Craig’s List Adds More Premium Fees; $5 for Auto Dealer Ads

Craig’s List is going to begin charging used car dealers $5 for 30 day placements, beginning December 3. The new fee is the latest stage in the slow evolution of Craig’s List to a partially premium site that still offers free services to individuals while charging lower-than-market rates to commercial enterprises.

The classifieds leader, which serves 486 U.S. markets and 214 overseas markets, imposed $5 fees on event tickets last year. It previously imposed $10 fees on “therapeutic” ads for sex workers and others; $10 fees for apartment listers in New York; and in some markets, $25 for recruitment ads (but $75 in San Francisco). Most of Craig’s List revenues are earned in its top 28 markets — it remains a steadfastly urban site — and the vast majority of its revenue comes from the recruitment ads.

According to tallies by AIM Group, Craig’s List currently has 3.9 million auto ads in its top 28 markets. Some of its markets (i.e. Dallas, Miami, Houston, Seattle and Phoenix) are clearly more car-centric than others .

The AIM Group suggests that just 10-15 percent of the sites used car ads might be dealer ads. Based on that estimate, we’d calculate that such ads might bring $1.95 million to $2.925 million per month, or roughly $23.4 million to $35.1 million per year. Smaller markets might bring in another 5 percent .

In our view, the imposition of dealer fees for used cars are mostly a good thing. They will likely end the surfeit of “fake” car ads designed to get consumers to the dealer. They’ll also make the ads easier to manage, as dealers currently post (and repost) ads in an effort to stay on top of the listings with high volumes of ads. The repostings have hurt Craig’s List efficiency, as the same Honda Accord EX 2013 would come up multiple times in user searchers. The imposition of apartment fees in New York similarly were something of a public service for all involved.

The downside for auto dealers is they still need to do a credit card payment for each listing, car by car. Industry analysts, however, suggests that Craig’s List might be developing a bulk signup program.

One question we have is whether the auto fees precede a similar program for real estate. Craig’s List has been aggressively blocking both auto and real estate hyperlinking to prevent third party sites from piggybacking its content.

Another question we have is the competitive threat posed by Craig’s List to car sites and other vertical sites. We have seen a growing use of Craig’s List by various vertical players (apartment managers etc.). We believe that the auto community is less vulnerable than other verticals, however, given the sophisticated search, tech and content features provided by leading auto sites.