Jan 08, 2002
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How do you make money in the directory business online? Here's what I learned while doing research for an unrelated report we're working on. The vertical was directories of ad agencies.
Almost everyone was the same in one key way -- they have three levels of service, usually with cute names (bronze, silver, gold .. you know the drill.) Generally a free level for a plain vanilla listing, a moderately priced level ($20-100 month) for a listing with a few bells and whistles, and a top priced level ($50-350 month, or a flat annual fee around $5000) for a listing with lots of bells and whistles.
There were two different business models - one which is basically a deluxe hosting service, where you can send them your stuff and they create a lovely online portfolio (aka mini-site) for you and promise lots of their client-side traffic will notice it. The second is the RFP model where in return for paying for a listing, you then get emailed any sales leads (requests for proposal) their site garners from visitors in your niche. The two biz models were never offered together under one roof. Either you can use a site to get noticed, or you can get RFPs.
(The only unusual one was Newmediary who offer both their self- named RFP service and IT Papers, a service marketers pay so links to their marketing white papers are distributed across the Web to gather sales leads.)
Although everyone knows biz execs are buying and researching vendors more online now these days, one thing became apparent. Nobody is making out like a bandit yet in either biz model. The RFP sites still don't get enough qualified RFPs into the pipeline to please clients. The portfolio, get-you-noticed, sites still don't get enough client-side (vs. competitors checking each other out.)
Part of this is due to too many competitors during the boom, which split potential traffic into too many factions. Parts also due to the fact that 90% of these sites know that they need partnerships and co-brand sites to get traffic, but they still don't use Web usability principals and hard-core marketing, to really get the traffic funneled in from their partners that they deserve. You need more than a link or a button on a navigation bar to get the real stuff. Some B2C sites have learned the hard way how to hand-hold partner/co-brand relationships to really get the traffic flowing, now the B2B directory sites need to follow their lead.
On the good news front, two of the portfolio-style services I researched were using great email newsletters to push traffic to their paying members' site sections. For samples of these sign up for the newsletters at Portfolios.com and AgencyCompile.com.
Anyway, it's a cool biz model -- pay us to distribute your marketing materials to our directory surfers. Kinda the grown-up version of trade magazine bingo cards. BitPipe is their top competitor.