How Does Craigslist Make Money?
How does Craigslist make money by just letting people post their everyday advertisements and job postings.
Before we jump into answering that, let’s take a step back and understand Craigslist’s business model. Craigslist is an American classifieds website that lets millions of buyers and sellers interact through its platform. It’s primarily used by and is popular with Americans as they are more familiar with it, but it is also available all over, in different parts of the world.
Its headquartered in San Francisco, United States and was founded in 1995 by a guy called Jim Buckmaster.
Craigslist has been one of the highest earning websites over the past many years, which makes us wonder, how does craigslist make money?
The company claims that it doesn’t work for profit. It only employs as many as 30 people in the organisation. Still, it has been quite successful, and revenues are crossing sky-rocketing figures, such as 694 million dollars.
So let’s dive in to understanding what is Craigslist’s business model and how does Craigslist make money.
Check How Does Netflix Make Money if you’d like to know.
What is Craigslist Business Model?
Craigslist is a classifieds website that allows people and companies to send in their advertisements for postings. Think of it like a notice board for advertisements from the neighbourhood.
But in this case, the neighbourhood is not limited to the houses and streets nearby. It extends to the whole city, country, and even the world in some case.
Remember the times when we used to get newspaper, and the publication charged people for their ad listings? Well in Craigslist’s case, the have a free option, where the ad might get lost in tons of other ads being posted.
So in order to address that, Craigslist can charge money for a featured ad from advertisers who are willing to pay the price. It also charges a fee to post an add in specific categories.
But why are companies willing to pay? Because Craigslist has built its credibility and today has the power of attracting millions of visitors on the platform. And this becomes a very attractive opportunity for advertisers.
Now let’s dive into understanding how Craiglist makes money.
How Does Craigslist Make Money?
Out of the number of ways that Craigslist can make money, they primarily do it through charging for ad platforms. Here are all the potential strategies Craigslist monetizes its platform:
Craigslist Charges For Listings
Since now you understand Craigslist’s business model, you know they charge for certain ad listings on their platforms. That’s one of their main monetization strategies.
- For instance, if you are listing an apartment in New York City, Craigslist charges 10 dollars for it.
- Another example – It costs 75 dollars for a job posting in San Francisco.
- Here’s another one – Craigslist charges $25 for job postings in six big states of the USA.
Even though their basic ad posting service is free, but Craigslist has identified potential categories that attracts companies and businesses, or people with buying power.
This is the only way of how Craigslist earns money.
Craigslist can make a lot more revenue through it’s platform, but the company does not seem to have any further plans of monetization.
The owner says that he wants maximum convenience and comfort for the users, and that profit is not the primary aim of Craigslist. The money that the platform earns is just used to pay off the operational expenses only.
Other Potential Income Opportunities that Craigslist Doesn’t Use
Even though there could be other ways through which Craigslist can make money, but they don’t seem to want to commercialize the platform. Here are some more ways that Craigslist can make money, but they choose not to:
1. Display Ad Networks
For those who don’t have any idea about advertising networks; ad networks are advertising platforms that connects advertisers and content creators. The content creators can make money by placing the ad networks code on their website
Craigslist does not use any ad network to generate revenues. If you look at the homepage of Craigslist, you will see a straightforward web page with just directory listings and categories. It’s more like the Google Search page.
It still has an old design, which makes you wonder how does Craigslist make money through such a simple page. Well they don’t place visual ads through any ad networks for sure. And that’s because they want it to be a platform that doesn’t exploit the users.
Even though they could have minted money, being one of the first classifieds website on the internet.
Craigslist could have charged money from large corporations for sponsorships of specific pages. But that also is against their philosophy.
3. Job Engines
Craigslist could also have gone into maximizing it’s presence by offering corporations a job application engine for their talent management and HR departments.
So That’s How Craigslist Makes Money…
Craigslist has a lot of potential to earn from ad networks and other opportunities too. However, they choose not to, and we respect their reasoning behind that decision.