eBay set to challenge Web underdog

"There are other sites, like Google Base, with nicer features for users, but they haven't dented Craigslist."

Greg Sterling, of Sterling Market Intelligence

Microsoft Google tried. Now it's eBay's turn to see if it can dethrone the Web's most spectacularly successful underdog, Craigslist.

The Kijiji unit of eBay, a free classified ads service covering 13 countries online, was introduced in the US in late June, and has already achieved modest success in some important markets, including New York. Its vice president and general manager, Jacob Aqraou, said it would market itself far more aggressively this year, and was further refining its service in hopes of putting a dent in Craigslist's huge market-share lead.

So far, Kijiji has done fairly well, climbing to second among all classifieds sites in the US, with 1.8 million visitors in November, according to Nielsen Online. That is far behind Craigslist's 20 million US visitors, and the average amount of time each Kijiji visitor spent -- three minutes -- suggests these visitors were still testing the waters. (Last month, the average Craigslist user spent more than an hour on the site.)

Like Craigslist, Kijiji is subdivided into geographic categories, with 262 cities represented in the US. In New York, the fastest-growing market for Kijiji, the site drew more than 18,000 ads last week, triple the number from July.

Since its debut in early 2005, Kijiji has surpassed Craigslist in many foreign markets, including in some parts of Canada. In the nine foreign markets that Nielsen Online measures, Kijiji led all other classified sites last month, attracting about 9 million visitors to Craigslist's 400,000.

Aqraou Kijiji was meant to appeal to consumers who were uncomfortable with Craigslist's laissez-faire approach, where ads for sofas and child care discussion boards are a click away from offers for sadomasochistic encounters and prostitutes.

"We're focused on the young family model," he said.

As such, the service deletes ads with adult content and pictures that show too much skin, among other things.

And Aqraou said most of Kijiji's visitors had come from word-of-mouth referrals, it has spent an undisclosed amount on ads, including some aimed at people who searched online for Craigslist-related terms like Craig Newmark, the company's founder.

Last month Kijiji introduced Spanish-language options for Miami and several Texas cities, and the company said it would probably introduce similar services for American cities with large populations of Polish, French and Chinese citizens, among others.

Unlike Craigslist, a 25-employee company with a public-service mission, Kijiji's top priority is making money. Next year, the site will begin offering marketers the chance to post ads throughout the site, a strategy that has paid off in other markets. Revenue from eBay's classifieds category jumped more than 100 percent in the third quarter last year from the same period in 2006, making it one of eBay's fastest-growing units. (EBay does not disclose overall revenue for its classifieds unit.)

Newspapers other companies that offer paid classified ads are watching the expansion of Kijiji and Craigslist closely. Atwood said Kijiji's approach could be the model of the future, where classified listings are seen as just another category of free editorial content to surround with paid advertising.

Small advertisers -- the most logical source of revenue for classified sites -- are quickly joining the Web. Borrell Associates estimates that local advertisers spent about US$8.5 billion online last year, a 42 percent jump from 2006. Atwood expects an increase of 48 percent next year, to about US$12.6 billion.

Craigslist to shun the advertising approach. Craigslist considers only those features that users request, and advertising does not qualify, said the site's chief executive, Jim Buckmaster. It charges fees for employment ads and apartment listings from brokers in certain markets like New York, but says is only to keep brokers from flooding the site with repetitive ads.

Buckmaster the company was working instead on incremental refinements to the service, like its own Spanish-language tools for users in southern Texas, which Craigslist was developing before Kijiji entered the US market.

Even without such features, though, Craigslist added nearly 7 million users last year. That should be enough to give pause to Kijiji and other competitors, according to Greg Sterling, of Sterling Market Intelligence, an advertising consultancy.

"There are other sites, like Google Base, with nicer features for users, but they haven't dented Craigslist," he said.

"The more competition there is, the more it reinforces Craigslist's users," Sterling said. "So Kijiji is going to have to take a long-term view if they want to gain any traction."