When Will Online Classified Ads Grow Up?

Oops! The Commerce Bank Five Boro Bike Tour sold out in New York City. For nearly a year, I had planned to join two friends on the 42-mile ride that takes place this weekend. Trouble is, the event reached capacity by early April, well before I sent in my entry fee, catching me and other cyclists off guard.

The bike tour (it’s not a race) means a lot to cycling enthusiasts. We get to roll through neighborhoods impossible to visit any other day — traffic free.

Determined to ride this ride, I scoured the Internet in search of someone selling their tour registration. My first stop: classified ad and auction sites (Craigslist, eBay, and Freecycle). No hunt would be complete without plugging “five boro bike ride” into the engines. My search led me to vibrant niche communities serving interests ranging from cycling enthusiasts to coral reef aquarium owners. (Fish, optional.)

My best bets: eBay or “Mike” at Manhattan Reefs, the site for coral reef enthusiasts. While bidding on eBay reached $300 a ticket, Mike sold his for a mere $75.

My experience got me thinking about online classified ads. Why don’t more sites take advantage of the Web’s interactivity and incorporate online video, tie into social networks, and add other features to complement plain-old text listings with photos?

Changes Are on the Horizon

While employment, real estate, and autos have long dominated the online classified market, other vertical categories are set to take off, predicts the Kelsey Group. Those include local healthcare, legal services, and salons. Verticals will account for an estimated $100 million in revenue this year, and could soar to $5.6 billion by 2012, the research firm says. It defines vertical ads as those that possess more interactive features and are found on Web sites that relate to the products advertised.

Online classified advertising, now at $3.9 billion, stands to reach $9.1 billion by 2012, Kelsey predicts. Examples include text listings on Craigslist, where ads are grouped into classes such as used cars and apartments. Last year, eBay joined the fray, activating its international classified ad site, Kijiji, in the United States.

Craigslist’s success can be attributed to many factors, especially its decision to host most ads for free. Listings — when written with SEO (define) in mind — turn up high on a SERP (define). Plus, ads can be posted and removed quickly, enabling shoppers and sellers to respond to changing market conditions (e.g., hundreds or thousands of cyclists looking to buy a Five Boro Tour registration kit.)

What Does the Future Hold?

Vertical classified ads will advance as more tools become available for businesses to build their own sites, predicts Peter Krasilovsky, Kelsey Group’s program director of marketplaces. He anticipates niche and hobbyist communities will be among those leading the way, propelling traditional businesses to examine how online classifieds fit into their advertising strategies. After all, there are 5,500 different classifications in the Yellow Pages.

A major change in online classifieds came a few years ago. “Classified ads were first in a walled garden. Whoever had the proprietary content would win. And they held it very tightly,” said Susan Pate, chief executive of AdMission, an advertising platform. Those walls are now tumbling as sites aggregate listings from multiple sources and make them searchable.

As more sites made listings available for free, clutter became an issue, observes Lockhart Steele, president of Curbed Network, a collection of real estate sites. Craigslist competitors, he said, “tend to get crapped up with garbage before anything useful happens” because of spam and other misguided posts.

In June, Curbed will add some paid featured “QuickListings” to its blog; those listings will include stats and photos about properties. “Not broker babble,” Steele promised. For Curbed readers, listing deals can be editorially more interesting than some editor-written blog posts. All paid listings, including those that don’t appear in the blog, will be aggregated and posted elsewhere on Curbed.

Covering a broader swath of the real estate scene are Zillow and Trulia, which upped the ante in the online classified world. These sites showed that just having listings isn’t enough.

With data about home values as Zillow’s foundation, property owners can compare the value of their homes to others, update their home profiles, add photos, and let prospective home buyers know the house is available — if the price is right. And, Trulia emphasizes stats and trends, showing lists such as the cities with the biggest changes in median list prices.

AdMission is working to advance classified ads on another front, developing technology to marry product listings or inventory with rich media display ads. So one person searching for a Ford Taurus and another searching for a Ford F-150 truck in the same city would only see relevant listings and associated images.

With all these changes underway, some advertisers are confused — possibly paralyzed — and are sticking with plain old text ads for now. That’s the easy way out.

Meet Anna Maria at ClickZ Specifics: Online Video Advertising on July 22 at Millennium Broadway in New York City.

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