International opportunities and adding adjacencies to support growth
Executive Summary: Print to digital shift now complete
Online employment, auto and real estate classified businesses have undoubtedly been the biggest domestic ‘winners’ in media over the past ten years. Combined market capitalisation of the three leading classifieds business (SEEK, carsales and REA Group) is estimated at A$16.9 bn, which compares with their market caps of ~A$ 4.6bn over 5 years ago. However, offshore participants such as Google and Facebook have also experienced strong growth and would have larger businesses in Australia
The process of classifieds migrating from print (the old rivers of gold) to online is all but complete in Australia and well anticipated by the leaders that have sought to supplement their growth offshore (particularly in developing countries) and into new and adjacent business models. See opposite.
We believe that each of the classified verticals will now enter a new phase, with the potential ‘end states’ over the next 3 – 5 years being one of; (a) one true winner; (b) a detrimental fight amongst leading contenders; (c) harmonious sharing or (d) new lower cost entrants that disrupt to the business model. Of course this is a dynamic outcome and competitive positioning and strategy and tactics along with innovations will ultimately determine the the outcomes and consequently the fate of the respective industry players
The enormity of success by the leading players (including strong margins and cash flow) is attracting a lot of attention both from new start ups as well large internet companies with substantial reach such as Google and eBay.
These end states and competitive outlook will be analysed further in an upcoming Venture Insights report