Competition intensifies for the online river of gold

When online advertising began to affect the bottom line of newspaper companies, it was always assumed one particular stream of revenue would be safe.

When online advertising began to affect the bottom line of newspaper companies, it was always assumed one particular stream of revenue would be safe. Classified advertising – once described by Rupert Murdoch as a “river of gold” – was an area where Google and its ilk would have little impact, it was said. But that hope was misguided; in America last year the number of classified ads posted online increased by 24% while sales in printed newspapers dropped 20%, a dramatic decrease.

One of the websites responsible is Craigslist (www.craiglist.org), a free listings site that has become a global phenomenon and a thorn in the side of everyone trying to make money from classifieds. Started in 1995 by Craig Newmark, the site has become a worldwide network offering classifieds for every kind of product and service imaginable.

Now trading in 450 cities across 50 countries, it attracted 24.4m unique users in December, a figure that puts it in the league of the world’s most popular destinations, alongside the likes of Facebook and Wikipedia; it generates an astonishing 9bn page impressions a month.

For all the talk of Web 2.0 – defined by stunning interfaces, graphics and video – Craigslist has barely changed since its last facelift in 2001. Eschewing the rules of modern web design, its interface is a sea of text and underlined blue hyperlinks alongside a simple search engine. Nor is it a big operation: the site is run by a tiny team of 21 full-time staff from a small office in San Francisco.

The site’s main draw is that it is free. Nor does Craigslist carry any third-party advertising, instead generating relatively modest revenue by charging for a small number of listings. For those buying property classifieds in its 11 biggest cities – including New York, San Francisco and Los Angeles – there is a one-off $25 (£12.8, E17.2) listing charge; for everyone else, it’s entirely free.

While Craigslist has been profitable for some time, with revenues of around $25m a year, it could generate over $500m if it were to open its community of millions up to advertisers. But it is a source of much frustration to online advertisers that Jim Buckmaster, Craiglist’s chief executive, has little interest in monetising his huge audience, arguing that it would go against the company’s public service values and non-corporate ideals.

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