Classified
The founders of Aylesbury Vale Enterprise Hub client Mobiya claim it will revolutionise the classified advertising sector. But changing the economics of an established market has its challenges...
Disturbing the market
Disrupting a large, profitable and established market with a radical new business model or technology is something that a high proportion of Hub companies are aiming for.
Achieving this aim, however, can mean facing a hostile market, with established players (with deep pockets) doing everything they can to prevent your success. However, one Enterprise Hub company has found a way to disrupt a huge market with a new approach and keep all the established players happy.
Aylesbury Vale Enterprise Hub client Mobiya has developed a way of creating new revenue streams from response activity in a classified advertising market that has traditionally relied on revenues from advertising fees. Finding a way to do this has changed the rules in an industry with an estimated value of £100 billion, and, importantly, the company claims to have developed an approach that can also benefit the established players.
Making change attractive
“There are two elements to disrupting an established market like the classified ad market,” explains co-founder Sacha Vekeman, “The first is to recognise that you have to give people a reason to want change – you have to help them to see the benefits. In our market, the traditional media publishers have hidden their classified sales figures, both in terms of volumes and success rates. By measuring and showing the response volumes for each ad our model brings transparency for the person placing the classified advert and for the responder. So the person placing the ad, the ultimate driver of the business, has a motivation to change. So, create facts, which the established key players in an industry have to face, and this will create visibility for you.”
Everyone wins
“Secondly, once you have visibility, it’s time to explore how you can create marginal value, for everyone in the chain. If your business model destroys value for any of the established players, you can expect them to resist it fiercely.
"Find a way for everyone to win, and the process of developing within your market immediately becomes easier.”
The Mobiya model so far seems to have mostly winners: classified publishers benefit from a new revenue source to compensate for the erosion of their business to online sites; advertising agencies have access to a new medium; mobile operators get a new way of driving SMS revenue; and customers can place genuinely measurable classified ads easily and at no cost. It’s not been completely plain sailing however.
“Breaking into an established market as an innovative, outsourced technology supplier you risk being a threat to someone in the target organisation,” says co- founder Martin Davis, “In our case there will usually be a classified advertising team in place. When we introduce a more efficient process for the capture and publishing of classified adverts it opens up potential operational savings and new revenue streams. The organisation then has to make the necessary changes to realise the improvement in their profits.”
“Most valuable was the mentoring we received from the Hub, to help us put our business plan together.” Martin Davis
Mobiya’s technology allows classified publishers to offer a mobile based service. The Mobiya platform delivers an automated, classified-ad cycle, from self-service content creation, through publication, to response. The service includes billing, formatting of content, and publishing to mobile phones, print and online – with distribution to the likes of Google, Oodle and eBay. Customers wishing to place a classified ad can do so entirely over their mobile, including managing responses, without revealing their phone number. The system, claims Mobiya, “Turns Mobiya-enabled classified operations into a competitive advantage for newspaper publishers, media giants and classified portals.” With the traditional classified advertising model the person placing the advert pays a fee, whether or not the ad is successful. With the Mobiya model the placement of the ad is usually free, but interested parties pay to respond to it through an SMS charge.
Over 95 per cent of the classified advertising industry’s £100 billion business currently belongs to the world’s newspaper publishers. It is, however, a market undergoing rapid change. A recent PWC/IAB report showed the online classified advertising sector enjoying a 54 per cent year-on-year growth to £585.3 million in 2007, much of which is at the expense of traditional classified outlets. As CEO of media giant WPP Martin Sorrell recently noted “There’s a tremendous violence in traditional media as it continues to get displaced by digital.”
“The majority of classifieds revenues still come from print, especially in communities where broadband internet is not always available,” says Martin Davis. “Mobile, of course, is available to almost everyone, anywhere and anytime. This is why the mobile enablement of traditional classifieds is a great opportunity for publishers to improve their services and create interaction with new and existing readers, protecting their market position and improving their margins.”
This makes for a potentially lucrative market, but it also means that established players, already under threat, are very sensitive to change. This isn’t something that seems to worry Mobiya however, “We know that with the model we have, we present an opportunity for everyone in the chain,” says Martin, “There are no losers with our service, and that makes overcoming resistance so much easier.”
Contact
Aylesbury Vale Enterprise Hub
www.avalehub.co.uk
