Craigslist Rivals Struggle to Succeed in Web Classified Space
It didn't work for Microsoft, but Wal-Mart is going to give Craigslist's free listings approach a try. Meanwhile, advertisers sit on the sidelines, waiting for dominant sites to emerge.
As print newspapers’ classifieds ad revenue plummets, more money for auto, real estate, jobs, and garage sale ads flows online. But the big names on the Web still haven’t managed to kill off free classifieds king Craigslist.
Analysts who follow Web classifieds closely agree the space is in flux. Off-line powerhouse Wal-Mart has gotten in the free listings game, and Microsoft has shuttered its own would-be Craigslist killer.
No clear winners have emerged among the vertical classifieds players — the Yahoo Autos, CareerBuilders, and Zillows of the world. And though having the most listings is a plus when it comes to driving traffic, it doesn’t guarantee users won’t look elsewhere, too.
“Classifieds is a field in turmoil,” said Peter Zollman, founding principal of Classified Intelligence.
The space may have been too tumultuous for Microsoft. The company gave up on its free classifieds site, Windows Live Expo recently, and will discontinue service starting July 31. According to Nielsen Online, the site didn’t garner enough unique visitor traffic to make it on the measurement firm’s reporting radar in May.
“Live Expo was a feeble attempt because Microsoft never really put its power of promotion and marketing and operations behind it, and so it never got critical mass,” suggested Zollman.
Local media analyst Greg Sterling thinks Microsoft should have toughened it out. He said Microsoft had the resources to subsidize the operation, which could have helped in its efforts to build up local advertiser offerings. “They should have taken a long-term view of it and let it develop organically,” he said.
Another would-be Craigslist slayer, Google Base, garnered about 743,000 unique visitors in May compared to Craigslist’s 26.7 million, according to Nielsen Online. While most listings on Craigslist are free, the site charges for some real estate listings.
“I think they have not known exactly how to position that product,” said Sterling of Google. Now, the company seems to be focused on using it as a service for individuals, small businesses, and firms with large listings feeds such as Cars.com and CareerBuilder to post ads or upload data that can then be found on Google’s main search site. This makes traffic to the site less relevant.
“Google Base has brought more traffic into its partner sites and has helped the classifieds category at this point,” said Peter Krasilovsky, Kelsey Group’s program director of marketplaces. “But it is not in itself a dominant player in any category.”
While Craigslist clearly leads as a destination for all sorts of classifieds, from collectibles to casual encounters, some think a new entry could attract lots of users without necessarily competing with Craigslist. Wal-Mart recently paired with classifieds ad aggregator Oodle to make its autos, real estate, jobs, tickets, and other items listings available on the retail site.
Walmart.com draws “a very different audience than Craigslist,” said Sterling, “So they can co-exist” rather than compete.
One of the primary reasons for Craigslist’s success is its communal sensibility; regular users feel a connection to the site and its other visitors. Because Wal-Mart’s brick-and-mortar stores tend to engender a sense of community in some places, some analysts believe its classifieds site could spur something similar online.
Oodle, which aggregates listings from several online classifieds sites, stands to score a significant amount of traffic through the relationship. The deal also represents a trend by which classifieds companies partner with publishers to attract eyeballs. Yahoo has dedicated a lot of resources to its HotJobs distribution relationships with online newspaper publishers, for instance. Together, Yahoo Autos, HotJobs, and Real Estate grabbed about 19 million unique visitors in May, according to Nielsen.
Rather than rely only on their destination sites to build traffic, other classifieds companies “will have to form partnerships with local media companies to get cachet,” suggested Gordon Borrell, president of local media research firm Borrell Associates.
Kijiji, another free Craigslist-style site launched by eBay in the U.S. about a year ago remains a “small factor in the U.S.,” according to Zollman, who added, “but I would not underestimate it.” Kijiji drew about 2.5 million visitors in May, according to comScore.
The success of Craigslist and free listings push by others indicates providing free listings and monetizing through charging premiums for added features may be the wave of the classifieds future. “People aren’t going to be making as much money over time on listings,” Borrell said. “What they’re making money off of is the advertising that goes around it or the additional features. The ones charging for listings are operating on a dying strategy.”
