Classified advertising is not glamorous — tucked in the back of a print newspaper, just squiggly lines with a bunch of acronyms. Yet at Malayala Manorama, they view classified advertising as “rivers of gold.”
Traditionally, classifieds represented a strong and consistent revenue stream for newspaper publishers. Mariam Mammen Mathew, CEO of Manorama Online, said her organisation recognised this early on, particularly since it is a regional and hyper-local publication.
Speaking at a Webinar for INMA members, Mathew said Manorama embraced a dedicated classifieds team as far back as 1954 — before the Indian newspaper market really did much with classified advertising.
“We were very sure this was something that was important for our local merchants, for our local users, for our newspaper readers,” she said. “This was an important segment that we had to develop for them, and so this was something we concentrated on with a full-fledged, dedicated team.”
Classifieds: a newspaper-owned market space
Classifieds are needs-based, local, and topical — a response-driven market, Mathew said.
“It creates a lot of readership, a lot of circulation, and the high readership of those newspapers kind of gets the right target audience as well, for the newspapers.”
Around 2000, Craigslist.org came out, taking away a lot of traditional newspaper classified business. Mathew recalled working in the United States, at the time, and hearing many news publishers discussing this problem but without a sense of urgency to do anything about it.
“The lack of urgency that you saw in most of those conversations triggered thoughts in our minds of, is this something which we are missing out on?” Mathew shared. “Should we not be in this space? Should we allow digital-only players to come into this space, which is traditionally our space? Is this important for digital-only newspapers?”
She realised at the time that classified advertising is extremely important in the digital field.
Digital migration of classified advertising
Furthermore, classifieds are uniquely suited to the digital medium, Mathew continued.
“When you do classifieds in the [print] newspaper, what happens is you only have so much space. Everything is abbreviated, quick descriptions, you really don’t have enough information you can give there. Listings in a digital space have more information, it has richer data, it stays beyond one day in the newspaper. It’s easily accessible and easy to interact with.”
This allows digital classifieds to go beyond the traditional reach of print newspapers and beyond geographical boundaries. The power of interactivity was the key differentiator in making classifieds work in the digital medium.
“It was only natural that classified advertising had to migrate to digital,” Mathew said.
Most digital-only players at that time realised this and got into the space very quickly. However, print newspapers continued to go along the way they had been when it came to classifieds, thinking digital classifieds wouldn’t be a very important part of the revenue — until things started unraveling, as Mathew put it.
“A lot of newspapers got shut down because they lost all their classified revenues. So at Malayala Manorama, we started [digital classified advertising] way back in 2000, 2001. I have to say, looking back, it was not an easy sale at all.”
Initially, there was a lot of resistance from the traditional print classified mindset to moving to digital classifieds, she said. Then, a vendor approached Manorama with the request to partner with them to handle their digital classifieds.
The team sort of bristled at that, thinking that they knew their classified advertising model — and their audience — better than any outsider could. Malayala Manorama ended up saying, “We will do it, and we will do a great job of it.”
Their first digital classified product was m4marry.com, a matrimonial site launched in 2008. Matrimonial print classifieds had already been one of the company’s strongest revenue drivers, and it was much better suited to digital than print.
Still, it took a lot of time and hand-holding of the consumer to make this transition. At the time, Internet access was not widely prevalent or consistent across India, and many of the parents looking to do matrimonial matchmaking were older generations very unfamiliar with technology and the Web.
“We got excited by our launch of m4marry.com, the reception that we got of that product, that we went on to create a huge portfolio of classified products,” Mathew said.
Some of these worked, and some of them didn’t, she shared. “One of the key things we have learned is we have to keep on trying, we have to keep on identifying classified spaces which will fit our users, and then keep on launching products and experimenting.”
Defining the audience
This is the most important first step. For Manorama, it was the Malayalee audience because this was the audience they knew best.
“When we know the audience, we know what is important for them,” Mathew said. The digital classified advertising also meant that they could reach the large Malayalee diaspora all over the world, not just in the state.
Over the course of the next decade or so, from 2008 to 2019, Manorama launched eight or nine different digital classified products, all focused on the Kerala Malayalee market, in Kerala and beyond.
Growing the pie
Mathew said one of the first questions she getsis: Did digital cannibalise Manorama’s print products?
Though the print classified department was initially resistant, everyone had decided to move full-force into digital classifieds. What they team saw was that within a few years, digital revenues had indeed overtaken print revenues — but both print and digital revenues had grown.
“We were growing the pie,” Mathew said. “It was not just about digital or print. We managed to increase the pie. Digital just got a larger section of the pie.”
Digital classified market models
Mathew shared two different models for digital classifieds.
Characteristics of the horizontal model are:
Listings across a large set of categories.
Traffic-driven Web sites.
Heavy market investment.
Network effect before monetisation.
Characteristics of the vertical model are:
Focus on single or narrowly defined set of categories.
Focus on unique solutions.
Targeted user acquisition.
“Over the course of time, we found that for usnas a company, vertical worked better than horizontal,” Mathew said. “We could not sustain the horizontal market. We were risk-averse, we did not have the time to do it. We were not keen on going the long run.”
All classified need segments are not the same, so the horizontal product cannot offer the same value to each category. The vertical strategy allowed Manorama to focus on its users and their specific requirements and to create products that best fit.
There are different ways to monetise digital classified advertising, depending on the market and category.
Largely free model (defining).
Lower-priced model (penetration).
Premium pricing (dominance).
m4marry.com, for instance, was a premium, subscription-based product. The real estate product, HelloAddress.com, started as a free product but eventually moved to a combination of a low-price and premium-price offering.
Ultimately, a publisher must decide if the digital classified product is about getting traffic or transactions. Manorama focused on transaction, subscriptions, and listings, which have created a consistent revenue base for its classified products.
“We knew if the product clicked and it worked, that revenue was surely coming,” Mathew said. “We didn’t have to worry about a good year or a bad year, or seasonal [fluctuations]. We found it was better to monetise it through transaction than traffic. We found that high volumes of traffic did not translate to monetisation for us.”
Building a digital brand
Digital classifieds do not necessarily have to follow the “mother brand,” Mathew said.
“It does not have to be a Malayala Manorama product, it had to have a brand of its own — a brand which would resonate with our users, but a brand that had to stand on its own feet.”
“Our value anchors are trust, choice, and convenience,” she added. The Malayala Manorama brand plays a part in trust of the individual classified brands. They value the fact that customers have a choice and build convenience in using the product.
There are, of course, some challenges with building digital classified products.
Competing with free.
Making digital pay.
Competition from platforms and disruptive business models.
“Sometimes we had to make hard decisions about whether to continue with a product or not,” Mathew said. “It’s a constant creative process, and I have to say our classified digital products team is constantly on their toes coming up with new things because they have to keep up with all the newcomers.”
Green-lighting a project
So, what does it take for Malayala Manorama to decide to move forward with a digital classified product? Mathew said there are several important questions the team asks:
How big is the size of the pain point?
Is this relevant to a large enough audience?
Does this product scale?
Can we monetise it effectively?
How soon can we break even with this product?
“This means that every quarter, we go through this ‘keep/kill’ decisions about our products,” she added. This means an additional set of questions:
Did the product meet its original intention?
Does the product need more support or time?
Do we want to hold on to the product for its future potential?
Would this product have a substantial market if we hold on to it?
“These are questions we constantly ask about all our products, even today — even if they are profitable,” Mathew said.
Each new product has its own individual growth engine and is treated as its own separate profit centre. There are separate road maps for each product, that are sustainable and growth-driven.
“That is the crux of our decision-making process of following different products,” Mathew said.
Failures and lessons learned
Mathew shared some of Malayala Manorama’s digital classified products that did not work — and why. The team learned many lessons along the way, and she also shared why ultimately the horizontal model failed for them.
TapeyTapey.com, a shopping product, was one of their biggest failures. Although volumes were high, the traffic was not large enough for B2C monetisation. The listings were low value, and so monetisation was the key challenge.
“Within 24 months, we realised that while it was a catchy product, everybody talked about and loved the product, we shut it down because we realised we could not go down this way. There was a lot of money required, a lot of investment, and we did not have those resources or bandwidth at that time. This was not our expertise, and we could not do this.”
Another failure was an extension of the successful m4marry.com, called shop.m4marry.com. This was a partnership with the wedding market for a multi-brand, multi-category shopping product. However, the team realised the luxury e-commerce market was not ripe enough at that point to be sustainable. The products were such that experiencing them or trying them on before purchase was key, which did not work well with the digital model.
However, some struggling products were pivoted for growth rather than shut down. One example was the educational product Manoramahorizon.com, which originally started as lead generation for educational institutions. Within six months, the team realised that subscriptions for learning products would create a much more sustainable model. The product therefore was pivoted from a classifieds product to a content product.
Battling the legacy mindset
Much of the success with digital classifieds comes from successfully battling the mindset of legacy print.
Print is known for organic growth, whereas digital provides exponential growth. Print offers continuity, whereas digital brings disruption. And print results in specialised silos, while digital brings a holistic outlook to the organisation.
“For those of you who are interested in going into this, I would say invest in it — but wisely,” Mathew advised. “It requires investment in process, in product, and in marketing. It’s very important that you know your market.”
Know what you are investing in and why you are doing so. She also advised to invest in harvesting data, as data can give the insights to assess the business and drive it forward.
Another important aspect is choosing your team. Mathew suggested betting on a “lean team,” one driven by vision, passionate about the market and about technology, and able to own the products and attempt high growth. Drive a high-performance culture.
“For us at Manorama, it was the vision and passion of our print classifieds team, the way they took these products, that we could build it from there. I think in classifieds, the team is the most important part of this product.”
It’s also vital for the team to understand that digital is not simply an extension of print or just another platform for print classifieds. Digital is its own separate thing that can open up great markets, but it must be viewed with completely different eyes. Teams must understand how the digital medium can offer solutions and create them.
Building on strengths
Malayala Manorama built its digital classified products on its existing strengths.
“We leveraged our market knowledge, we built on our community affinity, and we based our products on our local expertise,” Mathew said. “That’s where we thought we should stay, and that’s how we have worked on our classified products.”
She also advised publishers to understand that the company itself is a product always in the making and that it’s important to disrupt yourself.
“This is really the key,” she said. “None of our classified products are any form of what they started off with. It’s a question of constantly disrupting ourselves, constantly questioning ourselves, and constantly innovating.”