Wednesday, October 19, 2011

Will Google Trader Succeed in Kenya's Online Classifieds Market?

I have been wondering what effect Google Trader will have in Kenya with so many players or established as brands in Kenya. Is this just another futile attempt? At least from my side, I will stick to the brand I have been using for the last one year, not just because of my traditional sentimental brand loyalty but because I do not see a reason why I should do away with Dealfish. Dealfish offers me quality and efficiency whenever I need something and is mostly free from spam. Here is an insightful comment from someone I presume must be a player in the online classifieds industry in Kenya posted on the popular Tech blog Tech Mtaa:

Despite three attempts, Google has not succeeded in classifieds anywhere in the world to date. Their first attempt - Google Base - did not change any market anywhere in the world. Their second quite famous attempt was in Australia where they took on the real estate vertical but closed the attempt after a couple of years.

Google Trader is their third attempt - in Uganda first, then Ghana and now Kenya and no doubt other African markets. In Ghana, arguably the most successful Google Trader attempt to date, two other specialist job websites are ahead of them. Probably because you simply can't attach your resume by SMS, nor are employers particularly interested in receiving SMS job applications. Ditto Uganda.

20% TimeThese attempts at classifieds are all attempts that originated in the 20% time that Google employees use to grow innovations - in the US in the case of Base, and in the Google Maps engineering lab in Sydney which attempted the real estate move. Generally these 20% time projects infrequently get the hard backing of Google resources and most fail over time. A few celebrated ones like Google Earth and so on get real traction, but the vast majority do not. Google Trader appears to have some funding from within Google here in Kenya given the marketing spend and the deployed resources to get content so perhaps this may be a different attempt.

Strategic Consistency

Google's entry into classified is not actually consistent with Google's core strategy of enabling users to get to  all the world's information from one place. Google Trader is a different strategy where Google is acting as a publisher itself, rather than a place that points users to the publishing available around the world. Whilst Google may be acting as an aggregator here, the fact that they are sending people out to the field or inviting direct publishing of content on Google sets Google into competition with the very people it is trying to get advertising revenue from in the first place - the publishers of content around the internet.If you look at both Google Base and the Australian real estate vertical examples, both were killed off at the executive levels in Google for reasons of strategic inconsistency. Google's strategy in Kenya is all focused on last-mile connectivity - really trying to get more Kenyans and Kenyan content onto the internet in order to grow the absolute market size for internet in Kenya, which in turn creates more network effects for them in terms of people searching for and advertising content and services, which drives Google's revenue.

So there is some logic to them entering the classifieds market in order to grow the utility of the Kenyan internet itself. They themselves publish the fact that jobs, phones and cars are in the top 10 searched for items on the Kenyan internet. Competing against their customersThere are many good Kenyan internet companies rapidly developing classifieds content in Kenya in much greater volumes than Google  - Dealfish, BidorBuy, Junkmail, Patauza, Usanunua, Pigia.me and so on in the generalist category. www.cheki.co.ke, www.brightermonday.com, www.propertyleo.com, www.lands.co.ke, www.eatout.co.ke, www.umba.co.ke, www.kiosk.co.ke, www.kalahari.co.ke, www.mocality.co.ke and so on in the specialist categories.

So Google is going to get its content anyway for nothing. Why they are spending money getting content they effectively already have is a question worth asking. Google Trader is also likely to shrink their own Kenya revenue opportunity not grow it in the sense that already Google Adwords are already awash with Dealfish, Cheki, Kalahari, Mocality and BrighterMonday ads. By competing against their most high spending customers in Kenya, they are effectively biting the hand that feeds them. They already should know that highest spending Google customers around the world nearly always include online classifieds businesses.

Can they win?

All market leading classifieds businesses around the world employ huge resources to get their content, develop deep relationships with their employment, car selling or real estate or travel agency customers. They develop strong brands in their categories. History shows that the vast majority of successful classifieds businesses have these characteristics. Many have deep technical integration with their core customers, and provide insightful data products to both sides of their marketplaces, whether buyers or sellers.

The average number of employees for successful online classifieds businesses in national markets is between 200-300 employees. This tells you a lot about the resources and focus needed to succeed in these businesses. Is Google really going to develop these sorts of relationships in Kenya - say 200 employees per vertical, i.e. 1,000 employees focused on just classifieds in Kenya? I think not. If you add the total employees of Dealfish, BidorBuy, Junkmail, Patauza, Usanunua, Pigia.me, www.cheki.co.ke, www.brightermonday.com, www.propertyleo.com, www.lands.co.ke, www.eatout.co.ke, www.umba.co.ke, www.kiosk.co.ke, www.kalahari.co.ke, www.mocality.co.ke and so on, and measure them up against the total possible effort by Google in cultivating relationships with classified advertisers, it is going to be a battle worth watching. My sense is that of all the opportunities and priorities for Google, there are far more lucrative ones in local search and advertising than trying to pick a major fight trying to become a publisher when simply asking Eric Schmidt about whether that's what Google wants to do will result in a (already stated) 'No". Lastly, will Google ever be known as a brand for looking for a job or a car? Will they really be able to use Facebook to dilute the core Google search brand which is is incredibly associated with search, not shopping or real estate browsing?

This is the lesson of their Australian adventure where people had such strong brand association with www.realestate.com.au that no matter what google advertised, people just couldn't get their head around the equation Google = Real Estate.  I think in Kenya, people think Google = Internet or Google = Search.Time will tell whether people will ever really think Google = Dealfish 2.0




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