FutureFive NZ - Doing Web Business

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Doing Web Business

What is your background in the Internet industry?

I started at Yellow Pages in 1998. From there I went to NetGuide magazine, where I was responsible for business development. In fact, I helped launch the Schools Web Challenge. My most daunting task from that period was speaking to 1000 teachers from around the country at Te Papa. I remember practising for weeks and rehearsing a couple of gags for the opening. There was nothing but silence throughout my entire presentation – even at the end. But later that day, teachers were gushing about how fantastic my talk was and what a great initiative it was from NetGuide. Tough audience...

I spent the next four years at Nzoom and then TVNZ - eventually running their interactive sales division. Toward the end of that time, I helped set up the Internet Advertising Bureau of New Zealand (IAB NZ), of which I was the inaugural Chairperson.

You were the General Manager of free online classifieds web site SellMeFree.co.nz, which closed recently. What happened?

Well – we came, we saw and we learned. There was a real desire from Trade Me’s user base to have a competitor, but user apathy was a massive barrier! A lot of people responded strongly to our approach but just didn’t care enough to give it a try. Even though users felt they were paying too much on Trade Me, it still worked. Our biggest barrier to taking on Trade Me was the chicken-and-egg relationship between number of items for sale and number of people available to buy. They’re both intrinsically linked and neither is an easy nut to crack – even with the amount of advertising money we had to spend.

What was the highlight of SellMeFree’s short life?

I’m most proud of the phenomenal user growth we had – over 126% in a very short space of time. Part of that was the charity auction we ran in conjunction with Air New Zealand. I had an awesome team in place and the guys worked day and night to get it out on time. We raised $420,000 for charity - more than any other trading site, including Trade Me.

Can anyone really hope to take on Trade Me?

Overseas examples prove that significant inroads can be made – Craigslist and Kajiji are both growing out of control. In my opinion, the solution lies in finding a unique component (just a slice) that doesn’t already exist in any meaningful way on the incumbent. The same could happen to Trade Me, but it’ll take a really unique aspect to pull it off. However, I think Sella.co.nz can do some fairly unique things in conjunction with its sister site finda.co.nz

What’s your new venture, AdHub, all about?

Essentially, AdHub pools sales resource across a bunch of Web sites that couldn’t otherwise afford their own sales resource or ad-serving infrastructure. A central point of access also makes it easier for advertisers to get in touch with someone about ad or sponsorship opportunities – which can prove problematic when dealing with a publisher who’s selling, writing and managing content and keeping a site up 24/7.

How is the current health of online advertising in New Zealand?

Last quarter’s Interactive spend results put the entire market at $45.86 million in New Zealand. We’ve been experiencing between 30 – 50% growth every year and we’re expecting significant growth to continue even through the current recession. Audience share (compared to other media such as magazines or TV) is 30% in terms of time spent online, yet total advertising spend (compared to other media) is under seven percent. That means there’s huge room for growth.

What’s the most common misconception about advertising online?

That it’s all about direct response. Far from it! Direct response is an amazing component of online advertising, but there’s so much more. Unlike any other media, online can use every single element of traditional media to create a hugely rich experience. It’s possible to use video, audio and interactive elements all in one ad. It’s also possible to create unique spaces or microsites for a specific campaign that may only last for a short period of time.

Anyone can start a Web site, but making it profitable is much trickier. What is the key to “monetizing” a Web site?

Streamline it. Build a site for a very specific audience or purpose and watch it grow from there. Don’t build too much to start with. Look for a need that isn’t being filled and fill it very specifically. Once you’ve done that, look to broaden your base of services or content. If your site is consumer driven, then you should expect to be able to derive advertising revenue from it. Make sure you build your numbers though – you  want in excess of 50,000 users to be on an advertiser's radar. Try not to rely solely on advertising to make your revenue. Try to build a solid base from services or long-term agreements, because advertising tends to leap up and down wildly.

What’s a good example of a profitable local site?

GrownUps.co.nz is a great example. Richard Poole has ensured it’s been profitable for a while now, but it certainly isn’t easy. GrownUps has built a strong, targeted following. It now has around 80,000 users and multiple revenue streams, including classified ads, banners and sponsorships.

How does a Web site retain its audience over time?

The key seems to be constant tweaks. No site is ever finished. It used to be that development was broken into projects that had a finite life-cycle. Once a project was finished, that part of the site was deemed complete. These days, sites are an ongoing project that actually never finishes – so everything is broken down to versions and releases.

What’s the most exciting trend on the Web right now?

Web applications. I’m absolutely amazed by how cheap it is to start a business using Web-based applications - no more software licences and maintenance costs. We’re using pay-as-you-go (or free) Web-based project management, document and storage, and even telephony services through 37Signals, Skype and Google. The fundamental attraction of these things is that they’re small, fast, simple and customisable.

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