I wrote a few days ago about Google’s attempted acquisition of Groupon. Today it is announced that Schibsted, one of Scandinavia’s biggest media companies and No. 3 in the world on online classifieds, has bought a 37.5 % stake in Letsdeal.se. Letsdeal’s concept has many similarities with Groupon, which has experienced strong growth in USA and parts of Europe. It seems local advertising markets is indeed seen as a future gold mine by many media and tech companies, including Schibsted, Google and Facebook.
Letsdeal.se offers on a daily basis at least 50% discount on selected services or goods. If a “deal” gets a sufficient number of buyers it becomes valid. Companies using the service as a marketing channel are in this way guaranteed a certain number of customers. Today, Letsdeal.se is established in Stockholm, Göteborg and Malmö. Schibsted considers the opportunities for growth to be good, and the company is also considering establishing activities outside of Sweden. Schibsted’s existing strong portfolio of online positions has the potential to contribute significantly to the development of Letsdeal.se.
“Schibsted is probably the smartest media company in the world right now,” said Peter Zollman, founding principal of AIM Group, a Florida-based media consultancy, to BusinessWeek a few months ago. “They have been willing to jettison print, where appropriate, and they are willing to invest, where most media companies now are hunkered down.”
While many publishers bemoan the loss of print ads, Schibsted has built up its online classified ad business. Now it’s an industry leader worldwide, only behind eBay and Craigslist.
Like newspapers almost everywhere, Norwegian dailies VG and Aftenposten have watched their once-lucrative classified advertising sections shrivel as readers defect to websites where they can browse and post ads for free. That doesn’t bother the papers’ publisher, Oslo-based media group Schibsted. It also owns the website that lured away most of the classified ad business—and that site is more profitable than print ads ever were. “We weren’t afraid to cannibalize ourselves,” says Chief Executive Officer Rolv Erik Ryssdal about the group’s decision in 1999 to spin off an online business called FINN.no that competes directly with its papers.
Schibsted, founded in 1839, has taken that successful strategy on the road. Its online classified business has expanded worldwide, with sites in 22 countries listing everything from real estate in Malaysia to cars in Italy to job openings in Argentina. On Sept. 22 the group bought control of France’s No. 1 classified site, leboncoin.fr, from a former venture partner, in a deal that values the site at $540 million. Revenues from its classified ad sites hit $245 million during the first six months of this year, with profit margins at some of its best performing sites as high as 60 percent.
Carol Matlack, BusinessWeek