Too little, too late

Classified ads were providing a fairly substantial and a steadily growing revenue stream to Pakistan’s two leading newspapers, Jang and Dawn. Other newspaper groups, like Express and Nawai-i-Waqt, much to their dismay had miserably failed to make any dent in this lucrative market, which had essentially become a ‘Jang-Dawn’ exclusive territory. More importantly due to the very nature of classified ads, this segment was also unthreatened by the otherwise burgeoning players in the satellite television industry. Jang in Urdu and Dawn in English, were so to speak, the undefeated, undisputed heavyweight champions of the Rs 300 crores classified ad market.

However,a change was underway with the launch of Pakwheels.com in 2003 – an automobile classified portal, followed by the entry of the classified job portal, Rozee.pk. The two newspapers groups didn’t realize the potential threat posed by these tech-start ups so much so, that they even supported their own demise by sponsoring job fairs conducted by their soon to be competitor, Rozee.pk. And even though print numbers had started to show early warning signs before 2010, it wasn’t until 2015 when classified portals like OLX, Pakwheels, Zameen and Rozee had launched massive ad campaigns on television, outdoor and print, that the two hotshot newspapers realised what had actually hit them. The increasing number of people familiarizing with the internet and subsequent emergence of the 3G and 4G spectrums in Pakistan gave way to a technological revolution in the smartphone industry. In turn, this has significantly impacted the classified ad industry making it profoundly different from its former ensemble.

Late to the party? Giants admit

“We were like an ostrich with its head in the sand when the online portals sprung up in Pakistan,” says Sarmad Ali, Managing Director, Jang Media Group, who also happens to be the current President of the All Pakistan Newspaper Society. “We could say that we did this and that to counter the online portals, but that won’t be true – we were late to respond.” A similar narrative comes from Dawn. “If truth be told, we had our own reservations about the online classifieds industry, and we thought they would fail and not survive with such a business model,” says Kashif Saeed, Director Operations at Dawn Group – Pakistan’s first and oldest English-language newspaper which has been in circulation since before the country gained independence, and has thus maintained a strong grip on the market for English dailies.   However, Saeed maintains that Dawn is still in the top slot when it comes to English classified ads. CEO of Dawn also agrees. “The future of print classifieds is very much there, as long as we handle the market properly, Dawn cannot be pushed out. However, it will depend on how we modify our behavior in the future and how the online portals modify their behavior,” states Hameed Haroon. Monis Rehman, founder of Rozee, claims that he reached out to Dawn eight years ago with the idea of online portals but the offer was turned down. “They didn’t take the online threat seriously back then since we were unknown and off the radar,” says Rehman. He goes on to say that now the classified giants of yesteryear are realising the importance of going online, but adds that it’s a classic example of ‘too little, too late’. “Dawn was in a very strong position and had they done this 5 years ago, they would have been the market leaders today for sure,” asserts Rehman while referring to the soon to be launched Career portal of Dawn. Saeed from Dawn, however, argues that the classifieds ad volume is still there for the paper and the revenue from it is growing, but admits it not being where it ought to have been, had they responded in a timely manner. “If you were to ask me whether we are where we should have been had we responded earlier, then of course the answer would be no. Being late has impacted our business even if the management fails to acknowledge it,” says Saeed. Talking about the emergence of classified sites, both Saeed and Ali concede that online portals have come a long way and have managed to successfully earn a position for themselves in the market. “They have damaged the conventional print media players like Jang and Dawn, but the revenues from these sources are still growing, albeit the growth rate is low,” maintains Ali.

Why the battle for classifieds?

Strictly speaking, classifieds earn a meagre 5% of Dawn’s total ad revenue. However, if we include the bigger job opportunity ads placed by corporates, this number more than doubles. One rationale for clubbing these job ads with the rest of the classifieds is that they are published within the classified supplement, for instance in Dawn. However, the main basis is that job ads have the same impact on circulation numbers that the rest of the classifieds do. And that is why, despite relatively low contribution to the overall revenue, the classified category is so much more important. The small classified ads and the not-so-small job opportunity ads are directly related to readership numbers in Pakistan. Both Dawn and Jang claim that the sales of their newspapers almost double on Sundays. Reason? Well, classified ads, they say. People buy the paper specifically on Sundays to take a look at the classifieds’ section. And thus, both the groups are adamant on retaining the business.The small classified ads and the not-so-small job opportunity ads are directly related to readership numbers in Pakistan. Both Dawn and Jang claim that the sales of their newspapers almost double on Sundays

Profit E-Magazine Issue 03

“We still double our sales on Sundays because of classifieds section, and we still have the same number of classified pages that we had ten years ago,” Saeed explains. When Dawn first introduced its classified section in 1982 in Karachi, and in 1996 for the Lahore chapter and in 2000 for Islamabad, it kept most of its categories absolutely free. The idea was to penetrate the market initially by not charging the advertisers. This makes Dawn’s apprehensions about the sustainability of the business models of classified portals somewhat more astonishing considering their business model of free posting of ads isn’t any different from what Dawn had been following for many years. In case of the Jang Group, classifieds contribute around 8% of its total ad revenue. This does not include the revenue it makes from big job opportunity ads. “We realised we had to salvage this business at all costs – it’s a huge business for us and we didn’t want to lose it,” Ali from Jang said. It’s the relationship between classifieds and readership numbers that makes it so crucial for media giants to retain the business. In terms of importance, the careers and real estate categories hold the most significance for Dawn and the reason cited by their director was that in most growing economies, real estate is a huge sector. And more specifically, in a country where everyone – politicians, army, business tycoons and bureaucrats, is investing in the real estate sector, it naturally becomes one of the most important one. Jang also has almost the same preference when it comes to importance of categories for classified ads: real estate, jobs and automobiles.

Better late than never: Giants fight back

The print titans initiated their response strategy a year after OLX, the international giant in online horizontal portals owned by Naspers Media Group, launched a massive marketing campaign. The campaign was a sort of a statement by OLX on behalf of all classified portals announcing that they had arrived, and were serious players in the industry. OLX continues to be the largest advertiser on TV in the internet category. Other portals like Zameen, Pakwheels and Rozee also followed suit with big ad campaigns. Jang was the first to respond with a two pronged strategy. First, they convinced people to continue advertising in Jang for which it ran a massive marketing campaign in September 2015 with taglines such as ‘Yaqeeni deal har baar!’ which meant: a sure shot deal every time. Also, in order to make up for the lack of pictures in its classified section Jang introduced Quick Response (QR) codes which are printed on the ads in the newspaper. These codes allow the user of the classified section to watch a 20 seconds-long video and a few pictures of the said item which is being advertised. This was done in an effort to counter the growing digital presence of the online portals by imbibing similar features in their own service. In addition to the normal cost of advertising, Rs 150 are charged from the advertiser in order for them to avail this feature. However, the biggest shift in Jang’s strategy came when it launched its own classified portal in Urdu last year. “Our business models are different but we’re in the same industry, vying for winning over the same end-user,” says Ali from Jang. Following Jang’s footsteps, Dawn also introduced QR codes late last year to strengthen its print business. On top of this, Dawn finally launched its job portal last month. Explaining the newly launched job portal, Faris Islam, Manager Marketing Dawn says that Dawn is offering different packages whereby print advertisers can place their ads online. In addition, they also have advertisers who only wish to place ads online. “We have 25,000 jobseekers and over 1, 000 employers on the online platform,” says Islam’s colleague Ali, who works on the job portal at Dawn. Take a look at the portal and it shows only four ‘Premier Employers’ and only three job ads posted. Looks like the remaining 996 employers don’t exist on the portal. One cannot even find a separate category for ‘Ordinary’ employers in case you want to look for other employers, or job ads for that matter. When asked if they believe they are late in going online, Islam says that the group had been waiting for the introduction of 3G and 4G because according to him, most users access such portals through mobile phones. “I think going in before the introduction of 3G/4G would have put us at a disadvantage because most people use it on the phone,” says Islam. One cannot discount the fact that the online portals had already been established by the time 3G and 4G services were introduced in the country, and that the services only boosted the portals’ user-base manifold. Still, does it really take two years (since 3G services) to get the portal online? “We hired a former employee of OLX to work for us so that we could learn and integrate our business model with their business model and thus, create a presence on digital media,” says Saeed, while talking about the upcoming online classifieds section and careers’ portal on Dawn’s website. “See, we believe that the quality of our product is more important than being inhibited by a timeline. The (online) portals already have a presence and a delay of six months won’t really make a difference now,” believes Saeed. “Therefore, the priority is to get the right product to our customers.” A huge number of moderators will need to be hired in order to monitor the ads which will be posted online, since any obscenity or spam posting will directly impact the credibility and image of the core business of the firm i.e. the newspaper. “Our business models are poles apart. We are trying to do what they are doing while still retaining our business model and core business,” Saeed adds. One can take a look at OLX to see how the moderation is done. They have an automatic moderation software tool installed which filters obscene and illegal content when ads are posted. On top of that, OLX has a team of 30 people hired in Pakistan for customer services, working 24/7 to moderate each ad after it is passed by the software.

To make up for the lack of pictures in its classified section Jang introduced Quick Response (QR) codes which are printed on the ads in the newspaper. These codes allow the user of the classified section to watch a 20 seconds long video and a few pictures of the said item which is being advertised

OLX introduced phone verification through OTP (one-time password) to ensure all ads placed are from genuine sellers, verified through their mobile number. The ad usually goes live within an hour after being posted. Dawn, unlike Jang, hasn’t launched any ad campaign on television or otherwise for its job portal. Saeed feels that Dawn needs to tread very carefully on this path. One scandal and the reputation of the media group falls into jeopardy. “If the management tells me to go all in, with all my resources, I can do it and our competition will not stand a chance to compete against us if I offer all my media properties to my customers,” Saeed says while also acknowledging the fact that they are not doing it because: one, they want to play safe and two, their core business is newspaper and not online classifieds. Dawn has a multimedia presence in the country through ownership of a TV channel, a newspaper, a radio station (City FM89) and multiple magazine titles, and can deal with all competitors through excessive above-the-line marketing of its online classifieds. In response to Dawn’s threat of using its media properties to lure more users, Rehman dismisses it on the basis of economics and the resultant opportunity cost of doing something like that. “You can’t just say that using your own media to advertise and promote a product doesn’t cost you. There’s obviously an opportunity cost and a marginal cost attached to it too,” he explains. The Jang Group is even bigger than Dawn Group. It has at least five newspapers, namely: Jang, Awaaz (Lahore based), Inqalab, Waqt and The News (English daily) and combined, they are by far the largest circulated media group. The group also has a large electronic presence owing to the ownership of one of the most popular TV channels under the brand name of Geo. These include Geo News, Geo Super, Geo Kahani, Geo Tez and Geo Entertainment. For now, it seems both Dawn and Jang are trying to tackle the issue by integrating their business models with online portals, and by building a digital footprint for themselves with features like the QR codes (to allow for pictures) and an online classifieds’ portal. This has resulted in a partial success as well. The situation of stagnation in Jang’s automobile and real estate category saw an improvement after their marketing campaign aimed at focusing on the credibility of the paper, and the higher probability of a product being sold through conventional classified  vis-a-vis an ad on an online portal. As a result, Jang’s revenue from classified witnessed an increase of 22% in the year 2015-16.

Value propositions or propaganda?

Each player in the industry has something to offer to its customer. Dawn and Jang, by and large, have the same value proposition for its customers, namely credibility and security. “Print classifieds, by their very nature,  are known for security. Online portals are known for being less costly but the possibility of fraud is higher online. You see, nothing is for free. You’re paying for it one way or the other. Online is less costly but the information uploaded there lacks credibility, especially in categories like job ads,” says CEO Dawn, Hameed Haroon. Echoing similar views Ali takes it up a notch. “We believe that ads published in our classifieds section are more credible, and the instances of theft and fraud rarely ever take place on our forum,” he claims further adding that it is very easy to commit fraud on online portals because there is little value for anything that is for free. But that in itself is a challenge as well. “The problem is that we offer credibility and our brand has had a reputation for decades, while they offer the lure of free advertisement,” Ali reiterates. The online portals, however, tell another story. They offer free advertisement (in most cases), greater convenience for the users, and a higher outreach of a particular ad posted online. The obvious reason for this is the increasing number of internet users. As for theft and fraud, online portals vehemently disagree with the conventional players and claim that it’s a propaganda waged by the newspapers to dissuade people from posting ads online. All are susceptible to fraud, including the newspapers. “We advise our users to make the exchange at a public place and never go alone to meet the buyer or seller,” says Suneel Sarfraz Munj, co-owner of Pakwheels. Due diligence is the responsibility of the buyer and seller, not the company’s responsibility. National Database and Registration Authority’s (NADRA) verification of mobile phone sims against the National Identity Cards of the users make it increasingly difficult to commit fraud online. And with a cybercrime bill in the offing, it would just get more difficult to take someone for a ride online. “This act by the government makes fraudulent activity more traceable and difficult to commit,” says Bilal Bajwa, the Country Manager for OLX Pakistan. Bajwa says that OLX is currently not earning any revenue from Pakistan, being backed by deep pockets of Naspers, he says OLX can afford to tread the path of earning no revenues and yet, promoting the brand image through a huge advertising budget. “We believe all players try to provide users with the best experience and in the end whoever does it best will win,” adds Bajwa Print media was the only viable option for people to buy and sell products before the internet came around. But the problems of print classifieds such as limited description, payment to publish an ad, the absence of photo publishing option (except through QR codes), low reach and discoverability make it a less preferable option for the users. Perhaps, the greatest of changes has come by due to the emergence of the online estate portal named Zameen.com which has not only revolutionised the way estate is advertised but also how the buyers interact with the sellers. “Searching for property is an onerous task. What Zameen.com has done is to make it convenient and a hassle-free business for people to look up properties from the comfort of their own homes,” explains Zeeshan Ali Khan, CEO Zameen.com. According to Khan, before Zameen.com came onto the scene, people heavily relied on newspapers to find property, but would only get vague information and a phone number, no detailed description or pictures. “So all prospective buyers had to take out time to pay the property a visit to get an idea about what was up for sale.” Zameen.com has been a game-changer in that sense. Khan believes that not only have they been able to remove the stress in all of this, they have also opened a window into a world full of options. “Now all anybody has to do is look on the website and browse through our inventory of over 600,000 property listings with complete information, pictures, detailed descriptions – and all this from the comfort of their home,” shares Khan. With the booming success of vertical portals like Pakwheels and Zameen, the automobiles category in Jang classifieds had been hit while the real estate category remained stagnated in the FY 2014-2015. The managing director of Jang disclosed some financials from this period, saying that the classifieds’ business in 2013-14 was worth almost Rs 65 crores in terms of revenue for Jang, and went down to Rs 54 crores in 2014-15. That amounts to a 17% fall. Pakwheels has now gained a reputation of being one of the best in the car buying and selling industry. Munj shares his journey from the launch of the website, when Dawn and Jang were classified kings, to the current day, and recalls how people discouraged him in the early days by saying things like: “Cars only sell through newspapers, not through online portals.” “Our unique selling point (USP) is our knowledge about cars; we’re the best at it and this is our forte,” Munj says, sitting in his spacious office in central Lahore. According to Munj conventional classified players like Dawn and Jang are giving in to the power of digital media by incorporating a digital presence in their business models. He thinks that tactics employed by these players, like the QR codes cause more inconvenience to the end-users since they still have to go through a cumbersome process involving buying a newspaper, then having an internet connection and a suitable phone which could read the QR code to route the user to online pictures or videos of the item. “Print classifieds, even the entire print industry is akin to a person who is dying, but is put on a ventilator to delay death,” Munj says. He adds that it is only a matter of time when these big shots will run out of money and will have to take their product down from the ‘ventilator’. “Internet has changed the way people consume information and has certainly had a massive impact on the classifieds industry,” believes Rehman. For him, the problem lies with the low circulation numbers in the overall print industry, especially when it comes to English dailies. Reach of Urdu newspapers is higher than English newspapers, and it makes sense to believe that the vernacular print media definitely has an advantage there. “They also have the benefit of reaching those localities which don’t have access to the internet, hence effectively targeting the socioeconomic class (SEC) B, C and D,” says Rehman. Whatever the number for print circulation, it is considerably less than the number of people who access the internet in Pakistan. “All evidence is pointing in the direction that online classifieds will also impact Urdu classifieds in the coming years as more people from SEC C and D start accessing the internet through smartphones.” “After a certain tipping point, making your mark in this industry gets increasingly difficult,” says Rehman. To substantiate his claims, Rehman talks about how OLX has been massively advertising, only to gain the position of ‘the best’ in general classifieds’ market. According to Rehman, Dawn or any other media group cannot match the spending of OLX. “Their [OLX’s] plan is very well thought out and probably the best. They are waiting for the right time to charge their customers,” says Rehman while talking about OLX and its policy of not earning revenue. Once their position is built, a new entrant will not be able to make a difference, as per Rehman. According to similarweb.com, OLX is ranked 12 and Pakwheels is ranked 42 in Pakistan, while alexa.com ranks them 22 and 52, respectively. Each of them has 6 million and 2.8 million total visits, respectively.

Status quo in for a change?

With Rozee already having launched its Urdu version of the website, a question comes to mind. Is the inflection point in classifieds’ industry going to come from the rise of vernacular online media and growing internet penetration? If so, on what scale and in what manner would it individually affect each player in this huge industry? Only time will tell.