Value in an Inventory of One

Mar 10, 2006 7:38 PM  By

As it has done in most areas of our lives, the Web is having an impact on the way we look for everything from rental apartments and used couches to snowshoes and those weird hairless cats.

As a population, growing numbers of us are forsaking print information for online sources when it comes to classified ads. A new survey from research firm Outsell finds that 48% of Americans say they used eBay, Craigslist or similar online ad sites to buy or sell something over the past year. By contrast, only 10% said they bought a print classified ad to sell something in that time.

So newspapers are increasingly interested in moving their commerce sections, including their classified ads, onto the Internet. They may have gotten a little extra motivation recently from indications that Google and Microsoft are tuning up their own online classified offerings: Microsoft with the beta launch of its Windows Live Expo service, and Google Base with its test of an automated online payment system.

Classified ads, particularly for jobs and real estate, are seen as one arena where local news sources still enjoy an edge. Outsell found that 77% of those polled turned to newspapers for jobs, compared to 31% who went to Google, Yahoo!, MSN or AOL and 26% to other online sites; and 82% of respondents said they looked to print for real estate news and listings, compared to 22% to the four biggest portals and 19% to other Web sources.

Oodle’s aim is to help content publishers to distribute their classified ads to the widest audience, thereby maximizing their own value to advertisers. To do that, the company arranges to scrape ads from a wide range of newspaper sites as well as spidering prominent Web sites in verticals such as cars, rental properties, real estate and pets. It then formats the ads for an Oodle.com platform that lets users specify what kind of car, apartment or pet they’re looking for, how much they would like to spend and how far they’re willing to go to find it. For many items, Oodle also offers user the chance to pull up a Google map showing the location of the seller—all functionalities that most newspapers are not able to build into their own online classified ad services, but which Oodle provides.

When users click on an Oodle listing—usually a brief summary of the product on offer—they are linked directly to the Web page hosting that ad, and taken straight to the listing, with no landing pages in between. Oodle doesn’t sell listings itself but earns revenue from pay-per-click Google ads placed on its Web site. That way, the company doesn’t have to worry about charges that it’s competing with the Web sites supplying its inventory of classified ads.

The increased distribution and exposure make Oodle a tool for optimizing the value advertisers can get from the classified that newspapers and Web operators sell. “If we can deliver prospects to their ads, we’re making their advertisers more successful, which is making their medium more successful,” says Craig Donato, Oodle CEO and co-founder.

Oodle, launched in March of last year in three cities, now serves more than 100 major metro areas and currently claims to offer 10 million active classified listings from thousands of sources. That index now includes 3 million auto classifieds, with ads from Web sites such as Cars.com, CarsDirect, TrucketoTruck.com and BoatClassifeds.us. In housing, Oodle offers upward of 1.5 million listings from broker sites such as ZipRealty and Point2Homes.com, real estate companies like Z57 and self-sales site ForSaleByOwner.com.

The next generation of Web commerce involves a fundamental shift from an impression-based business to a prospect-based one, Donato says. “It’s not just about delivering eyeballs to your ads any more; it’s about delivering prospects to your advertisers. I think publishers are embracing search moiré and more. They’re looking for ways to get traffic to a site, and looking at ways to make their advertisers more successful. And over the course of a year, we’ve seen a pretty aggressive embrace of the potential of what we’re doing—with one notable exception.”

That exception is Craigslist, the immensely popular free classified site that asked Oodle to stop indexing its ads last October. Up to that point, Craigslist—which is partly owned by online auction site eBay—had provided as much as 20% of Oodle’s total listings. But Donato says his company can get along fine without that content.

Donato says Craigslist, as a free ad site, doesn’t have the same economic incentive to optimize its ad product that online newspapers and other listing sites do. “If you don’t want more traffic and you’re really not trying to optimize ads on your site, then maybe our equation doesn’t work for you,” he says. “Fortunately for us, that’s not how most businesses are run. We think the decision was interesting, but it’s not a leading indicator of a future trend.”

What Oodle hopes the future holds is more partnership deals like the one it just joined with Web portal Lycos to integrate its ad-search platform into the site. The feature will be called Lycos Classifieds but will add “Powered by Oodle”, which constitutes the company’s most aggressive co-branding to date. Users on the Lycos site will be able to deploy all the search features available on Oodle’s home page, including geotargeting, filtering for product details, and setting e-mail alerts.

Oodle has also set up dedicated local-ad-search portals for almost 200 U.S. college communities around the country. “We have our own unique way of segmenting the user market for classifieds, and college kids represent a pretty interesting part of that market,” Donato says. “College kids tend to shop in a tighter radius centered on campus rather than a metro area, and of course we feature more rentals on these sites and fewer real estate listings. We also offer lots of used items, such as books and furniture.” The company’s aim with these portals is to create functions that are tailored for whatever segment of the buying public represents an interesting category for classified ads.

As for the prospects raised by the Microsoft Expo test and the beta trial of online payments for goods sold on Google Base (itself still in test mode), Donato thinks that far from posing a straight competitive threat, having the two big search engines join the online classified ad space could produce more content for Oodle to help distribute to buyers.

“What Microsoft is doing is very complementary: They’re becoming a classified publisher,” he says. “We don’t work with sellers but simply help buyers find their listings, so there’s a really natural deal we can do with Microsoft.”

Google Base is a trickier proposition. It’s an online platform that will let users submit all kinds of content for indexing, which presumably can include listings of items they want to sell; and as a search engine, Google may wind up serving those listings as part of a keyword search on “Toyota” or “Chihuahua”.

But the trial of a system to let sellers take credit card payments via a Google account suggests that Google Base may be aimed more at online marketplace eBay and its PayPal subsidiary than at the classified market, Donato says. “To me, the definition of a classified is an ad for an inventory of one item—one job, one car, one apartment—in which the actual transaction happens offline. So the payment element in classifieds is irrelevant. You’re match-making; no one’s going to buy a car or take a job without a face-to-face meeting. I think Google Base is as much about someone selling digital cameras from a Web store as about selling a perishable inventory of one.” Looked at from that perspective, he says, Google Base is much broader than classifieds and is actually much closer to being a back end to Froogle than a rival classified ad search.

Basically, Donato maintains, the classified vertical of the online shopping search segment needs someone like Oodle on the buy side, drumming up ads from around the Web for users to examine. “We’ve always believed that classified advertising is a fragmented category that is going to get increasingly fragmented, contrary to the conventional wisdom about consolidation,” Donato say. “That’s good for someone like an Oodle, because users need someone to help them look across all those different marketplaces.”