A classified ad industry research firm says Craigslist could "easily" rake in $100 million with a few minor changes to improve service.
The company, Classified Intelligence of Altamonte Springs, Fla., estimates Craigslist's 2008 revenue will be about $81 million this year, a figure Classified Intelligence Principal Peter Zollman called "amazing" in light of the laid-back operations of the mostly-free classifieds Web site.
"They charge in 11 cities for recruitment ads," said Zollman. "In 10 of those cities, the ads are $25. In San Francisco they're $75. They also charge a paltry $10 for apartment listing by brokers in New York City. Believe it or not, all of that adds up to $81 million in revenue this year."
Zollman said Classified Intelligence did its first revenue report on Craigslist in 2004. He said the estimates are, for the most part, crafted simply by counting Craigslist ads and multiplying that number by the appropriate cost per ad.
The company tries to take into account some variables, such as economic conditions, said Zollman. He said the most fascinating aspect of researching Craigslist these days is watching the effect that eBay's classified site Kijiji is having.
Despite the fact that eBay owns 25 percent of Craigslist, Kijiji "is now aggressively and openly targeting Craigslist," said Zollman. "Kijiji has become a market-leader among classified sites in several markets and, although eBay owns 25 percent of Craigslist, it's not an investment that brings ROI, so eBay it set out to systematically replicate, improve on and overtake Craigslist."
While Kijiji doesn't share any revenue numbers, it does claim to be the fastest growing part of eBay, said Zollman. "But if you are growing from a base of zero or near zero, it's not hard to post huge percentage gains," he added.
While there's irony in the fact that eBay is, in essence, competing against itself, that irony pales in comparison to the way Craigslist seems to make money despite itself.
"Craigslist is legally a for-profit company but mentally and socially it runs like a not-for-profit," said Zollman. "It's very community driven. It is totally not driven by revenue and completely disinterested in the revenue, which is amazing by traditional publishing standards. But it's not a traditional publisher."
Classified Intelligence's estimates about Craigslist are being published today by the company in a report it's selling for $395. According to the report, each month Craigslist draws more than 9 billion page views, runs more than 30 million new classified ads, uploads more than 10 million new images and lists more than 2 million new jobs.
All this is managed by 25 employees working in a small, Victorian house with a "craigslist.org" sign over the front door, an image that is on the first page of the Creative Intelligence report.
The report says Craigslist's revenue is rising fast despite the company's refusal to accept display advertising or otherwise modernize its sites. Classified Intelligence estimates Craigslist's revenue was $55 million last year.
"They could upgrade," said Zollman. "They could allow multi-city search. They could improve search by changing it from keyword-only to search by certain parameters -- like "three bedrooms" or specific neighborhoods and communities."
Zollman said visiting Craigslist is like "looking at a Web site from 1996," but there's no sense in fixing something that isn't broken. "They could change the look and feel," he said. "But, for many people, that wouldn't be an improvement...It's a very dated look and that's the way they want to keep it."
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