China

China Web Strategy: From household goods, Paul Luciw aims Asiaxpat.com at Asia’s expat jobs

Asiaxpat founder Paul Luciw proudly claims blood in forcing closure of the Trading Post, the now-defunct Sunday household classifieds in Hong Kong’s dominant English-language newspaper, The South China Morning Post.

Now Luciw wants more blood: Regional recruitment websites like jobsdb.com

“The SCMP charged money when I offered something better for free,” Luciw said of his site’s free classified listings. “Undercutting in price while offering better service is a great tactic against a competitor.”

Asiaxpat’s Hong Kong expat forum already offers information on many aspects of expatriate life - expat medical insurance, expat property, China business - so this is not the first time Asiaxpat has entered a rival’s home territory.

By outflanking a range of direct and indirect competitors, Luciw has built Asiaxpat into one of the region’s most successful expatriate-focussed websites. Run with a total staff of seven from a small office on Wyndham street in Central Hong Kong, Luciw said the site now reaches 500,000 unique visitors per month, roughly half of whom are in Hong Kong. The site has 14 city-specific portals for Asian cities and more than 60,000 registered users.

Asian expatriates are, needless to say, an extremely attractive demographic due to their spending power and predictability of needs. What Luciw accomplished, should have been done by regional publications like the International Herald Tribune, local newspapers like the South China Morning Post or city publications like AsiaCity. Both the regional and city publications, however, failed.

Far from preparing the site for sale - it is 90 percent owned by Luciw, his brother John and a friend - Luciw sees Asia’s online advertising market as still way too undervalued.

“Reaching Asia’s expatriates through online ads is still a crazy bargain,” Luciw said. “You can pay US$6,000 for a one month ad on Asiaxpat, or hope to get the same audience with a one issue ad in The Economist costing US$20,000.”

From gym and sweaters

Moving from Canada to Hong Kong in 1991 with a freshly-minted bachelor’s degree in education, Luciw started working as a gym teacher in the Canadian International School. Long fascinated by business, Luciw started importing handknit sweaters from Nepal and selling them in Canada. The business grew and so did the school’s concern that he was doing too many outside activities, so Luciw accepted an offer to do business full time with some ice hockey buddies (Yes, people play Ice hockey in Hong Kong, there is even an ice hockey league!). Working as a jack-of-all-trades in numerous private investments of his ice hockey friends, Luciw learned the ropes of business and saw some market opportunities. One notable opportunity: The cost of real estate advertising seemed excessively high.

to launching Asiaxpat.
Ready to focus on one project after trying so many, Luciw launched Asiaxpat in 2000 as the Internet headed for the first dotcom bust. Financed by his friend Richard Siemens, Luciw saw others making major mistakes. One lesson came from a rival site - Planetexpat - which employed 50 people and hired out prominent boxes at the Hong Kong Rugby Sevens, even before launching the site. The Rugby 7s, the world championship for a particular style of Rugby, is one of the largest annual gatherings of expatriates in Asia.

Since the Planetexpat site had not been launched, many attending the event presumed the advertisements were for Asiaxpat.

“That confusion played in our favor for years,” Luciw said. “We learned that you have to be very careful how you do publicity.”

This year Asiaxpat plans to distribute 10,000 stick on tattoos at the event. “They stick around long after games,” Luciw said.

Dotcom meltdown challenges business model

When the dotcom nuclear winter hit, Luciw managed to keep the site afloat since it required only US$20,000 per month in revenue to survive. “We chased after any advertising, even HK$1,000 contracts,” Luciw said. “People also pushed us to change the business model.” Among the suggestions: Change Asiaxpat into an eBay for expats; move into other transaction-based models and charge for classifieds. In the darkest days, Luciw bought out the other investors, took full possession of the site and relentlessly pursued the advertising-based model.

Asiaxpat’s key tactics:

SCMP-killer
Luciw relentlessly stuck to an advertising-based strategy and took direct aim at the South China Morning Post’s now defunct Trading Post, a classified section appearing Sundays with expatriate household goods for sale. When the section finally shut down, Luciw claimed victory. “At HK$80 for a two-week advertisement they charged way too much money for what they offered,” Luciw said. “A classified advertisement online could be posted and read any day at any hour.” Asiaxpat now gets up to 400 household goods postings per day, not for revenue, but as a way to build traffic and interest in the site.

Used car ad-killer
With higher value transactions, Luciw started charging money. While the SCMP would charge HK$360 per day for a used car advertisement, Asiaxpat sold them at that price for a full month.

Undercut Maid agencies
Seeing an opportunity to cut out the agencies that help expatriates - and Hong Kong residents - find maids, Luciw offered a service allowing maids to personally list their details for HK$180, while employers pay HK$200 to see all the phone numbers for a month. This compares to the HK$2,500 to HK$4,000 charged by agencies, many of which do not allow employers to interview the maids. Running the maids ads is, however, labor intensive. Of the seven people working on the site, three of them deal exclusively with maid listings.

Free to list personals
For personals it is free to list, but people pay to get the email address. Luciw sets the price point for access to the emails at HK$188 for three months or HK$488 for a year.

DollarSaver-killer
Luciw saw DollarSaver, a publication that helps expatriates find plumbers and other service providers, as another target. Gathering information from all sources, Luciw aimed to build the best Internet-based directory for services in Hong Kong. Organizations and non-profits kept their listings for free, but when enough competitors came on the market in a given service, Luciw started charging. To be a plumber listed on Asiaxpat, for example, costs HK$388 for three months or HK$888 for a year.

Down-market services, but up-market feel
Luciw’s tactics cobbled together a new sort of competitor on the market. The South China Morning Post did not compete directly against DollarSaver’s role of finding services since the SCMP classified ads were too expensive. For their part, DollarSaver never attracted advertising from the kind of up-market brands targeting expatriates. “What upmarket brand would want to place themselves in print alongside a plumber?” Luciw said. “We saw an opportunity in remaining up-market while at the same time providing more downmarket information.” The result: Key banner advertisements are reserved for big name brands only - such as HSBC or the Leading Hotel Group - which enhance the value of the site. Luciw aims for an overall upmarket feel to keep those advertisers comfortable.

No sales calls
In Luciw’s experience, cold-calling potential advertising clients is a waste of time. Explaining the value of the site to someone unfamiliar with its workings usually leads nowhere. Advertisers either “get it” - usually because they use the site - and they call to place an ad or they don’t get it. Fortunately for Luciw advertisers now “get it” in sufficient numbers that most banner ads are sold out for the next year despite a recent redesign that quadrupled the banner inventory.

Mousepad Publicity
Luciw’s marketing strategy has been quirky, but apparently effective. Advertising outlets include mousepads with the Asiaxpat logo (One recent order was for 600,000 pads) to attract users. To attract maids to the service, Luciw hands out leaflets in Central on Sunday afternoons. They highest cost part of the strategy, however, are TV advertisements during international sporting events. Spending up to US$500,000 for TV time, Luciw focuses on many very short advertisements during an event like the Superbowl, Formula One or other. “We keep the ads short and frequent, mainly because longer TV advertisements have high production costs,” Luciw said. “We had 20 spots in Wimbledon last year, which was more than Rolex.” Luciw doesn’t like print ads since they are costly and appear for only one day. By contrast, Luciw said TV ads “seem prestigious” to people.

Rebranding for Asians
Since 2006 the site has worked to rebrand itself as a site tailored to overseas Asians. This has involved visual imagery for the site and advertisements that puts Asian faces in the foreground and western faces in the background. The site’s name has been less important on recent mousepads, with more of an emphasis on the products offered by the site.

Print competitors
While Luciw considers his main competitors to be The South China Morning Post and HK Magazine, he said he will avoid ever going into print. “Print gives you deadlines and other headaches,” Luciw said. “Not only do you need to figure out distribution, but you need to keep selling ads for each issue.”

Online competitors/equivalents
Jobsdb: “They just don’t have the size of audience we have,” Luciw said. “We want a site that people go to for more than just one purpose.”
Expatica: “We operate on lower margins since they have more original news content,” Luciw said of the Europe-focussed website. “We looked at tie-ups in the past, but we have this fundamentally different approach.”

Expatica’s heavy focus on news and structure of their ad units made it problematic to cross-sell ads and neither side wanted to alter their sites. That said, Luciw said neither site had plans to launch into the others’ continent.

As for the news section on Asiaxpat, it is updated several times daily by Luciw himself, who has set up numerous Google news alerts.

Expansion into China

Asiaxpat does substantial marketing focused on both Shanghai and Beijing, but Luciw does not push local advertising sales because there’s not yet a big move to online advertising in those markets and he prefers to keep inventory for the many clients who want to advertise regionally.

Asiaxpat expanded their traffic to the site thanks to traffic redirected by the 2004 purchase of leading English language websites That’s Beijing, Guangzhou and Shanghai (Full story on Asiaxpat acquisition of the URLs from Mark Kitto).

The dominance of Hong Kong’s traffic to the Asiaxpat site reflects the size of the expatriate and English-speaking Chinese professional population. China’s other cities have fewer expats and few Chinese reaching into the highly affluent English-language demographic that the sites caters for.

“For Chinese cities outside of Hong Kong, we basically have a strong market penetration in what are relatively limited markets for our service,” Luciw said.

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