The ongoing crisis hasn’t been great for classifieds companies relying on 3rd party advertising revenues. While long-term trends show mobile advertising spend rising, marketing budgets are one of the first cuts during an economic crisis. In a survey by ICMA, 45% of classifieds providers said advertising is the area with the biggest decrease in revenue.
Whatever the recovery will looks like, classifieds portals can take specific steps to strengthen their position and become less dependent on advertising.
Adjusting to a mobile-first strategy
Smartphone ownership has grown from 2.5 billion to 3.5 billion in only 4 years, according to Statista. This means 200 million additional people get a smartphone each year. In 5 years, 75% of all people are estimated to use only their smartphones to access the internet.
For advertisers, mobile web consumption creates a problem. On average, there’s 3 times less advertising room on mobile devices. That means 3 times less advertising revenue per session. Increasing the space allocated to advertising on mobile can instead lead to a negative impact on the mobile user experience and drive users away, not increase revenue.
The other growing concern with mobile advertising is its efficiency. The Financial Times recently ran a study that included major advertisers Disney, Unilever, Nestlé, 8 global ad agencies, 5 demand-side platforms, 6 supply-side platforms, and 12 publishers. The study concluded that only 12% of the ad dollars spent were completely transparent, while the rest could not be traced from end to end.
This has two implications for classifieds portals. The long-term trend makes legitimate advertisers cautious of ramping up their ad spending. Low transparency of current ad solutions also means portals are not in control of the advertisements, which can again lead to negative user experiences.
Putting emphasis on mobile UX
Salesforce’s recent survey indicated that 74% of people are likely to switch brands if the purchasing process is too difficult. The “purchasing process” does not mean only the part of the journey where the user enters the checkout flow: it covers the whole journey from acquisition to become a loyal customer.
For a classifieds portal that wants to grow its revenue from listing fees and other value-added services, reviewing the advertising strategy from end-to-end is necessary. This can mean cutting down on advertising elsewhere on the website, but also removing ads from pages related to the purchasing process entirely. Another important aspect is reviewing the payment process.
Optimizing the payment setup to increase revenue
74% of new users are willing to switch to a competing service if the payment process is too complicated. What are the main friction points on why people fail to complete their transactions?
Long and complicated checkout processes are one of the top reasons why people abandon payments. So what are some of the things that can be done to improve revenue leak during the payment process? Here are 3 ideas.
Focus on a great mobile UX: Having a mobile-responsive site is not enough. Google micro-moments research indicates that before a purchase decision is made, 88% of people do research on their phone. Making your mobile customer journey effortless should be a core focus, including simplifying the account creation process.
Going deep with payment conversion data: Baymard Institute’s survey indicates that technical and billing errors combined makeup 71% of the reasons why people abandon shopping carts. Getting a total overview of the checkout process and understanding where users drop off is the first step improving the results.
Using alternative payment methods: classifieds offering premium listings and value-added services can improve the mobile user experience through alternative payment methods. Digital wallets and carrier billing are two solutions that can be used for this. Our own work with OLX in Poland shows 10% pay with carrier billing. These are not people who would’ve used other payment methods before - it’s new paying users and revenue.
Mobile users are here to stay. Mobile advertising reached $225 billion in 2020. And if used wisely, it’s a great source of revenue for classifieds sites. But as the current crisis has shown, it’s wise to spread your bets. Companies that put the customer’s needs first and create great user experiences tend to win over the long haul.
Andrea Boetti is VP of Global BD at Fortumo, the mobile technology company helping Google, Spotify, Amazon and thousands of other digital merchants acquire, monetize and retain users through our bundling, carrier billing, and messaging solutions. Andrea has been working in the payment services industry for the past 12 years and has experience with both credit cards and carrier billing.