Craigslist's outrageous profit
One group estimates the company makes $2.9 million to $3.2 million in profit per employee.
These are the kinds of numbers any company would drool over.
The online classifieds site Craigslist could see $122 million in sales this year -- and profits of $88 million to $99 million. That's according to a classified-ad consultancy, MediaPost reports.
Those numbers reflect a 22% increase in sales from 2009. Not a bad jump by any measure.
So how does a free site like Craigslist pull in this kind of profit? Overhead is extremely low, obviously. And Craigslist does charge money for a few categories of advertising, including -- let's bring in the quotes for this one -- "adult services."
The ad consultancy, Advanced Interactive Media Group, estimates that 30% of Craigslist revenue comes from this category, which it calls "thinly disguised advertising for prostitutes." Gee, ya think?
Craigslist also has a thriving recruitment and job advertising business, which amounts to about half of its revenue, AIM estimates. And about 17% of sales, or about $21 million, is from apartment advertising in New York, writes MediaPost.
Craigslist is the leader in its category, and lots of challengers are trying to knock it from that top spot. One of the biggest threats could come from eBay (EBAY), which has its own classifieds section, AIM says.
Craigslist also has a problem with the spam and scam messages that try to confuse and rip off users, MediaPost writes. And finally, there are some indications that Craigslist traffic may be leveling off at about 50 million unique visitors a month.
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The company has made at least 4 acquisitions in the space, and few people have paid any attention.
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