How Schibsted arms itself against disruption

11 Oct 2016

For the first time in two years, Schibsted Media Group held an Investor Day in London and New York in the last week of September.

The presentation to investors was called Driving Long-Term Online Growth, and contained well-chosen facts of, and forecasts for its plans with classifieds and beyond.

It all looked promising, until Facebook’s Marketplace launch on Oct. 3 (read about it here, and on page 1 of our latest CIR17.19) sent Schibsted’s share price tumbling by almost 10 percent (our report here; clients only). At first glance, it may look like Schibsted — and other companies that operate classified marketplaces, such as Craigslist, Naspers, EBay and Quikr — are in trouble.

It’s easy to see how they can fall victim to the “innovator’s dilemma”, which hypothesizes that the violent growth of an aggressive, disruptive player will steal their business, because the “good enough” product the disruptor created, will serve needs of their customers better – so they’ll migrate. Even if the new player didn’t intend to disrupt in the beginning, it now has no qualms about grabbing the opportunity.

Rian Liebenberg, CTO of Schibsted, lifted the veil in London (photo from his LinkedIn page with thanks)

Rian Liebenberg, CTO of Schibsted, lifted the veil in London (photo from his LinkedIn page with thanks)

However, taking a second look at what Schibsted presented in London (a recording of the webcast is online and the presentation (PDF) is available for download) raises doubts whether Facebook’s announcement took the Schibsted management by surprise. On the contrary — the whole Investor Day presentation can be interpreted as an outlook on how Schibsted plans to survive the next wave of disruption.

In his opening remarks, Schibsted chairman Ole Jacob Sunde stressed the point that disruption and entrepreneurship is in the DNA of his company; that user centricity and trustworthy relationships are key; and that – apart from its activities in classifieds – Schibsted is actively extending its digital footprint.

Schibsted was able to build a €100 million business in Sweden within a short time in its “growth sector” with very limited investment. The start-up companies within this portfolio are in the marketplace business, serve personal finance, are ecommerce and consumer services-focused, and will, by and large, be well prepared for internationalization — something Schibsted has vast experience in. And, of course, there are obvious synergies between classifieds and personal finance.

It’s also impressive to see how much Schibsted has invested in building competence in technology, and has attracted top talent in the past few years. It operates five tech hubs in five, different countries in Europe, each focusing on different aspects of the business, in addition to tech competences within its local teams.

CTO Rian Liebenberg, a former CEO of eeGeo and former long-term director of software engineering at Google, heads a team of about 1,500 developers at Schibsted. The whole team just recently gathered in Barcelona for an internal “Reboot” event, to discuss progress with Schibsted’s “platform strategy”, focused on building scalable platforms and re-usable components for publishing and marketplaces, based on common technology, and infrastructure integrated with an advertising platform.

From the examples shown in London, Schibsted puts the user experience first. Take Schibsted’s so-called “Audience Targeting Engine” as an example: It uses the data Schibsted collects around the world, and doesn’t only display advertising targeted to the user’s interest within milliseconds, but will also deliver tailor-made news and classified ads in future, Liebenberg explained.

Built by the advertising team in London, the “Audience Targeting Engine” is integrated with AppNexus, and already produces significant new revenue in Norway.

A self-serving tool that has been rolled out in France and Norway recently, allows geo-targeting and very local campaigns in four simple steps. It aims to tap into the largely unexploited local ad market.

The improvements in the advertising platform and the focus on increased verticalization in classifieds are important in building revenue and serving the professional customers.
But what about the consumers? Is there anything in it for them? Anything that can rival the convenience of Facebook?

Facebook’s biggest asset is its large user base. Experience with the buy-and-sell groups has shown that it’s easy to post ads, but much harder to sell items, and making them mobile and presenting them in a way similar to the known mobile classified markets, will not instantly solve this problem.

Schibsted has strong experience in mobile. It holds 91 percent of Shpock, the mobile classifieds brand that shows good traction in Europe and seems to resonate with young users. It even started monetizing recently. But, rolling out Shpock in new countries is not the pinnacle of innovation. The ad-publishing process is still too time-consuming and on-boarding as a new user is still too much of a hassle.

Communication, payment, delivery — the availability of such features in other applications slowly changes user expectations. Developments all over the world show that these features might eventually become integral parts of what we used to call classified offerings.

In London, Liebenberg gave a glimpse into what is being developed in this regard. One example was Rocket, Schibsted’s nickname for a new mobile application that can be rolled out white label, and serves as the mobile interface for existing classified brands. It is designed for use in emerging markets and is currently being tested with 2,000 beta users in Greece at Aggeliopolis.

Data-driven improvements will make the life of consumers and sellers easier. Image-recognition, for example, could play a major part in classifieds in future. Currently, Schibsted has data stored of millions of images – a treasure chest which grows by 100 million a month. When Schibsted’s engine recognizes the user is uploading a photo of a bicycle, why not suggest the appropriate category? If it recognizes the brand, why not suggest the price?

Knowing the context and user intent could give Schibsted an edge, Liebenberg explained.

None of these initiatives can guarantee that Schibsted (and other classified companies that are working on similar ideas and initiatives) will be safeguarded from the disruption that Facebook’s Marketplace might wreak on the industry. But, focusing on the user, aiming for constant improvement, ongoing investment in people and technology, and not putting all one’s eggs in one basket, seems to be a promising way to face current and future challenges.

This article was first published in CIR17.19, a client-only report. To receive the biweekly Classified Intelligence Report (CIR), go here.  

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Katja Riefler

Katja Riefler, AIM Group principal and director for Europe, Middle East and Africa, has a broad background working with newspapers, trade associations and online services to shape media companies for the future. She is based in Munich and travels regularly throughout Europe and frequently to the United States.