Most new classified ads sites face a daunting chicken-and-egg challenge. Sellers are reluctant to post ads on a new site that hasn’t built a base of users yet, and users won’t go to a Web site where no one is selling anything.
Even after building a strong base of users, the owners of free classified ads sites have to figure out to make money. (Craigslist makes virtually all its money off jobs listings.)
For ZiXXo’s Chief Executive Mike Hogan, the answer is coupons.
For less than $300 a year, local merchants can create online coupons that will appear in a special section above or below the free ads on ZiXXo. Users print out the coupons and redeem them. Hogan and his staff have devised a coupon-wizard system that he says makes it easy for merchants to create online coupons in minutes. Merchants can change the coupons whenever they want.
“Seventy-nine percent of the U.S. population uses coupons,” says Hogan. “”But on the Internet, it’s much better than clipping and saving. If we can use classified ads to build local communities, then we can capitalize on the coupons.”
That leads us to Hogan’s next challenge: luring local merchants to buy into the online coupon program.
Experts view local businesses as a huge, untapped market for online advertising, potentially worth billions of dollars.
But many local businesses do not have Web sites, and still pour their advertising dollars into printed phone books and newspapers. Online companies from Google and Yahoo on down have been grappling with how to educate merchants about online advertising opportunities.
Hogan is banking on building a cadre of commission sales people to beat the streets and sell the ZiXXo program to merchants door-to-door.