Yago Paramo

Automotive Entrepreneur

Is Craigslist’s charge change positive or negative?

For how we understand the world a “charge” a tax or any new form of payment can’t be hardly justified as positive but I think we need to look at where is CraigsList today and what could possibly happen once the change is implemented.

The fact that CraigsList didn’t charge for postings made the flow of cars into their system a race for volume of postings. The dealers willing to invest the most time and or money seemed to have an advantage over the rest as their vehicles will show on the first 100 ads or they will take over a search. That race brought two problems; first it forced the rest of the dealers to either leave or also escalate their posting efforts. Dealers had to post more to remain relevant. But the resulting and second problem brought by this was that searches became less relevant and frustrating to consumers as a search for an “Audi A6″ will bring the same car from the sale dealer 45 times.

Escalation of postings created a problem for customers-poor search results, a problem for CraigsList-system overload, a problem for the dealers-increased cost to post volume, and a problem for companies building the systems to post-hard to keep up with volume of postings required.

In this case, for the most part, free access resulted in creating problems that only helped one person in this equation: A dealer willing to over spend.

The $5 fee will do a few very positive things right off the bat:

1) It will limit 3rd party lead companies from posting “fake” cars to create leads then sell them to you indirectly. It will limit 3rd party lead companies from posting your own cars (yeas, your own cars) to create leads then sell them to you directly.
2) It will limit low cost systems that for example were automatically posting one low quality ads (just one image). If you are going to pay $5 you better put a relevant ad.
3) It will stop systems posting on 24h cycles (easier to post at 4am for example) which only purpose was to show dealers that they had hundreds of ads. If you are going to pay, post during a relevant search time (business hours for example).
4) It will stop dealers from posting their inventory multiple times per day (this stops excavation of volume).
5) ++

What we are going to see on December is a leaner, easier to search, and more useful for customers CraigsList system.

 

A few things dealers should consider:

 

Positives:
Craislist still a great alternative or complement to Autotrader and Cars. I’m not saying is better or worse, each market is different for that. What I’m saying is that if you are already on Autotrader and Cars, where else can you advertise that has 50 million users?

This change will effectively eliminate half of the ads and make a better site, the customers remain the same. The dealers left advertising on CraigsList may see a vast increase in leads.

The cost will remain very affordable. For what I understand with the information we have today this is going to be $5 per car per month. 100 cars will cost $500 a month. You still have to pay (or invest the time/effort) posting the vehicles, but you have to post a lot less to be relevant. I believe the increase of cost on one end will offset the decrease of cost on the other end.

Negatives:
CraigsList now needs to be managed. If the cars remain posted for 30 days as the information they have released suggests, the cars need to be manually marked as sold from their site.

Cars may be reposted after 48 hours, so a dealer willing to spend some money could potentially still hog the system.

Ads don’t have links anymore which to me was a great value based on the traffic that I saw from CraigsList to the dealer’s websites. I hope they will reconsider this as the ads are now very HTML limited and car buyers want to see as much information as possible.

A note about payment:
In order to ay for the ads you need to use a credit card with CraigsList. You can buy one ad at a time or pre-pay bulk. This change makes this system similar to Google’s Pay-per-click. You pay for the ads and a management fee to the company managing this for you. One difference is that Google provides a great system to manage the ads, for CraigsList a vendor has to build a system and maintain it to do this. Be careful to whom you give your credit card to out ads on CraigsList and that the company you do so is registered in your state to do business.

I hope this helps with all the unknowns but we will know a lot more in a few weeks. Last here is some information that CraigsList has released about the changes:

$5 fee for “Cars/Trucks by Dealer” ads starting 12/3 – FAQ

Q. What is happening on 12/3?
A. Ads posted to “cars/trucks by dealer” for CL sites in the US will be charged $5 per ad.
Q. How long will paid car/truck ads last? Can they be edited? Renewed? Reposted?
A. 30 days. Live ads can be edited. No renewals. Reposts are $5.
Q. What forms of payments will be accepted?
A. VISA, Mastercard, Amex will be accepted as part of the posting process for car/truck ads.
Q. Are volume discounts, flat rate, or monthly “all you can eat” plans available?
A. No. $5 per posting. One vehicle per ad.
Q. Can I purchase a block of postings in advance?
A. Yes – blocks can be purchased by paid account holders. Sign up here
Q. Is monthly invoicing available?
A. Not at this time.
Q. Will a bulk posting interface be available?
A. Yes. Large volume posters can request bulk access ($5 per ad) at ctd@craigslist.org (please include name and phone number)
Q. Is a paid posting account required?
A. No, but they can be helpful for volume posters. Sign up here.
Q. Can ads include hyper links, templates, and external images?
A. No. Please include all relevant information for the specific vehicle being sold in your craigslist ad.
Q. Will paid ads be subject to flagging?
A. Yes, but ads will be reviewed before any removals take place. TOU violations will not be refunded.
Q. What happens if a dealer posts in “by owner” to avoid the fee.
A. They will be subject to ad removal and other remedial actions. Please flag dealer ads you see in “by owner.”
Q. What will happen to ads in this category posted before 12/3?
A. Ads posted prior to 12/3 won’t be renewable (and will be subject to removal) after 12/3. Reposts will cost $5.
Q. What if I have additional questions or want to comment?
A. Please send questions and comments to ctd@craigslist.org

Yago Paramo
CEO
PGIAuto.com / DealerLab.com
yago@pgiauto.com

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