It’s taken some time, but the price of a basic online classified listing will soon be free. A number of prominent players in the classifieds industry have begun to embrace this view by offering free listings to their customers. A few months ago, eBay rolled out free classifieds internationally as part of its new Kijiji service. Yahoo recently launched free classifieds in over 20 categories for private party sellers. Tribune just launched free classifieds in 6 cities under its Recycler brand. Now Knight Ridder is offering free online classifieds in 22 of it 27 markets.
There actually is a business model for free
The good news is that the cost of an online listing is near zero. Using a self-serve model, fulfillment is free and the incremental cost to serve the listing (i.e., bandwidth, servers) is almost free. This, in combination with the tremendous success of Craigslist, makes it increasingly hard to ignore this downward price pressure. What’s needed is confidence in a revenue model for free listings.
I believe that an upgrade-based model will soon emerge. In this model, the free basic online listing will act as a starting point. Instead of spending marketing dollars looking for advertisers, a classifieds provider will have clients coming to the front-door for free. The sales challenge will be in convincing them to buy “merchandising” upgrades that will make their listings more effective. These will include listing upgrades ( e.g., in the case of a real estate listing, a virtual tour), power seller upgrades (e.g., features for car dealers that wants to easily upload and monitor scores of listings); placement upgrades (e.g., option on how and where the listing is displayed, including placement in a print publication). The cost of these upgrades will be based on performance – i.e., the more effective they are in helping sellers, the more they will cost.
This type of model also better supports pricing segmentation. A classifieds provider can simultaneously meet the needs of both professional sellers as well as private party sales. A restaurant may only elect to place a free job listing for a dishwasher (or a person with a room to rent) but the hospital looking for RNs (or the landlord for an apartment complex) will spend money to generate more effective leads.
Free changes everything
Free classifieds listings also do more than create a widespread change in an industry business model. More significantly, free classifieds serve to increase overall consumer usage of the category. When listings are free, consumers use them a lot more often. This is especially true with merchandise for sale. Thinking about selling or promoting something -- why not list it?