Gumtree is seeing positive results from using first-party data in direct deals

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Short-term pain for long-term gain is a business cliche. But it’s not wrong, as online classifieds site Gumtree’s direct ads business shows.

Before unpacking those gains, here’s a closer look at what it took to get them: it started back in 2021 when Gumtree’s executives wanted to sweat their data harder in ad deals.

They needed technology that was going to be better at matching advertisers to audiences who were visiting the online classifieds site. This isn’t an easy problem to solve, but something had to change. Gumtree’s ads team did just that last January, when it swapped the old data management partner for another (Permutive).

“We were seeing under 40% match rates with that particular data management platform, and it was causing some scale issues,” said Victoria Trevillion, head of ad tech and operations at Gumtree.

While the online classifieds site did not disclose what those newer match rates were, the results suggest they’re significantly higher.

Here’s what this means in cold, hard commercial terms: the click through rate of those direct ad campaigns’ run for the first three months of the year was around 36% higher than for the whole of 2022 — this includes programmatic guaranteed, programmatic direct and insertion orders, but not private marketplaces. The average cost per thousand impressions of this direct inventory over the same period is up 14% on the same period a year ago.

Impressive as these results were, the long-term benefits of the changes are still a little hazy. Yes, those numbers have piqued the interest of more advertisers in using Gumtree’s data to advertise on its sites, but that isn’t always turning into intent. In fact, most of the ad money Gumtree collects is from the open programmatic marketplace. It is cheaper and logistically easier to advertise this way, after all.

“The open market is about 60% of our business but that also includes our app inventory where open marketplaces are more dominant,” said Trevillion. “Forty percent is direct — and of that 70% is direct [insertion orders and programmatic guaranteed] and 30% private marketplaces.”

It won’t stay this way — but the change won’t be rapid. Marketers are nothing but creatures of habit. It takes them a while to adopt something new, and even when they do they don’t fully commit straight away. Still, of all the problems that could go wrong with this part of Gumtree’s ads business, this one is manageable — as in it’s more a question of when, not if, it gets resolved. Gumtree has seen enough over the last year to believe more advertisers will see the value in its data.

“Over the last year or so, we have around 400 different audience [segments] that have been additive,” said Trevillion. 

Granted, some of those audiences are different iterations of the same thing, so a 30-day version of a particular audience segment or a 60-day one, for instance. But Gumtree has also been able to add more audience types, from newer lookalike segments to ones filled with people who have clicked on previous campaigns — all thanks to those changes. And as a result, more advertisers have wanted to buy them — and in some cases pay more for them.

Gumtree tested how big that demand actually was last November when it put up its rates for direct campaigns by 10% following a review of the aforementioned changes.

“Historically we’ve probably had over 50% of our revenue coming from auto clients, which has obviously been a challenge, but we’ve been able to use audiences and insights to diversify away from that spend,” said Trevillion. 

Nevertheless, automotive advertisers remain a key part of Gumtree’s ads business. In fact, they’ve been some of the most progressive to adapt to the changes from the online classifieds site. 

One unnamed marketer used the insights that Gumtree shared on those users likely to purchase an electric vehicle to change its creative. Normally, it’s a rarity that marketers like this give feedback to Gumtree on the back of insights shared — let alone act on it. 

For many more marketers, however, seeing the most in this sort of data is a work in progress. As in, it’s more of a question of when, not if, due to the slow degradation of third-party tracking. The more this happens the more important it’s going to be for marketers to explore and implement alternative data strategies, including leveraging data from publishers like Gumtree. 

“Marketers shouldn’t be waiting for Google to make changes to third-party addressability to adapt their first-party strategy because first-party anything, whether it’s first-party data or first-party IDs, is a much more effective way of running any ad campaign over those that use third-party cookies or IDs,” said Phil Acton, country manager at ad tech vendor Adform. “This way the marketer gets a lot more information and data on someone than they would do if they were reliant on third-party tracking.”

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