The online classified market is a huge opportunity in India and while there are leaders in job and matrimony space, this article will focus on the real estate classified portals and how they have lost a sense of value.

The primary business model of a classified portal (except craiglist) is to monetize via lead generation channel or charge people for listings. Operationally, classified services enable both the parties (i.e. seller and buyer) to discover each other given a certain context (which could be house for rent/sale, marriage proposal etc etc).

Over the last 1 week, I have used pretty much all the classified listing sites (makaan.com, click.in, locanto.in, craiglist, 99acres, quikr, clickindia etc etc) and here are a few observations [to give you the context, I have been searching for a 2 BHK house in Bangalore].

A. Expired Listings Anyone?

Surprisingly, most of the classified sites do not expire listings. 30 days should be the default timeline for any listing and one is supposed to expire them. The reason for not killing these listings is obvious – SEO. These listings are indexed and provide a lot of Google juice to these sites. So why kill it?

Does this strategy add value? No. I am least interested in finding a 2010 ad.

The best way to approach this is to create relevant landing pages, instead of trading value with free traffic.we sell everything

B. The Rush to Register/Add More User Accounts

In one of the (top classified) sites, you need to share your email id to connect to the listing owner (i.e. you have an option to not register and simply enter your email id/mobile number). And once you do that, the site sends you registration details with an auto generated password (in spite of you opting not to register)!

While I understand the need for privacy (i.e. not to share email id/mobile number of the listing owner), I strongly recommend these sites to follow craiglist model – craiglist leaves the privacy option of showing email id/mobile number to the seller. This is the most practical approach to classified, instead of building a forced-privacy wall for each and every listing (and add no value in the process).

C. Broken Search

What’s the point in showing “Openings for Bengali Sub Editor” in search result page for a query like “2bhk sarjapura for rent”?

Search is the most important element in a classified service and should be intelligent enough to understand the concept of “proximity”/”similar”. Right now, it’s limited to keyword searches and worst of it, there is an attempt to push irrelevant results, in order to fill up the page.

D. Broker or Owner?

Surprisingly, a lot of listings that are classified as ‘owner listings’ are actually from broker (and these listings carry ‘Brokers Excuse’ note as well]! I agree that a site cannot afford to verify the listings, but here is a user experience to take note of.

On craiglist, I flagged couple of listings as overpost/spam, while I didn’t share same love for other sites (though most of them also have equally bad categorization of listings). More on this behavior towards the end of this article.

Who is Killing the Classified Sites? Answer: Google

Oh well! Google is probably the largest source of traffic – so how is G killing these classified services?

Most of the classified sites have beautifully blended Google adsense within the listing pages and in-between the search results.  Infact, its so beautifully blended that you just might end up clicking on the ad, mistaking the ad as a listing!

Nothing wrong with that – just that ‘easy money’ (i.e. adsense) has made these sites lose sense of value creation and the focus now is to bring more traffic to the site, which in turn brings more adsense money (i.e. keep focused on short term business goals).

The question that needs to be asked (especially by VC firms who have invested in these companies) is what are the right metrics for online classified sites?

More Traffic?

OR

Conversion?

Where is more money and an opportunity to create differentiation? An opportunity to create a long term business? Is banner advertising the best way to monetize these services?

In fact, I’d say that it’ll take truckload of guts to say ‘we are not a free classified site. we charge money because we deliver value’. That is, change the game. Be accountable.

I hope some startup takes this gutsy approach and create a more meaningful experience.

For the rest of classified sites, please do not try to create a namesake free marketplace, because value you have delivered so far is so negligible that there is no respect for the service. Except for category specific sites (like Makaan for real estate), all of them (i.e. generalists) are happy with ‘Looking for men/women/escorts category’ listings.

Not a fail (each business model to itself), but why not just build an awesome dating site than a super-mediocre generalist service?

What Works In Online Classified Space in India?

Talking about rental business, services that has worked (for me) so far are bulletin boards and discovery made via one’s social network.

  • Some of the best leads came from internal Google groups (of apartment owners) or from bulletin boards of companies like Infosys/Wipro (which were forwarded to me via my existing social network). They were the most qualified leads and came sans broker fee!
  • Of all the classified service, craiglist delivered the most useful list. There hardly was any differentiation among others. This is precisely the reason why I spent effort in flagging inappropriate Craiglist listings, as the site delivered value to me.

I am not saying that classified sites do not add value. They do, but there are blinded by easy money (i.e. Google adsense) and have lost track of value creation part.

Do A Sanity Check

Mask the logo and you won’t be able to differentiate one service from another. That’s when you have failed to create a valuable business and if you are a VC firm that has invested in this business, it’s time to do a reality check (try using the service as a consumer and you will know what I am talking about).

What has been your experience with online classified services in India?

Recommended Read: The Lack of “Useful” Job Portal in India [And An Idea For One].

[Image credit: pasa47/Flickr]