but readers can now access your content via RSS readers, blog posts and news aggregators like Google News. These have been flourishing, reorganizing newspapers’ articles (the new content atoms), into flexible reading formats. For newspapers, it’s a catch-22. You want to be indexed by news aggregators to drive traffic back to your site but you wonder if you’re losing brand equity at the same time. Efforts at trying to get readers to register to newspapers’ sites (to generate potentially valuable socio-demographics information) have been a major failure. Clearly, the only strategy now is building a strong brand online while allowing readers to access your atomized content via a variety of vehicles but that creates problems from a monetization point of view.

Traditionally, the newspaper business model has been found in these three revenue categories: reader subscriptions, traditional display advertising and classifieds. Except for a few exceptions (the Wall Street Journal comes to mind), experiments in paid online user subscriptions have been failures as digital content is much more difficult to sell as an aggregate than print content. Classified revenues are being nuked by free sites like Craigslist or Kijiji, or aggregators like Oodle. Newspapers have been also forced to offer free classifieds, managing to generate some priority placement /enhanced content revenues but not to the previous print level. Online display advertising is working but it does not monetize as well as print advertising.

To better monetize their destination site, newspapers have been looking at various new solutions. One is in-line text ads (double-underlined sponsored keyword ads appearing directly in the article text) delivered by companies like Vibrant Media but, as I mentioned yesterday, the blurring of the line between editorial and advertising content has created ethical issues within news organizations. Already in 2006, in an article called “Is It News…or Is It an Ad?”, the Wall Street Journal exposed the various issues around the product:

“This type of online advertising within the text of an article, known as in-text advertising, has been around for a while. But it used to be relegated to niche sites like the videogamers’ haven IGN.com and ScienceDaily.com. Now it is appearing on some mainstream journalistic Web sites, like those of News Corp.’s Fox News, Cox Enterprises Inc.’s Atlanta Journal-Constitution and Hearst Corp.’s Popular Mechanics magazine. That marks a departure from a long-observed tradition in the print medium of keeping editorial content separate from advertising. “Journalism ethics counselors decry the trend. “It’s ethically problematic at the least and potentially quite corrosive of journalistic quality and credibility,” says Bob Steele, the senior ethics faculty member at the Poynter Institute, a journalism school in St. Petersburg, Fla.”

More recently, Tim McGuire from the Walter Cronkite School of Journalism in Arizona wrote about its use in the Arizona Central web site:

Michael Coleman, Vice-President of Digital Media for AzCentral, told me late Friday that the site has been using Vibrant Media for “two or three weeks.” Coleman described the relationship as a test and said this is not a “Gannett roll-out” of the concept even though some Gannet papers are using the system. “We’ve got a pretty non-committal contract with them, Coleman said. “The publisher made the call, and we decided to try it and see what happened.” Coleman said the experimental aspect of the deal explains why nobody has announced this deal.

Business Week wrote about the phenomenon in December:

Many journalists believe that selling the words in a story blurs the line between editorial and ad content. Some worry it creates an incentive to insert ad-linked words or order up certain types of stories. Forbes’ online arm caused a ruckus in 2004 when it rolled out in-text ads. After an outcry among the editorial staff and negative media coverage, Forbes ended the practice. (…)

Publishers are paid by Vibrant and other marketing companies based on how many times readers scroll over a word. Advertisers only pay Vibrant for how many times a reader actually clicks on an ad. In-text ads draw a higher response than traditional Web ads: About 0.2% of Web users click on posterlike ads known as banners; Vibrant CEO Douglas Stevenson says 3% to 10% scroll over and click on in-text ads, depending on the category.

I think the use of in-line text ads might be problematic thus far because newspapers have been using the technology to better monetize their destination site. I would suggest that the better use of this new ad vehicle would be to monetize a smaller atom of content, i.e. the news article, decentralized from the destination site. Embedding in-line text ads within RSS feeds or other distribution mechanisms might be a small price to pay to allow readers to access news article outside of the newspaper’s site. Another option would be to have RSS ads, like the Feedburner Ad Network.

I think the general takeaway here is that newspapers shouldn’t look at the same business models to monetize centralized and atomized content.

Update: The Kelsey Group discussesNewspaper Next 2.0, a “progress report” by the American Press Institute on the evolution of newspaper companies beyond the print edition.” I took a quick glance at it (it’s a 110-page document) but it does not seem to address many of the business model issues that newspapers are facing. As my friend Peter K. says in the post, “The report has a better fix on consumer-oriented solutions than business solutions. But that’s not surprising for a newspaper industry (i.e. editorial-driven) product. If the Yellow Pages Association commissioned similar research, it would probably be the other way around.”