Pro winner: Is consignment a model for reviving classifieds?

We were looking for innovative and unusual ideas to reinvigorating newspaper classifieds when we offered $500 to the media professional who sent us the best one by the end of 2008. And the winning entry, by New York Times Regional Media Group online advertising project manager David Kiessling, fits the bill.

Kiessling, who is based in Winter Haven, Florida, brings us an old concept, “consignment” selling, reintroduced and recrafted for the new media era. Here’s his description:

“Use self-service ad placement tools to offer classifieds on a consignment basis. Under the consignment classified model the price of the ad is based on a percentage of the cost of the item sold. E-mail notifications and outbound calls are used to survey advertisers on the selling price. If the item does not sell it remains in print and online for another 30 days.

“The classified consignment model is aimed at traditional non-consumers of newspaper classifieds, who will be more compelled to use the service as a result of low or no up-front costs. The classified consignment model also allows newspapers to tap into an army of eBay Power Sellers, thrift shops, and dealer networks by making it easier for the customer to buy classifieds.

“Large-ticket items like homes and vehicles are now public record in most states so it is not difficult to uncover the actual selling price. Recruitment ads are easy to track since a phone call will reveal whether the position has been filled.

“Merchandise classifications are a little more difficult to verify the actual selling price. Several tax preparation software programs offer elaborate price guides for use with charitable contribution deductions. The price guides list thousands of item values based on the condition of the item. When an advertiser cannot be contacted or does not reply to the follow-up survey data, the deduction software can be used as a basis for determining the estimated value of the item.

“Will advertisers try to cheat the system? Absolutely. A small percentage of advertisers will try to cheat the system. Advertisers caught cheating get placed on the black list and pay in advance for all future ads.

“Publishers need to ask themselves would I rather receive no payment for the large volume of free ads that currently run in most newspapers or would I rather receive payment for those ads in return for assuming the risk that a small group may not remit with payment?”

We think this idea has some promise, if the challenges of oversight of selling price can be overcome and the process automated so as not to take up much human staff time. After all, one of the biggest problems that newspapers face with classifieds (what they have left of them) is that people no longer want to pay to place them. Why should they for many categories, since Craiglist and other free alternatives are available and work. If an effective and mostly cheat-proof system can be devised, then ads can be placed by a seller with no upfront cost, but a (verified) credit card number recorded which will be billed a consignment fee if the ad is successful.

It’s a pay-for-performance model, which is where the Internet seems to be taking the advertising world.

This may not be appropriate for all of a newspaper’s classifieds categories, and it will depend on the situation in your newspaper’s city. (If Craigslist isn’t operating nearby, you have less pressure to stop charging up-front fees for classified ads; if no one else in your market is giving away free home ads, then you can skip this idea for that category and try it elsewhere; etc.)

The challenges we see are in getting a consignment model to work without too much human intervention to verify completed transactions. But we applaud Kiessling for his out-of-the-box thinking. We’ll be sending him $500 as our contest winner.

Other entrants’ great ideas

From Edward Vielmetti

“I’d suggest a very old solution to the classifieds problem, going back to the copy of a newspaper I have from the 1880s.

“Stick the classified ads in-line in the text of the news, one or a few of them at a time, so that ads are interspersed throughout the copy that people actually read.

“Bonus points if your ad layout software does context-sensitive matching, so that Google-like, the article about cars is matched with car ads and the article about washing machines is mixed with washing machine ads. But don’t stuff the classifieds in the back where people ignore them. Mix them in.”

Vielmetti didn’t mention it, but another good option is to use his technique for upsells, where an ad is placed in the regular print and online classifieds sections, but the seller pays extra to also be included within editorial content. Also, advertising placed within a reader’s path over editorial content (that is, the reader’s eye must pass over it to get to the rest of the editorial) has been shown by eyetracking research to be more effective than ads placed to the side of content.

From Dustin Block

“Classifieds have to be a helluva lot more entertaining. Papers should encourage creativity in every aspect of the ad (fonts, wording, clip art, pictures) and come up with a better layout than streaming text in 9-point font.

“Half the fun of reading Craigslist is seeing what people are willing to barter and who’s trying to hook up with who. Newspaper classies need that sort of readability. They should be funny, revealing … even insightful.

“Add new categories like ‘Wit & Wisdom’ and let people submit quotes and jokes for free. Have someone start a national Classifieds wire with the best ads from around the country and let newspapers run them. Let readers text in Facebook/Twitter style status updates and run them every day. Hold regular haiku contests.

“It’s time to add life to a dead, dead page. Classifieds are the cheapest entry point for someone to write/advertise anything they want in their own words. Poets can get an audience of thousands for a few bucks. Blogs and websites can draw in new readers. Even artists could show work in a tight space.

“Make the Classifieds section the entry point for the connection between the newspaper and the reader. Charge a few bucks along the way, sure, but more importantly, convince car dealerships, Realtors, and employers that people want to read those ads. Make the classifieds entertaining.”

From DeAnn Rossetti

“I think that if the newspaper editors assign a good graphic designer to the classifieds section, and allow that designer some free reign on creativity, that will make the section look better, and with larger fonts, cleaner and clearer designs plus adding in an advertorial in a special box to ‘highlight’ one business a day or a week, that would appeal to business owners and get them to seek out the newspaper classifieds instead of Craigslist. Part of the reason classifieds are so short in papers is because they are so expensive. If newspapers offered better deals for those placing ads, and offered more value for the money by making the ads larger, adding graphics and design to make them look better, advertisers would be more willing to come back to papers.”

High pricing for newspaper classifieds came in for criticism from several of our contest entrants …

From Katherine Bostick

“The best way to get new customers for classified advertising is to lower your rates. I do not place classified ads for my small business because of the high cost of advertising in the newspaper. Also, small business with a small amount of capital cannot afford to place help wanted ads so they rely on signs in the window of their stores. I realize that inflation has hurt us all, but to survive and thrive, the newspaper industry needs to make adjustments as well. Perhaps lowering the price on help wanted and low-priced items for sale, while continuing the current cost for placing ‘for sale’ items that are more costly.”

From Christine Davis

“The answer is simple. The ads must be affordable. And newspaper circulation must increase. Those are the hard parts. As for the creative part, how about if we use the ‘Twitter’ format?”

And another vote for utilizing Twitter …

From Jon Lansner

“Why not offer ability, in right categories, service that also twitters the ads with a link … or create blogs or other social media tools, around — including the ads …”

Finally, there were calls to (finally) put print in the subservient position in newspaper organizations, focusing on the future of classifieds (online and mobile) rather than the past …

From Bob Andelman

“If I were a newspaper, I’d stop fighting online classifieds and work within. For example, every print classified should have within its lines a tiny URL so readers could go online and get more info, including a picture or video. Newspapers could charge extra for the link and multimedia; the chief selling points would be: 1) more detail about what is for sale, and 2) its searchability online to a wider audience. This should appeal to people who don’t even have (or need) online access because it broadens their potential market.”

From Mark Loundy

“Other than inventing a time machine and killing Craig Newmark’s grandpa, I think that newspapers will be better off spending their dwindling resources on transitioning away from print. As long as they have that massive financial weight around them, they will have no hope for long term survival.

“Chasing print consumers is a losing proposition. They’re dying of old age.

“Newspapers’ core value is local coverage by professional journalists utilizing medium-agnostic methods along with active user interaction. In other words: Professionally created written words, images, video, audio and user feedback and discussion with active staff participation. Spend money on journalism.”

Tags: consignment, contests