Businesses that have long relied upon classified advertising in newspapers are starting to experiment with Craigslist, a free online bulletin board that is expanding its reach in Hawaii.
Craigslist.org offers free classified advertising in all 50 states and 35 countries. More than 10 million people use the site each month to find practically anything -- cars, apartments, jobs, even sex.
With 3 billion page views per month, Craigslist is seen as a growing threat to newspapers but a cheap and active marketplace for many small businesses.
Frank Caliri, co-owner of Auto Buyers & Sales in Waipahu, started using Craigslist last June and now buys and sells three to four cars on it every week.
Because his free ads were so successful, Caliri said he stopped advertising in the free-distribution Pennysaver, published by The Honolulu Advertiser, and pocketed the $800 to $1,200 he used to spend every month. He still spends about $1,500 a month on ads in the daily Advertiser.
"It's easy to do Craigslist and it's free," Caliri said. "There's not a negative associated with it."
Since starting in Honolulu in November 2003, Craigslist has fast become one of Hawaii's busiest online communities. In December, there were close to 24,000 posts on the Honolulu Craigslist site; that's up from about 5,500 a year earlier. And Craigslist says it receives 15 million Honolulu page views a month, far ahead of any other local media site.
So far, Craigslist hasn't taken a serious bite out of local newspaper revenue. As the state's largest daily, and with the most extensive classifieds, The Honolulu Advertiser stands to lose the most if free online ads gain traction.
"It hasn't had a measured impact on our classifieds at this point, although we do keep track of it," said Mike Fisch, president and publisher of the Advertiser. "Certainly any new services that compete with us is something that we watch carefully."
Fisch said classified advertising in the Advertiser has grown in each of the last three years, primarily because of the reach of its Sunday edition. In each of those years, overall advertising revenue grew between 5 percent and 7 percent, he said.
Nationally, newspaper classified advertising is a $16 billion business and typically accounts for about a third of a daily newspaper's revenue. Newspapers have steadily moved into the online classified business with sites like Cars.com, Careerbuilder.com and Monster.com, but a recent report by the Pew Internet & American Life Project and comScore, which monitor the effects of the Internet on America, says Craigslist is still the most popular classified advertising site on the Web.
The report said Craigslist usage grew 156 percent from September 2004 to September 2005.
Employment ads at risk
In the San Francisco Bay area, where Craig Newmark started his Internet bulletin board in 1995, analysts say Craigslist has moved at least $50 million worth of classified advertising out of the daily papers.
"If people are going to get results and they can pay less, that's where they're going to go. That's certainly why the Craigslists of the world are seeing results," said David Kennedy, vice president of marketing for the Honolulu Star- Bulletin and MidWeek. "The word will spread here too, it's just taking a little longer."
Kennedy said the Star-Bulletin and MidWeek also have seen little impact from Craigslist, but that's mostly because classified advertising is dominated by the Advertiser. Classified ads for the Star-Bulletin and MidWeek account for "nowhere near" 30 percent of revenue, Kennedy said, but he declined to give a specific amount.
Both the Advertiser and the Star-Bulletin have skirmished in recent months promoting free or cut-rate classified ads, but those initiatives appear to have been driven by traditional competition rather than pressure from Craigslist. The Star-Bulletin is preparing more online advertising as a result of the growth of the Internet, Kennedy said, and will soon start a service that allows businesses and individuals to buy and build their own ads online.
A growing number of local businesses are using Craigslist for recruitment. Employment classifieds are among the most lucrative for newspapers; a small help-wanted ad in the Sunday Advertiser, along with a posting on Careerbuilder.com, can cost $500.
Honolulu public relations firm Bennet Group Strategic Communications recently posted an ad for a new account executive on Craigslist and for the first time skipped the Advertiser and Star-Bulletin.
"We have gotten some really great qualified candidates who've approached us after our listing on Craigslist," said vice president Alyson Helwagen, who received her first response within an hour of the posting.
Helwagen said she plans to use Craigslist exclusively for job ads from now on.
A cluttered marketplace
Craigslist isn't perfect. The staggering numbers of postings are, in many cases, the result of a seller simply reposting her ad for a '99 Neon every day until it sells. Some of the categories are filled with spam from mortgage lenders, phone sex sellers, scam artists and oddballs from around the globe, and it's sometimes difficult to weed legitimate ads from all the clutter.
And in New York, Los Angeles and San Francisco, Craigslist is starting to charge for employment ads, a practice expected to spread to other markets.
After jobs, housing is the most popular section on Craigslist, which has found ready acceptance among young people more comfortable with a keypad than a newspaper.
Phil Uehisa with Century 21 All Islands in Honolulu said he tells all of his clients to post their rentals on Craigslist because, among others, it attracts military families coming to Hawaii.
"For people outside Hawaii, they don't have access to newspapers," he said. "They go to Craigslist to look for rentals."
Uehisa said Craigslist is just starting to catch on in Hawaii and he expects its use to grow dramatically.
