Facebook to Offer Members Free Online Classified Ads

Facebook added free classified advertising yesterday to its popular social-networking Web site, intensifying the competition among Internet companies and newspapers for this lucrative ad business.

Only Facebook.com members will be allowed to post classified ads on the site. But with a membership of about 22 million, Facebook could represent a challenge especially to Craigslist.org and other providers of free classifieds, analysts said. Facebook says it is adding new members at a pace of as many as 150,000 a month.

Under its Marketplace initiative, Facebook offers members a chance to post ads for housing, jobs and items for sale. A fourth category would include miscellaneous requests, such as rides to concerts. Members can choose whether to make the ads available only to their designated friends or to wider networks of classmates, co-workers and residents of the same geographic area.

Brandee Barker, director of corporate communications, said Facebook had noticed that members had been posting informal listings on the site. "It seemed like a natural progression to begin offering classifieds," she said.

While the listings will not generate any direct revenue, Barker said the company is now reviewing how it might be able to make money from the classifieds, perhaps by charging members for making the ads available to an audience beyond their friends and networks. She said nonmembers will be barred from advertising on the site because this would dilute the value of the classifieds, which is built on the pre-existing relationships of members.

Facebook is entering an online classified market dominated by Craigslist, which now reports handling more than 17 million new ads a month. Craigslist chief executive Jim Buckmaster said he could not assess how Facebook's move would affect other providers of free ads, but predicted it would have no effect on his company.

"We see ourselves as being in the business of providing a public service and do not concern ourselves with market share," he said in an e-mail. Craigslist, which does not disclose its revenue figures, makes money by charging for employment ads in some cities and brokers' apartment listings in New York.

Facebook's initiative is also part of a broader move by Internet companies to capture a classified market that was once the exclusive domain of newspapers, said Allen Weiner, an analyst at the Gartner research firm.

"Clearly, these free providers are trying to nibble away at the traditional classified market," he said.

But while they may be able to wrest away some of the "lower-hanging fruit," such as advertising for second-hand cars, Weiner said newspapers continue to control the most profitable categories of job recruitment and real estate. He said newspapers are trying to adjust by building relationships with Web companies.

Randy Bennett, vice president of audience and new business development at the Newspaper Association of America, said most of this collaborative effort has centered on job recruitment classifieds.

He said it was difficult to judge their success because some of the relationships are so recent.

Last month, Yahoo expanded its national ad-sharing program that now includes 264 U.S. newspapers. Belo Corp., a member and publisher of several newspapers, including the Dallas Morning News, reported that its partnership with Yahoo has proven profitable.

Carey P. Hendrickson, a Belo spokesman, said revenue at the Morning News from online employment ads was up 65 percent last year, with Yahoo accounting for 40 percent of that.

A second online advertising network includes the country's two largest newspaper companies, Tribune and Gannett, which own CareerBuilder.com. The New York Times teamed up with Monster.com earlier this year to sell help-wanted ads.