Are Facebook, Rocket threats to the 'Big Five'?

85 Pages·2015·5.09 MB·English

by  Jim T

Page Vol. 16 No. 23 Classified Intelligence Report
Consulting Services for Interactive Media and Classified Advertising Vol. 16 No. 23 Dec. 10, 2015 R1
AIM Group 2015-16 Global Classified Advertising Annual
Are Facebook, Rocket
threats to the ‘Big Five’?
Swedish bank buys real estate site, Page 80 EBay site drops most LatAm markets, Page 82

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Page 2 Vol. 16 No. 23 Classified Intelligence Report
Execu tive Summary
Will Facebook attack classifieds?

During the last 20 years or so, digital classifieds have decimated newspaper classi-
fieds. Now there’s a new threat that could decimate today’s digital classified companies.
Facebook.
After nearly a decade of false starts, the world’s largest and most powerful social net-
work is moving into classifieds, and it could pose major problems for today’s classified sites.
Do we think it will? Our detailed look at Facebook and classifieds begins on Page 28.
Another radical change that’s taking the classified world by storm is apps. New app-
only marketplaces like OfferUp, LetGo and Shpock are growing exponen-
tially, other app-only classified businesses are launching seemingly daily,
and in some markets companies like Naspers are shutting down their web-
sites and going app-only.
Meantime, the Big Five classified companies worldwide get bigger,
focus on learning more about their customers and increasing revenue and
margins, and consolidate existing sites or launch new sites.
And Facebook and Rocket Internet, the “wild cards” next to the
Big Five, work to grow their classified businesses as well.
This Global Classified Advertising Annual is the latest in a series
we’ve published exploring the trends, the revenue opportunities, the ma-
jor players and “the sites to watch.”
This year’s sites and apps to watch include one of the most interesting we’ve seen in
years: a small but fast-growing app that has converted Instagram posts into a full-blown clas-
sified business. It’s the first we’ve seen of its type in the world, and we expect it to expand
rapidly both within its market and into new countries near and far. (See Page 75.)
What are the big trends this year?
— Mobile, mobile, mobile. Some sites are up to 80 percent mobile traffic. And of
course the app-only classifieds are 100 percent mobile.
— Continued investment. We look at 11 companies, venture capital firms and invest-
ment firms that are sinking money, lots of money, into classified companies. It’s not uncom-
mon to read about a $100 million investment. Some of the investors have taken exits, some

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Page 3 Vol. 16 No. 23 Classified Intelligence Report
have consolidated their holdings, and some are pouring more money into classified and mar-
ketplace companies. And some are big classified companies in their own right, like EBay, News
Corp. and Recruit Holdings.
— Consolidation: Since Naspers and Schibsted consolidated and rationalized their com-
petitive sites early this year, we’ve seen a lot more companies consolidating, closing and
merging their sites, or buying competitors.
— Launches: Even with all the consolidation we’re seeing, we’re also seeing lots of
start-ups and new launches, even by the major companies.
— Horizontals go vertical: Some sites that launched as general-classified sites, like Le-
BonCoin and Quikr, have heavily expanded their presence in verticals. Quikr, for instance, has
launched QuikrJobs, QuikrHomes, QuikrJobs and QuikrServices while buying companies to ex-
pand its portfolio in each vertical.
One trend we’re still waiting for? Video. We keep expecting video of individual listings,
whether commercial or private-party, to become integral to classified sites. But so far, we’re
not seeing it become mainstream. Soon, it will be. Just like mobile was “coming soon” for
about 15 years, and it finally came, so too is video “coming soon.”
A reminder about the AIM Group and our annual reports (this one, plus automotive, real
estate and recruitment): We publish these so we can stay smart for our primary business,
which is consulting. We offer a wide range of consulting services, and we’ve just added a new
member of our team who’s a top-notch consultant and classified advertising operator.
Learn more about us in the back of this report, or call / email for more information.
Our number and e-address are below.

A reminder
This is the last issue of Classified Intelligence Report for 2015. Thanks for being our
client! All of us at the AIM Group send you our very best wishes for happy and healthy holi-
days, and a peaceful and prosperous 2016.
We’ll be back with the 2015-16 Automotive Advertising Annual in January. If there are
any major developments in the classified / marketplace world between now and then, we’ll
send an alert. Otherwise, keep checking AIMGroup.com for news and briefs during December
and January.

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Page 4 Vol. 16 No. 23 Classified Intelligence Report
classifiedintell igence report Con tents
Peter M. Zollman, Founder, Executive Editor
Executive summary Page 2
[email protected]
Katja Riefler, Principal, Managing Director
[email protected]
Contributors Pages 5-6
Rob Paterson, Principal, Director-Consulting
[email protected]
Jim Townsend, Principal, Editorial Director
Paterson joins AIM Group Page 7
[email protected]
Christoffel Volschenk, Editor EMEA
[email protected] The Big Five — plus two Page 8

Axel Springer Page 9
Craigslist Page 13
Senior Consultants Senior Analysts
Craigslist — it doesn’t work Page 18
Konstantin Kalabin Lars Herlin (Scandinavia)
Gareth Lloyd Kenny Kinako (Africa) Craigslist — it works just fine Page 21
Brian Blum (U.S., Canada,
EBay Page 23
Facebook Page 28
Western Europe Middle East
Alessandra Ritondo Talal Abu Issa Naspers Page 32

Cila Warncke Rocket Internet Page 37
China
Cristina de Barros
Don Gasper Schibsted Page 42
Gérard Esteve

Anastasia Gnezditskaia India
Lisa Walls-Hester Radhika Sachdev
Investors / Mobile Page 47
Shilpa Shree
Eastern Europe Sites lure investors Page 48
Africa
Andrzej Sowula Mamello Masote Market leaders show scars Page 53
Pavel Marceux
Adegoke Seun

Turkey Asia Sites to watch Page 56
Emre Dalkilic Marco Bouwer
58.com Page 57
Southeast Asia
Latin America Marian Jacob LeBonCoin Page 60
Léo Siqueira Aust ralia Quikr Page 63

Kate Lyons TradeMe Page 65

Mary Biddle, sales— Americas, Australia, Asia
[email protected]
Apps to watch Page 69
Diana Neatu, sales / marketing EMEA
[email protected] Close5 Page 70
Suzanne Lander, finance director LetGo Page 72
[email protected]
OfferUp Page 74
Robin Monti, client services manager
[email protected] ShopInStar Page 75
Luke J. Smith, marketing
Shopo Page 77
[email protected]
Michael T. Gaffey, production editor Shpock Page 78
VarageSale Page 79
Published twice monthly, except once in December, by Advanced Interactive
Media Group LLC. This publication may not be reproduced in any form, in
whole or in part, except by licensed clients.
Classified Intelligence Report occasionally covers companies that are clients Swedish bank buys real estate site Page 80
of the AIM Group. We make every effort to ensure that our editorial content is
objective and is not compromised by any client relationship.

402 Spring Valley Road AlaMaula cuts back in LatAm Page 82
Altamonte Springs, Florida, USA 32714
[phone] Fax [phone]
More news, analysis Pages 84-85

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Page 5 Vol. 16 No. 23 Classified Intelligence Report
Contributors
Cristina de Barros Costa reports on Switzerland, Austria and Portugal for the AIM Group.
Previously she worked in media planning for an international media agency in Germany and
was a media researcher for a German public broadcaster. She has also been an online jour-
nalism instructor, and holds a master’s degree in journalism.
Brian Blum is an active AIM Group adjunct who started working with us in March 2004 as a
writer / analyst. He was CEO and founder of Neta4, a start-up that developed a personal-
ized Web publishing platform, and also served as Entrepreneur-in-Residence at Jerusalem
Global Ventures. He is based in Jerusalem.

Emre Dalkilic joined the AIM Group in 2014 as writer and analyst for Turkey. He has been
working as a reporter, editor, editor-in-chief, and executive editor in different (primarily
focusing on the growing Turkish economy) magazines more than 13 years. Emre has also
been involved in social projects including a project with the World Bank.

Michael Gaffey has been a page designer for the AIM Group since January. He has more
than 30 years of experience as a reporter, editor, page designer and photographer at news-
papers and magazines throughout Florida. He is a graduate of the University of Florida in
Gainesville.

Don Gasper joined the AIM team as a writer and analyst in 2005. Based in Hong Kong, he
covers media-industry trends in the Greater China area. He specializes in business and legal
developments concerning Chinese companies and has worked for several years as a reporter
and editor for a number of daily newspapers in Hong Kong.

Anastasia Gnezditskaia is a Belgium-based analyst for AIM Group covering France, Belgium,
Netherlands and Eastern Europe. She joined in February 2014. She has a background work-
ing for trade publications covering markets and their regulation. She holds an MSc degree in
psychology from Moscow State Lomonosov University and a PhD in public policy from Central
European University.

Lars Herlin joined the AIM Group in 2013. He had a long career in journalism at Expressen,
Svenska Dagbladet and Veckans Affärer, and served as managing editor and later managing
director of Gotlands Allehanda. He was also managing director of a commercial radio sta-
tion during the same period. He lives on the west coast of Gotland in Sweden.

Marian Jacob covers Southeast Asia. Marian worked in marketing and corporate communi-
cations for over a decade, covering both internal and external communications. She began
her career in professional services, leading up to communications business partnering in
various multinational organizations with progressive cultures.
Rob Paterson has been involved in the classified advertising / marketplaces business for
almost 30 years. Rob spent more than 20 years as group managing director for Friday-Ad
and Friday Media Group. He joined the AIM Group as a principal in late 2015, responsible for
expanding our consulting practice and developing a new conference business for us.

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Page 6 Vol. 16 No. 23 Classified Intelligence Report
Mike Ricigliano is a gifted cartoonist and artist who has worked for newspapers, including
The Baltimore Sun; greeting card companies, and magazines. He also manages a cartoon
trivia website, Ricig’s Toon Trivia. He and Peter Zollman began working together at their
college newspaper more than 40 years ago.
Katja Riefler, AIM Group managing director, has a broad background working with newspa-
pers, trade associations and online services to shape media companies for the future. She
joined the AIM Group in 2002, and became our Europe Director in 2007. She was promoted
to director of EMEA in 2011 and became managing director on Jan. 1, 2015.
Radhika Sachdev is a long-time financial journalist in India. She worked as deputy features
editor for Financial Express for more than three years, followed by a two-year stint with
Financial World from 2012-2012. She is a partner in Write Solutions, a copywriting and edit-
ing company that works on ebooks, industry white papers, training and websites.
Léo Siqueira joined the AIM Group in 2014 as writer / analyst for Latin America. He is a
multimedia journalist based in Brazil. Siqueira writes, reports and consults for news outlets
and corporations in Brazil and in the U.S He has served as a news presenter and commenta-
tor at a radio station, and as a corporate journalist for Synergic Corporate Communications.

Luke Smith is co-founder of Flipside Consulting and Director of Marketing and Development
for Railey Harding + Allen, a construction and real estate law firm in Orlando. He’s passion-
ate about is taking individuals and firms to new levels of growth and helping them plan and
implement successful marketing and development strategies.

Christoffel Volschenk joined the AIM Group as a researcher and writer in 2007. He brings
more than 26 years of experience in business journalism to the team, the last 14 years fo-
cused on e-commerce. In addition to working closely with the AIM Group, Christo is also a
freelance journalist, online editor and translator.

Adam Zollman is a computer network security engineer based near Washington, D.C. He is
the youngest son of AIM Group founder Peter M. Zollman, and, with his wife Hannah, made
Peter a grandfather for the first time.

Peter M. Zollman, founding principal of the AIM Group and CIR, compiled much of the in-
formation in the vertical section, and oversaw development and production of this report.
He has more than 40 years of experience in journalism, interactive media and classifieds,
and is a frequent keynote speaker at classified advertising and media conferences.

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Page 7 Vol. 16 No. 23 Classified Intelligence Report
Buy our cover art for a good cause

Did you notice our cover art? And did you see who’s “stepping
out” of the Craigslist limo onto the red carpet?
You can own the original. We’re auctioning it off for charity.
This colorful 8 1/2-inch-by-11-inch piece joyfully illustrates many of
the classified companies and businesses from around the world.
What a great conversation piece it would be!
You’ll send your winning bid to one of three charities. Go to
https://www.32auctions.com/aimgroupcharityauction and bid. If
you win the auction, make the donation and we’ll ship you the art-
work, framed. The auction ends Jan. 6.
It’s one small way we like to give back this holiday season.
Paterson joins the AIM Group

Rob Paterson, a longtime classified / marketplace expert and former managing direc-
tor of Friday Media Group in the U.K., is the newest senior member of the AIM Group. He joins
founding principal Peter M. Zollman, managing director Katja Riefler and editorial director
Jim Townsend as a part-owner of the company, and will serve as direc-
tor of consulting and events.
“Rob has already become integral to the group,” Zollman said.
“He’s completed several consulting projects, and he’s heavily involved
in the planning of an event we’ll be announcing in a few weeks.”
Paterson will work with AIM Group clients on strategic and tacti-
cal issues, and will review financial statements and operations for po-
tential investments or sales / acquisitions. He’s working with one client
already on a strategic review to help that client determine “next steps”
in the growth of the business.
“We’ve known Rob for a long time, and have worked with him on
Paterson
projects for the International Classified Media Association,” Riefler said.
“He’s knowledgeable, he’s delightful to work with, and he’s become a great asset to the AIM
Group and our clients in a very short time.”
Paterson, who’s based near London, worked as CEO of Erento and as head of biz devel-
opment and internationalization for Russ Media after leaving Friday Media. He later launched
Pantera Digital, a digital marketing agency affiliated with EC Hispanic Media and El Clasifica-
do in southern California. (For more about him, click here.)
“This is a very exciting and challenging time for classified ad publishers and the tech
companies that work with them,” Paterson said. “It’s exciting to join Jim, Katja and Peter to
help them help their clients.”

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Page 8 Vol. 16 No. 23 Classified Intelligence Report
The ‘Big Five’ — plus two

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Page 9 Vol. 16 No. 23 Classified Intelligence Report
Classifieds fuel Axel Springer profit

Margin is highest among all business segments
If you look at Axel Springer’s news releases during the past year, you’d think the com-
pany is focused on editorial. There are far more releases about news, advertising, shopping
and start-up accelerators than there are about classifieds.
But don’t let the noise distract you: Classifieds are the driving force behind the finan-
cial performance at Axel Springer.
Classifieds contribute just 23 percent of the company’s overall revenue, but 55 percent
of its EBITDA. And they are growing. Fast.

Source: Axel Springer; H1, 2015
Digital services have contributed 62 percent of overall revenues, 81 percent of ad reve-
nues and 73 percent of EBITDA in 2015 to date. In the first nine months of 2015, EBITDA of the
company’s classified division rose significantly, up 40.8 percent to €225.7 million year-over-
year from €160.2 million, and therefore contributed the most to total corporate earnings.
EBITDA margin of the classified segment is the highest among all business segments at
Axel Springer — 44.9 percent for jobs, 48.5 percent for real estate and 26.9 percent for
“general classifieds and others”, which for example includes Yad2 in Israel, MeineStadt in Ger-
many and the Indian automotive website CarWale (which was sold to competitor CarTrade in
mid-November.)
Classifieds is the only business segment at Axel Springer where the company expects a
significant increase in revenues as well as in EBITDA for all of 2015.

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Page 10 Vol. 16 No. 23 Classified Intelligence Report

Source: Axel Springer
“We love classifieds,” the company said in its Q3 analyst call. Here and during two re-
cent road shows, chairman / CEO Mathias Döpfner and CFO Julian Deutz also said growth in
classifieds is the company’s No. 1 priority.
Within the past year, the company has taken steps that underline its goal.
Restructuring General Atlantic relationship
Axel Springer has reshaped its corporate structure and its relationship with General At-
lantic, which invested in Axel Springer Digital Classifieds in March 2012. In a deal that closed
in mid-December 2105, Axel Springer bought back the remaining 15 percent of ASDC held by
General Atlantic, which in turn received almost 9 million shares of Axel Springer.
General Atlantic originally held 30 percent of ASDC but sold half its shares back to Axel
Springer in December 2014. Axel Springer paid €446 million ($562 million U.S.), valuing ASDC
at €3.95 billion (100 percent, cash / debt free) and an expected EV / EBITDA 2015 multiple of
14x-15x. GA’s original investment had been €237 million.
New roles for two executives
Two Axel Springer execs made key moves in 2015. Milan Dubec was appointed MD of
Ringier Axel Springer in Slovakia in February. The 34-year-old is one of Slovakia’s online pio-
neers. He founded the online portal Azet.sk in 1997; Ringier Axel Springer Slovakia has held a
70 percent stake since 2010. Azet, which also has a free email service, has a particular strong
position in automotive, competing with the smaller Autovia.sk (bought from Alma Media in

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