Craigslist Costs Newspapers $65 Million in Ads Each Year

A popular online community for selling goods and finding jobs and housing is diverting US$50 million to $65 million annually in classified advertising from newspapers in the San Francisco Bay area, according to Classified Intelligence, a consulting firm in Altamonte Springs, Florida.

The firm released a report this week, a copy of which has been obtained by TechNewsWorld, consisting of articles and essays about Craigslist, an online community that began in the Bay area and has branched out into more than 70 U.S. cities as well as several metropolitan areas overseas.

In one of the report's essays, Bob Cauthorn, who used to run interactive media operations at the San Francisco Chronicle, noted that in one week alone in November, Craigslist had 12,200 paid and unique job listings, compared to 4,900 for the online editions of the Chronicle, Oakland Tribune, San Jose Mercury News and Contra Costa Times.

Migrating Ads

"The net financial impact of the migration of so many jobs to Craigslist is something on the order of $50 million to $65 million lost to print newspapers each year," Cauthorn wrote.

He painted a similar picture for rental advertising. At any moment in time, there are more than 15,000 Bay area rentals posted on Craigslist. During the target week in November, the Chronicle had 2,500 online rental postings and the Mercury News 2,990.

"That is a far cry from 15,000," Cauthorn noted. "If you were looking for a rental in the Bay area, why would you go anywhere but Craigslist?"

Newspapers Can Be Ignored

Chronicle spokesperson Yung Ahn told TechNewsWorld the newspaper hadn't seen the Classified Intelligence report so could not comment on its contents.

Craigslist uses a combination of free and paid postings to drive traffic to its city sites. In the Bay area alone, it has 500,000 visitors and 150 million page views a month, according to Classified Intelligence.

"In the Bay area," Cauthorn wrote, "if you're looking for a job, a house, an apartment; anything to put in that house or apartment; basically, if you want anything a classified market can provide, you don't need to go anywhere but Craigslist. Indeed, if you want to be sure you've seen it all, you must use Craigslist. And you can pretty safely ignore the print newspapers."

Craig Delivers

The former Chronicle executive contended that Craigslist is so effective that even its competitors use it when they're looking for talent.

"When the Chronicle's human resources department needs to fill jobs for the newspaper, it frequently advertises on Craigslist because its own recruitment ads deliver unsatisfactory results," Cauthorn wrote. "Knight Ridder Digital, down the road in San Jose, also recruits through Craig's. You advertise where you'll get results. Craig delivers."

Service Obsession

Cauthorn explained that on its surface, Craigslist is indistinguishable from other similar sites on the Web. What sets the organization apart from those other sites, though, is its customer service.

"Every morning, founder Craig Newmark, CEO Jim Buckmaster and the 12 other people behind the site awaken and try to help their customers get on in the world," he wrote. "Craigslist just works for customers. Brilliantly."

To say Newmark takes customer service seriously is an understatement. "My title is customer service rep and founder," he told TechNewsWorld. "I demoted myself from management, after getting people who are better managers than me. It's part of my commitment to do customer service forever for quality purposes."

Moral Compasses

Success like Craigslist's -- Classified Intelligence principal founder Peter M. Zollman estimates the service will gross $10 million this year and $14 million in 2005 -- is bound to attract attention, and money. This summer, eBay (Nasdaq: EBAY), a publicly traded company, garnered a 25 percent stake in the folksy outfit.

Asked if that move by eBay had any impact on how Craigslisters perceived their community, Newmark responded: "At first, there was some skepticism, which is a good thing. And now, people see that the news is that there's no news. We haven't changed the way we do things.

"Both companies have a pretty good moral compass and our adherence to our moral compasses reinforces each other," he added.

Although the Classified Intelligence report focused on Craigslist's impact in the Bay area, Zollman asserted that the service has had an impact in other cities, too. "The only place that we quantified it was in the Bay area, but it is having a significant impact on employment advertising in lots of markets," he said.