Internet Advertising to be Relatively Unscathed

A recent article in the Economist discusses the likely impact of the current financial crisis is on the internet advertising market. It makes for interesting reading.

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Will Ad Revenue Drop for US Property Websites?

The results of the half-yearly Internet Advertising Revenue Report, conducted by PricewaterhouseCoopers LLP for the Interactive Advertising Bureau (IAB), will be met with some anxiety by property portals and websites.

The good news is that overall Internet advertising revenues are up on last year. But the not so good news is that second quarter 2008 figures are slightly lower than the first quarter of 2008. It’s the first dip in revenue since the third quarter of 2004:

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Times are Tough (part 2)

I just wanted to follow up on the article i wrote yesterday with some more thoughts on what property portal sites should do in the current financial crisis.

I came across a presentation from Sequoia Capita on startups and the economic downturn.   The key messages are similar to the ones i wrote in the previous article however they have gone into more depth and i thought i would summarise them here for everyone.

Here are the key messages:

1. The recovery will be long - dont expect a quick turn around
2. There are new realities - raising money on high speculative valuations is a thing of the past and series B and C funding will be very very tough
3. Customer take up of businesses will be slower than projected
4. Expense cuts are a must
5. You have to become cash flow positive

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Times are Tough, Portals Should Tighten their Belts

The credit crunch and the collapse of the financial markets can only mean one thing - the days of easy access to funding is well and truly over.  In a recent article on cnet titled “VC’s throw cold water on portfolio companies“, VC’s and angel investors are giving their portfolio companies a clear message - prepare for the worst.

So what sort of preparation as they talking about?  They are suggesting cutting marketing costs, reducing G&A costs and even laying off staff.  The way angel investor Ron Conway put it in a letter to his portfolio companies is “This is the equivalent to “raising an internal round” through cost reductions to buy you more time until you need to raise money again; hopefully when fund raising is more feasible.”

The other pieces of advice being offered include:

• If you need to raise money, start early and raise as much as you can
• Talk to any VC / investor you can - you cant afford to be picky
• Aggresively examine M&A opportunities as strength in size will be important
• Be very realistic on your valuation as they will fall
• Potentially consider the sale of your company to a corporate partner

On top of this, it is highly unlikely that VC’s, angel investors or the private equity market will be investing in new businesses (at reasonable valuations) any time soon. 

Therefore what does this mean for the property portal sites around the world?

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eBay Looking to Buy Classified Sites

It was recently reported in the Wall Street Journal that eBay is looking to expand its classified ads business by buying promising private companies.  eBay’s strategy will be to target classified ad sites that have leading positions in geographies and industry segments in which they don’t currently compete.

They are taking advantage of the global economic slowdown and hope to buy these companies on the cheap. Jacob Aqraou, the GM of eBay’s global classified business, said that the deepening credit crunch has depressed prices to such an extent that it makes more sense to acquire a market leader than to build a new business.

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Four Types of Property Portal Markets

In a previous article i wrote about a number of different business models that there are in the property portal world (Click here to read the article).  However, not all of these models can be applied to every market and to understand where to apply a business model, you must first understand the type of market you are operating in to determine the likelihood of success.

These four market types are - Maturing Markets, Emerging Markets, Early Stage Markets, and Non-Existent Markets.   Each of these are discussed in turn in this article.

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Property Portal Financial Models From Around the World

When looking at property portals around the world, there are various financial models that are being chased.  The main ones are subscription, pay per listing, free to pay - pay to upgrade, lead generation and pay per acquisition.

The models that are truly delivering returns to the operators are the Subscription Model and the Pay Per Listing Model.

Each of these models is discussed in detail in this article.

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