In 1704, newspapers were the first source of classified ads, which provided advertisers with low-cost notices divided into a variety of categories. Before the age of digital transformation, classified ads allowed an easy way for consumers to browse local deals, typically listed by private sellers.
Making purchases from print classifieds is well-known for being a tedious and time-consuming process, hence a natural shift to online was inevitable.
In 1995, this change in the market transpired and the introduction of online classified ads occurred. The leading innovators of digital classifieds which changed the world of online advertising forever were AdOne and Craigslist.
The Decline of Print Classified Ads
Prior to the introduction of online classified ads, print classifieds made up 40% of newspaper ad revenue. In the early 2000’s the internet became more readily available to households which posed a bigger opportunity for digital classifieds to reach a larger audience and thus, increase profitability. With this jump from print to digital, the figure of newspaper ad revenue reduced by over half to 18%.
The digital revolution has penalized newspapers for an outdated business model and forced them to change their business strategies with many newspapers transitioning online. However, although there has been a major decline in print classifieds, they are not obsolete yet due to the security benefits they pose through having a third party to review advertisements versus online classifieds which have been known for having issues with anonymous and fraudulent postings.
Online Classified Ad Models
As online classifieds have developed, two primary online classified ad business models have been defined – horizontal classifieds and vertical classifieds.
The first model horizontal, also known as general classifieds offers advertisements across a wide variety of categories in one space. Industry leaders in the horizontal classified space include Craigslist and Groupon in the US, Gumtree in the UK, and Kijiji in Canada.
The second model, vertical classifieds, focuses on one segment of the market, for example, automotive, travel, or real estate. Industry leaders in vertical classified advertising would be Cars.com in car classifieds, Zillow in real estate classifieds, and Booking.com in travel classifieds.
While both classified advertising business models continue to evolve, general classifieds are forecasted to obtain the higher market share in 2022, with the US market average spend per internet user in general classifieds projected to be $1.17 US dollars. It is predicted that general classifieds will become a network of interlinked verticals by assigning dedicated vertical teams to each country. This also poses an opportunity for the general classifieds market to acquire independent verticals.
Technical Advancements in Classified Ads
The Rise in Social Selling
In the early 2000’s the popularity of social media was on the rise. This created an opportunity for social media companies to monetize their platforms. Facebook developed one of the first social classifieds advertising spaces, “Facebook Marketplace” in 2007 which ultimately failed until its relaunch in 2016. This enabled users to post classified advertisements for a variety of products and services for free.
Social classifieds began to grow and had to incorporate many new and innovative features to keep up-to-date with modern trends. Some of these features include strong search capabilities, reviews and testimonials, links to further products, and streamlined checkout services.
Social classifieds remains a growing niche however, with a lack of buyer protection and fraudulent advertisement complaints, online classified sites still remain a popular and more trustworthy option for many customers.
The Future is Mobile
With an estimate of over 6.64 billion smartphone users globally in 2022, searching online classified sites on mobile devices has become a growing trend. With hundreds of mobile apps specifically built for classified advertising on smartphones, the competition has increased amongst the app owners competing for the same audience.
Moreover, the COVID-19 pandemic has also had a major impact on the classified advertising mobile market with global app revenue increasing by 32% in Q3 of 2020 reaching over $29 billion US dollars. This has further progressed enhancements in the process of booking digital classified advertisements. Displaying classified ads through mobile devices can offer technical benefits such as cross-device compatibility, personalization opportunities, and augmented reality features to name just a few.
It is further estimated that in 2026, in the classified advertising industry, 46% of total ad spend will be generated through mobile devices. This presents major opportunities for many businesses across both general and vertical classifieds to increase engagement with millions of smartphone users that are willing to shop and engage through classified ads.
Over two decades, classified advertising has progressed from offline newspapers to mobile apps. The industry continues to grow and develop through technological advancements and increased competition with thought leaders such as Amazon, carsales.com.au, Craigslist, and Groupon leading the way. It is crucial for classified businesses to continue to evolve and keep up to date on these latest trends and technological developments in order to stay ahead of newer media platforms entering the advertising market.