Yahoo! Classifieds: Friend or Foe?

By: Steve Outing The rise of the Internet gives newspaper classified advertising executives many reasons to worry. Yahoo!, the busiest site on the Web and now a significant player in online classifieds, gives lots of news people the "heebie-jeebies." As well should an Internet giant that within local metro markets contains more ads in many categories than do the classified ad sections of the largest local-market newspapers.

But to hear Yahoo!'s top classifieds manager tell it, newspapers have little to fear from Yahoo!'s encroachment into the classifieds industry. Indeed, says classifieds project manager Susan Carls, newspapers can partner with Yahoo! and benefit from the traffic Yahoo! can send the publishers' way -- if they'll just modernize their classifieds systems and split their ads into database fields.

Carls, interestingly enough, came to Yahoo! by way of the Boston Globe's Web site, where she worked on its online classifieds service. Now she works at what Media Metrix (April 1998) says is the busiest online classifieds site on the Internet. Yet she hasn't forgotten her newspaper roots and professes to root for newspapers to push forward and withstand the challenge of cyber classifieds competitors.

Numbers favor Yahoo!

Without doubt, Yahoo! Classifieds is making serious inroads into local markets. For major U.S. cities in which it solicits local classifieds (all without charge to the seller), Yahoo! Classifieds for many categories has more ads than do any of the local metro newspapers. Carls says Yahoo! has not conducted in-depth studies comparing the number of ads it has in various cities versus the local newspapers, but she has a good sense of how Yahoo! versus newspapers stand. Generally, she's pretty happy with what she sees.

Typically, in a major metro market, Yahoo! carries more local ads than the dominant newspapers. The exception is employment ads, where newspapers continue to have the numerical edge. Yahoo! recently partnered with Monster Board, one of the biggest online recruitment sites, in an effort to increase its employment classifieds numbers, however. And through data mining, Carls and her staff can see in what categories classified placements on Yahoo! are lagging, and shift marketing resources to promote Yahoo! Classifieds for those particular segments.

Yahoo!'s classifieds are all placed for free, and Carls says that's not going to change. To Yahoo!, classifieds are "content" meant to drive traffic to its already dominant Web site. The prospect of at some future date beginning to charge for classifieds "is not interesting." Rather, revenues come primarily from banner advertising within the classifieds component of Yahoo! and outside partnerships.

Not only can individual consumers place ads for free, but so can auto dealers, real estate agents and employment agents. A car dealer can put every single car in its inventory in Yahoo! Classifieds for no charge. This goes further than some other online classifieds companies, which allow private parties to place ads free but make money partly from charging dealers and real estate agents to place their entire inventories online.

Some executives in the newspaper classifieds industry criticize Yahoo!'s free classifieds because of supposedly inferior "quality" of the ads. Not so, counters Carls. Yahoo!'s classified ads are automatically purged after 45 days, but more than 80% of the ads on Yahoo! Classifieds at any time are no more than one week old. It's a myth, repeated often by newspaper classifieds partisans, that such free online ads are of lower quality than paid newspaper classifieds, Carls suggests.

Typically, ads on Yahoo! that are outdated (because an item has been sold, for example) get deleted by the seller after she gets a phone call from an interested buyer and realizes she forgot to kill the ad. Some auto dealers and real estate agents submit their entire inventory of ads weekly, but Carls points out that when some of those ads are repeats of already-run ads, they retain their origination date rather than get a new one which would otherwise extend their run time -- a policy designed to keep the quality of the ads high, even though the dealers don't like it.

If Carls' assessment is accurate, that puts a dent in some newspaper executives' arguments that papers' paid classifieds are superior to free online ads. (Of course, newspaper classifieds will long hold an edge in local markets because of the combination of local print and online delivery, rather than only online as with Yahoo! classifieds.)

Yahoo! as traffic generator

Carls would like to see newspaper companies work with Yahoo! rather than strictly see her company as a competitor encroaching on local markets. She cites the example of YachtWorld, which contributes its classified boat ads to Yahoo!, as an example of how a newspaper similarly might work with Yahoo! Search for a boat for sale on Yahoo! and you will stay on the Yahoo! Classifieds site up to the point where you see the actual text ads for various boats. But click on "More Listing Detail" and you are on the Yachtworld site looking at a detailed boat for sale listing with photo. Any consumer who is serious about buying a boat will click all the way through to get the full ad with photo on the YachtWorld site. Ergo, YachtWorld is the beneficiary of significant traffic gains for its site via its relationship with Yahoo! Classifieds, Carls says.

Where newspapers can best benefit is by offering similar depth in their local-market classifieds, she says. Newspapers have the wherewithal to offer deeper local classifieds service than Yahoo! can ever hope to do. Yahoo! Classifieds doesn't offer the ability to include photos with ads, for instance, but partners such as YachtWorld (and presumably newspapers) can, she says. Carls doubts that Yahoo! Classifieds will be able to compete with the depth of classifieds content that newspapers can create by working inside the local market. It's not her intention or within her ability to be more than an aggregator of classified advertising.

"Call me a 'peace-nik,' because I think there are ways we (Yahoo! and newspapers) can work together" in the online classifieds space, Carls says.

Of course, most newspapers aren't there yet. Carls says no deals have been done between Yahoo! Classifieds and a newspaper yet in large part because most publishers haven't adopted technlogy that allows them to parse their classifieds into appropriate database fields that would allow them to integrate their ads into Yahoo!'s technology structure. Forget the business model considerations for a minute; technological hurdles prevent cooperation. Says Carls, "To some degree, newspapers are really tied down by their print classifieds."

What needs to happen is that newspapers become more sophisticated about their online classifieds, letting consumers post video clips or an audio blurb talking about the car they have for sale, for instance. That kind of local ad depth is a direction Yahoo! Classifieds is not likely to go, Carls says.

Of course, many newspaper publishers will bristle at the notion of helping build Yahoo!'s database and brand name by contributing their coveted classifieds. Yahoo! is big enough and poses enough of a threat to newspapers that some publishers will not be inclined to enter a relationship that helps Yahoo! grow. The business model of a newspaper-Yahoo! classifieds partnership may make sense, but it's not without controversy, which Carls admits.

"We're not directed against newspapers," says Carls, who believes that local newspapers will hold on to the local classifieds franchise for the most part. "But newspapers have to change, and we're going to push them to. ... We'll make sure they aren't sitting back in a newspaper (classifieds) monopoly."

(In my next column, I'll continue a discussion about Yahoo! and newspapers, looking at how a real estate news syndicator is helping build a Yahoo! real estate site with original news content -- at the same time that an increasing number of newspapers are converting their real estate sections to "advertorial" content.)

Contact: Susan Carls,


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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing

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