Classified ad sales take flight online

Advertisers find customers through websites' more detailed collection of user information.

Classified websites in the Middle East are reporting sharp increases in advertising revenue as clients seek to target consumers more specifically. Portals such as Souq.com, Dubizzle and the jobs site Bayt.com say they have seen large increases in revenue, with the detailed user information collected by such sites proving attractive to advertisers.

Ronaldo Mouchawar, the chief executive and managing partner of Souq.com, says advertising revenue on the e-commerce site will more than double this year. "We're seeing a 10 to 15 per cent increase in advertising revenues per month," said Mr Mouchawar. While Souq.com does not release figures, he said the advertising revenues were "significant", and made up about 20 per cent of the website's total revenues.

"As this business grows it could account for 30 per cent of our total revenues," Mr Mouchawar said. "The targeting gives you good value in terms of the exact clients you want to reach. "We can offer a unique proposition because we know the demographics of the users on the site, what products they are searching for, what categories they are interested in and what value of products they are buying."

Mr Mouchawar said Souq.com had an advantage over Dubizzle, the classified advert website, because users of his site bought items directly online. "The transaction does not take place on Dubizzle," he said. "On Souq, we can do better in terms of targeting. We have more data." Richard Pakenham, the sales director at Dubizzle.com, said the site has seen a "tenfold increase in monthly ad revenues since January 2009".

"Advertisers on Dubizzle enjoy being able to reach buyers in certain generic categories; for example autos or mobile phones," said Mr Pakenham. "We are also able to include behavioural targeting for advertisers ? where their adverts can be targeted to registered users who have been active searchers in certain sections of the site. "These refined targeting techniques give advertisers much better ROI [return on investment] on their budgets as there is virtually no wastage, which is especially important in difficult financial conditions."

Bayt.com, which recently launched a classifieds service, has also reported an increase in advertising revenue. The site launched a dedicated advertising sales division at the beginning of 2008 and has seen an increase in ad revenue of "14 to 15 times over a two-year period", said Ali Sinaei, the head of commercial content at Bayt.com. "Bayt.com caters for the working professional so you are guaranteeing a certain kind of audience," said Mr Sinaei. Advertising buyers said e-commerce and classified advertising websites had great potential as online advertising grows.

Robert Salomone, the head of Starcom IP, the digital media buying and strategy arm of Starcom, said more of his clients were placing money with Dubizzle. "We've probably come close to doubling our spend year-on-year on Dubizzle, but less so with Souq," said Mr Salomone. He said the motor sector was "most active" in this regard. "We've also looked at both Dubizzle and Souq for our financial clients," he said.

But consumers' reluctance to shop online due to the perceived security dangers is "the biggest barrier" to growth, said Mr Salomone. "We really need the banks, credit card companies or governments to start making an effort to educate people." Another barrier lay in the crude address system in some parts of the Middle East, making home deliveries unreliable and prompting many to take deliveries at work.

"I'm not going to have toothpaste and diapers delivered to my office," Mr Salomone said. [e-mail]