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Are African Online Classifieds Sites Financially Viable?

You’ve probably heard of the world’s most popular classifieds site, Craigslist and UK’s Gumtree. Both sites offer buyers and sellers an opportunity to engage in a free and open market.
With the success of these sites in their respective countries and beyond, Nigerian entrepreneurs are keying into the online classifieds market. Today there are probably more than 20 classifieds sites in Nigeria offering the same service, but with different business models and technical functionality.


Some of the popular niche classifieds sites include Nairalist.com, Txtoweb.com, Chukslist.com, Nairalists.com, Gbogbo.com, Bunchbay.com, Kerawa Nigeria, and WhoGoBuy. On the other hand, some other Nigerian sites offer online classified ads listings in addition to their other products and services.
Just like other classified ads sites, they all have one thing in common: offer buyers and sellers an opportunity to engage in a free and open market.

Upside

Some of these classified ads sites were launched due to the success of the leading classifieds sites such as Craigslist, Gumtree and Kijiji. Their success can be measured in terms of the great value they provide to local businesses and individuals who wish to buy and/or sell their items online from cars to phones.
In terms of revenue, we can say that the online classifieds market has seen tremendous success. In 2007, reports estimated Craigslist’s revenue at $150 million, with its sole source of revenue from paid job ads in selected cities.
According to Wikipedia, the world’s largest online encyclopedia:
Craigslist serves over twenty billion page views per month, putting it in 37th place overall among web sites worldwide and 11th place overall among web sites in the United States (per Alexa.com on January 8, 2010), with over 49.4 million unique monthly visitors in the United States alone (per Compete.com on January 8, 2010). With over eighty million new classified advertisements each month, Craigslist is the leading classifieds service in any medium. The site receives over one million new job listings each month, making it one of the top job boards in the world. The classified advertisements range from traditional buy/sell ads and community announcements to personal ads and adult services (previously erotic services).

Downside

On the other hand, Craigslist has witnessed a great deal of criticism, notable among which is an appeal in August 2007 by Atlanta’s Mayor, Shirley Franklin to take steps to avoid unwittingly enabling child prostitution through its classified ads.
There have also been allegations by several US states that the “Erotic services” ads on Craigslist were being used for prostitution. On May 13, 2009, Craigslist announced that it will close the ‘Erotic services’ section, replacing it with an ‘adult services’ section where the postings will be reviewed by Craigslist employees, while postings to the new category cost $10 and can be renewed for $5.

Nigerian Story

In Nigeria, classified ads sites have their own stories to tell. Some like classifiedsnigeria.com have packed up shop because of a lack of the right business/marketing strategy and/or sustainable business models.
Others have had issues with using the right programming languages and the right functionality, spam-resistance and security features needed to sustain such sites. For example, WhoGoBuy (launched in late 2005) built their site using ASP initially, then migrated to ASP.net about a year later, and then moved over to PHP a few months after.
In March 2010, the founder of Nairalist.comSeun Osewa asked some very interesting questions: Should Nairalist have been packaged as a software product and not a new website? How many Craigslist(s) can Nigeria (or the world) accommodate?
The Google Buzz topic generated a lot of reactions which provided suggestions on how Nairalist can be improved. One of the best suggestions was that Nairalist should be turned into a Facebook application that allows people to put stuffs they want to sell and share it with their friends and their friends can share it with their own friends too.
Despite these challenges, these online classified sites still offer this service all for FREE, unlike some Nigerian newspapers and WASEET, Nigeria’s first weekly classified ads publication that charge a fee for posting classified ads.

Success Stories

With all of these seemingly difficult challenges, are there any success stories? The answer is yes.
According to Fritz Ekwoge, founder of Kerawa.com, one of the leading African classifieds site,
The Nigerian classifieds business is a business of trust. And trust takes years. For what it’s worth, I don’t think we at Kerawa.com are doing any poorer (financially) than other web ventures in the same space (say social networks, forums) the same age (say less than 2 years). There’s a lot of (potential) ways to monetise it beyond contextual or banner ads.
I love those geeks (software developers) trying to create online classifieds for their local communities. They’re creating a very useful service. Monetisation, like what you hear in other online classifieds markets will come. It will come when internet itself becomes very common in Africa. And when it does, the pioneers will generally have the greater share.
He also stated that when Craig Newmark started Craigslist in 1995, it took him about five years to open in another city. Being the first to market, he is benefiting from the fruits of his labour. Ekwoge believes that the Nigerian classifieds market is growing and will boom financially too as it has done in other developed countries.

Case Study 1: Kerawa

So is an online classified ads site a financially viable business in Africa? Ekwoge shares Kerawa.com’s revenue model and his success story with Kerawa in Cameroon.
In all our supported countries, we get revenue from Google Adsense, which seems to do us well. We believe the reason it is so is because we serve mostly commercial content ( jobs, stuff for sale, properties etc). This helps in that our Google Adsense inventory tends to be more relevant and lucrative since Google advertises spend more on those categories. I guess news and other non-commercial content websites don’t have that much luxury, thus poor adsense performance.
– In Cameroon, we have VIP ads. This is a major source of revenue for us here in Cameroon particularly due to the popularity of Kerawa in Cameroon. We cannot yet replicate this model in Nigeria because we are still building the audience to par with that in Cameroon.
In all our supported countries, we get revenue from Google Adsense, which seems to do us well. We believe the reason it is so is because we serve mostly commercial content ( jobs, stuff for sale, properties etc). This helps in that our Google Adsense inventory tends to be more relevant and lucrative since Google advertisers spend more on those categories. I guess news and other non-commercial content websites don’t have that much luxury, thus poor adsense performance.
In Cameroon, we equally have VIP ads. This is a major source of revenue for us here in Cameroon particularly due to the popularity of Kerawa in Cameroon. We cannot yet replicate this model in Nigeria because we are still building the audience to par with that in Cameroon.

Case Study 2: Txtoweb

I think there is something to learn from Txtoweb.com, a service that lets you send instant short messages in form of classified ads via SMS from your mobile phone straight to the web. With this strategy, Txtoweb has made classified ad listings in Nigeria a lot easier and smarter, though not safer yet.
With a N50 per message charge on each SMS classified posted on the platform from your mobile phone, I think Txtoweb’s revenue model is a game changer in Nigeria’s online classified ads market.
Developed in 2009 by Fusure Limited, a technologically driven, avant-garde group with a visionary bias for developing ground-breaking web applications, Txtoweb is the most innovative (and perhaps financially viable) classified ads platform in Nigeria.

Final Thoughts

These two examples show that online classified sites are financially viable. As Fritz noted, it requires time and trust before it sees traction and trickles of income.
Interestingly, there are other “potential” ways to monetise online classified sites beyond Google Adsense, contextual or banner ads. I’ll be writing about some other cool ways to monetise from online classified sites in a future post.
But before then, just be wary of the Big G’s marketplace application called Trader. I hear it’s coming to Nigeria soon.

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