May 11th, 2007

Facebook Classified Ad Offering Deals Another Blow To Newspapers

by Scott Karp

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It’s sure rough trying to charge for a service that other businesses are offering for free. Just ask any newspaper exec. With 20/20 hindsight, it seems inevitable that the web would be the perfect platform for free classified ads, but no newspaper exec in their worst nightmare could have imagined Craiglist, which has done huge damage to newspapers’ classified ad business. Now there’s a new disruptor in the classified ad market — Facebook.

Again with perfect hindsight it seems inevitable that Facebook would offer free classified ads, given the huge advantage that the closed network offers to establishing trust between prospective buyers and sellers. Ebay demonstrated long ago how important trust is to online transactions. Facebook users can post classified ads to their trusted networks based on friends or affiliations, most notably schools, but increasingly companies and other groups as well.

Imagine the impact this could have on housing ads, such as searching for a roommate. Neither Craigslist nor newspapers can compete with prospective roommates being able to size each other up based on their Facebook profiles.

Facebook could also achieve a Google-like disruption by offering the ads for free to increase Facebook usage and monetizing that usage in other ways. According to Facebook’s Zuckerberg:

“We don’t try to lock people up or take more of their time, but we try to provide them with easier ways to do the things they want to do on the Internet,” said Mark Zuckerberg, Facebook’s founder, who noted that more than 60 percent of the site’s active users log in each day. “If we can provide people with efficient tools, they will use the site more.”

It also seems inevitable now that social networks are the perfect platform for all online transactions that involved connecting individuals, and even transactions that involve connecting companies.

If I were a newspaper exec, I’d thinking long and hard about how to create a social network around the one element that newspapers still have claim to — locality. People who live in a city or town have an instant connection. Newspapers should focus on how the help people in their communities leverage that connection.

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Topics: Facebook | Newspapers | Social Media | Social Networking

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  • Facing even more competition are Classifieds under Web 2.0 banner. It'll be interesting to see how it pans out
  • Derick Harris
    Surely the ultimate nightmare for newspapering is when, not if, an enterprise model makes it feasible to offer DISPLAY ADS, free to anyone who wants to place the ad.

    This is doable right now.

    The issue (to me at least) is not how to do it; that has been solved. It is getting people to understand and appreciate the sheer doable-ness of local...that's right...local enterprises tied together in a huge network that offers completely free display ads to local merchants, not unlike the free weeklies that have emerged in the past two decades.

    This drives the last nail into the coffin of the localpapers.

    I have been thinking about offering, say, a $1000.00 reward to anyone who can prove that it can't be done. I of course CAN objectively prove with dollar and sense figures that it's doable - and profitable.

    A nice terrain upon which to be thriving.
  • And the recruitment business that Facebook is finally getting seriously engaged in (as opposed to linking out to Jobthing) threatens another key newspaper revenue stream. It'll be interesting to see if Google's experience with Belgian newspapers will start to be replicated as, over a period of years, Facebook et al continue to hoover up fairly static streams of business.
  • Jeff
    Actually, the Marketplace feature was built in-house at Facebook. The Oodle sponsored group is totally separate and unrelated.
  • "one element that newspapers still have claim to — locality"

    You're right. Locality is a huge deal. I think every newspaper should start it's own free inclusion Yellow Pages, then charge for classified ads from businesses looking to sell an item or service, promote an event, or hire someone.

    Now here's what interesting about Facebook that newspapers should learn from. Zuckerberg did not have the new service built in-house. Instead Oodle white labeled it for Facebook.

    Newspapers need to start partnering with these small companies and integrate their services into their sites.
  • Thanks Scott - this is incredible - I can't think of a more intelligent move for Facebook.

    And I'm looking forward to using the service. Facebook is already killing MySpace with its vastly improved architecture. Craigslist suffers from many of the same pitfalls - poor design, a lack of trust.
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