Author: Mark Fletcher

Crikey reported yesterday that News Ltd and Fairfax are believed to be in secret talks to merge their recruitment websites CareerOne and MyCareer to compete with Seek. Based on site traffic, Seek dominates online employment advertising in Australia. This is in part due to features on their site and in part due to poor competition by Fairfax and News over the seven or eight years Seek has been in business. Early on they refused to carry Seek advertising as they were (possibly) in denial about the online opportunity. More recently, they have allowed their commitment to print revenue to treat their online employment plays as the poor cousin. That has clearly changed this year with both sites improving offerings, but not value for the advertiser.

If the Crikey report turns out to be true, News and Fairfax will need to go to market with a new offering which leapfrogs that from Seek. They will also need to turn their back on print employment advertising. That decision, if taken, will have a knock on effect through their newspapers – more so at Fairfax than News since white collar employment positions seem to be advertised more online than blue collar.

As one who has advertised more than thirty positions online, mainly at Seek, in the last five years I would hope that any renewed competition among the big players in the online space would result in a pricing model based on the cost of providing the service and not based on what they can get away with as at present. Seek, CareerOne and MyCareer charge too much for employment ads and do so because they can get away with it. This is what comes with cozy competition. Having said that, I’d expect the ACCC to reject a proposed joint venture between News and Fairfax.

As readers here would know, I am preparing to play in this space with Find It and online classified website. But we’ll be small – tiny, in fact. But we will be independent, visitor driven and offer points of difference and value propositions which we expect will resonate with advertisers and consumers. Our pricing will not be arrogant. Our key point of difference will be our newsagent connection. Newsagents are signing agreements to represent Find It at a great rate. This will give us an engaged local sales force to promote our offering and demonstrate the local focus of search. Newsagents like the idea of connecting with online advertising and are pleased to earn not only through commission but also profit share.

The Wall Street Journal publishes an excellent commentary piece by Brian Carney, a member of The Wall Street Journal’s editorial board, about Craigslist and classified advertising.

“The Internet at large, and free classifieds in particular — and even beyond that, Craigslist free classifieds in particular — certainly pose challenges to the newspaper industry as far as being able to raise their profitability over time.” Many in newspaper publishing would consider that an understatement. But Mr. Buckmaster is sanguine: “The demise of the newspaper has been overstated.” Phew. I expel a nervous chuckle of relief. In Mr. Buckmaster’s view, newspapers would be better off being a little more Craigslist-like: Go private, eschew Wall Street’s demands for continually “goosing profitability” and give your readers what they want. Much trouble in the world comes, in Mr. Buckmaster’s view, from losing sight of that essential goal.

It is good to see a newspaper discussing the Craigslist phenomenon and classifieds more generally without the usual shrill and denial.

No matter where you turned over the last two weeks, all commercial media outlets were reporting and commenting on the now infamous “turkey slap” incident on the Big Brother tv game show. People who really wanted to know what happened went to YouTube and watched the footage unedited.

While I care little for the contestants in the Big Brother house, I do care about manipulation of the truth by the producers of the game show and the gullibility of mainstream media when it comes to reporting what allegedly goes on inside the game show house. Prior to watching the YouTube footage I had read the newspaper stories, watched the TV news reports and heard the shock jocks shrill across the airwaves. YouTube provided context for the event. In a few minutes I was able to see the truth for myself. I was able to understand the con played on media outlets by the game show producers and the Network Ten. I am astounded that Network Ten and mainstream media outlets were so reckless with the truth and the reputations of two young men.

I wouldn’t have known this had it not been for YouTube. There was a time I relied on TV news and newspapers for the truth.

A big challenge for mainstream media in this age of massive disruption is how to compete with social media sites like YouTube and the people who load content on them. In the case of the Big Brother turkey slap, how does mainstream media compete with the truth? The approach of the last two weeks, conspiring to repeat spin put out by one of their own – will alienate consumers. Trust in mainstream media product will erode. Younger consumers are smarter – why do you think they are embracing social media? There, stories can speak for themselves.

In the case of the Big Brother turkey slap, the truth is less interesting than producer spin. To compete with the truth of social media, journalists and editors will need to realise that their laziness and bias will more easily and quickly outed.

Crikey reported earlier this week that PBL’s SEEK is preparing to launch into the real estate classified space. In part, their report says:

Seek had revenues of just $47.3 million in the December half, but managed a net profit of $27.1 million and is now capitalised at $1.5 billion.

This result demonstrates how removed the pricing for online classifieds is from the real cost. Companies like SEEK are purchasing bandwidth for a fraction of what they charge the advertiser.

Fairfax, News, Telstra and PBL control online classifieds in Australia and do not seem to compete on price as one could expect.

Disclosure: I am involved in Find It which is set to launch in the online classified space later this year.

MediaPost reports on a Hitwise research showing MySpace commanding 4.64% of all US Web traffic. Social media is huge, obviously and any online play without a social connect will struggle to gain traction.

A good post from Greg Stirling of SearchEngineWatch (courtesy of Brad Robertson, VP Advertising for the Des Moines Register), referencing recent research and views on local search. It’s best summed up in this quote.

I tend to believe that what one might call an “integrated local marketplace” is what consumers ultimately want — the convenience and efficiency of getting their local needs met in one place. If I’m right this gives the search engines/portals an advantage “on paper” because of their more comprehensive content. But, to date, they’ve failed to fully leverage that opportunity in their local offerings, although they are improving under the intensifying pressure of competition.

I agree. Australia has plenty of vertical local search offerings. News Ltd’s True Local is the most interesting recent entrant but it’s overpopulation with brief listings ‘acquired’ from elsewhere without knowledge of the those listed makes the search results of dubious value. Searchers want honest results. That is, not results listing rich businesses which pay for more attention.

The Internet is a democratic place of equals and businesses paying to get in the way of good search results will soon frustrate consumers.

Smart local search will be about less but more accurate and more valuable content. Size (of one’s database) does not matter.

It’s good to see a newspaperman publishing this material for comment.

This Yahoo Finance report quotes research by analyst Telephia indicating that four of the top five revenue-generating titles fall into the Puzzle/Strategy category and that 65% of mobile game revenue is driven by female wireless subscribers. I wonder what the numbers for Australia. I also wonder how this data plays out as an indicator for moving crossword and puzzle magazine consumers to online product. Crossword product sales are very strong in Australia and newsagents dominate the category. Any move online would hurt.

Wired magazine has fascinating profile of Rupert Murdoch in the July 2006 edition. The article opens with this quote from Murdoch which gives context to News Corp’s current mission online:

“To find something comparable, you have to go back 500 years to the printing press, the birth of mass media – which, incidentally, is what really destroyed the old world of kings and aristocracies. Technology is shifting power away from the editors, the publishers, the establishment, the media elite. Now it’s the people who are taking control.”

Deeper in the article Murdoch provides the business case for their online investment:

“Everything we’ve ever done is about giving people choices,” he says. “The Net has a billion people looking for news, sports, and entertainment. Another billion are on mobile phones, and another couple of billion are coming up behind those. That’s a hell of a lot more people making choices.”

But these quotes don’t do the long article justice. There are opinions on all manner of things including newspapers – which, by the way, are discussed as online entities. No comment on print product. Read the article at Wired for yourself. My take away was the extent of Murdoch’s commitment to social media. It’s as if he sees social media as bigger than news in pulling viewers/readers/traffic. I’d like to hear from others in his organisation on this.

The article ends with this quote:

CONTENT VS. DISTRIBUTION
Distribution was nearly king – you couldn’t get a cable channel going in this country without John Malone. But when real broadband arrives, owning distribution will be less and less important.

Fascinating.

True Local (News Ltd) and Yellow Pages (Telstra via Sensis) are the two major online business directories in Australia at present. My Local (PBL) is on the track but not achieving much traction due to lack of promotion. As this Alexa generated graph of daily reach from the last three months shows Yellow Pages is way ahead but True Local is gaining traction thanks to its extensive outdoor campaign. Fairfax is the only major online advertising player not currently in the space but that could change if the rumor put to me is true. I’m told that Fairfax Digital is close to announcing entry into the now competitive directory space. I wonder if their entry will make for competition on price though. Take a look at the True Local and Yellow Pages advertising fees and you soon get an understanding of the size of the game being played and that there is not significant price competition. While each site offers basic free listings, it is the featured listings and options like photos which bring in the millions in revenue. Charges of between $1,000 and $6,000 for featured display are not uncommon.