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Craigslist's Loyal Audience, Local Focus Make It a Unique Player in Job Listings

August 29, 2005

A t this year’s Society for Human Resource Management convention in San Diego, job boards Monster, HotJobs and CareerBuilder attracted mobs of people with everything from photo opportunities with monkeys to after-show concerts by acts like the Village People. Other giveaways included massages, pedicures and smoothies.

    For Craigslist, the San Francisco-based Web site and growing force in the online job listings business, such promotion would seem garish and out of character. The company has never advertised, much less set up shop at a SHRM convention. It does offer a giveaway, however, that gets the attention of businesses, recruiters and people looking for work: free job listings in small and medium-size cities and deeply discounted prices in three larger ones.

    That, along with a grass-roots vibe that the site and its users invariably refer to as an online community, has brought the site a fiercely loyal audience. To imitators, it’s a role model. And to envious competitors, whether they are in cyberspace or are newspapers in the 100-plus cities for which Craigslist operates local sites, its ability to reach new users poses a potential threat to established business models that serve the employment market.

    The site’s presence in the job listings segment seems both accidental and natural. Founder and namesake Craig Newmark, a computer programmer, started it 10 years ago as an electronic mailing list to get the word out about events in San Francisco. As its subscriber base expanded, so did its content. People began to share leads on housing, offer things for sale and exchange tips on jobs.

    As the mailing list gave way to a Web site, Newmark incorporated the company, which today employs 18 people and generates an estimated $10 million in annual revenue, a figure the company declines to discuss. That money is derived solely from job listings in San Francisco, where an ad costs $75, and in New York and Los Angeles, where it costs $25.

    Though the site is spare and drab in its appearance--blue, red and black text over a gray background--its content is the opposite. Posts include political rants and community-oriented notices like lost-and-found and ride-sharing announcements. In the classified ads, there are categories for jobs, real estate and personals.

    Experts say this content gives Craigs-list a peculiar competitive advantage over job sites without such diversity. "People don’t come to the site to look for jobs," says consultant Peter Weddle, CEO of Weddle’s Publications in Stamford, Connecticut. "The site induces them to look for jobs after they look for baseball cards and romance."

    Tracy Poole, director of recruiting for travel site Expedia in Bellevue, Washington, says his gut feeling is that candidates found through Craigslist are more likely "the type of person we want, that doesn’t run with the pack." Weddle sees it another way: The site attracts a large number of passive job seekers.

    Figures provided by Craigslist show that users view the site’s job pages more than any other area. Yet each month, the 160,000 job listings constitute just over 3 percent of the 5 million classified ads that users post. Individual job listings garner as many as 5,000 individual views, usually by people within the city or region in which the listing appears. Recent figures compiled by Web tracking firm Alexa show Craigslist to be the 40th most visited site on the Web.

Quality people
    Employers say that putting an ad on Craigslist typically results in a higher yield of quality candidates. That’s especially true for positions in technology, an area in which the site, by dint of geography and the dawn of the Internet era, got off to a considerable lead.

    But they also say Craigslist is especially useful for finding workers that they may have a hard time reaching either through traditional offline approaches or by using the "big three" job boards. For example, Mentor Graphics, a Wilsonville, Oregon-based company that designs hardware and software used in semiconductor manufacturing, recently used Craigslist to find a technical writer fluent in Japanese. The company also has listed jobs there for less specialized or part-time positions, like trade show event managers.

    Craigslist CEO Jim Buckmaster says that small and medium-size companies constitute the majority of job advertisers on the site, but larger companies appear too. In New York, for example, recent listings included a corporate librarian position at financial services company Dreyfus alongside ads seeking an executive office assistant for a Wall Street technology firm and a general manager in retail.

    Blue chip technology companies also advertise on the site. Microsoft, Google and Yahoo (owner of HotJobs) have advertised on Craigslist for people with expertise in areas like data engineering. Yahoo sought a product manager. None of these companies responded to questions about hiring practices or how they use Craigslist.

    For recruiters at biotech company Chiron in Emeryville, California, Craigs-list is just one place they turned to when looking to fill the 150 or so open positions they had this summer at four U.S. sites. The company employs 5,400 people.

    Chiron staffing director Anthony Damaschino says the company has hired for positions ranging from administrative assistants to quality-control specialists with backgrounds in chemical analysis in the past several months. All were candidates found through Craigslist. "We find that we have a high hit rate with quality candidates," he says. But Chiron doesn’t rely on Craigslist exclusively.

    Rather, its recruiters use niche sites like Biospace and mainstream board Monster. Print ads, Damaschino says, have been less effective for the company’s hiring, so the company has scaled back their use in the past year. He says his staff likes Craigslist because it’s easy to use. They don’t have to register to post a job, for example.

    Another positive that recruiters cite is the volume of response a Craigslist ad generates. Expedia’s Poole says his firm’s ads on Craigslist bring in far fewer responses than other methods he employs. An Expedia listing on Monster can generate as many as 200 responses in a 24-hour period. On Craigslist, total responses might be one-tenth that number. Poole says that cuts down on time he has to spend reading résumés, but the ads still yield an acceptable number of applicants.

Local hero
    Craigslist’s local approach remains one of its hallmarks and is a hit with audiences. But its growing visibility has also invited people who prefer searching for work in more than one city at a time. And that gave rise to an unwelcome site enhancement.

    The company recently asked a third-party Web developer to disable a tool that allowed users to search for jobs across the Craigslist network. Buckmaster explains that allowing the tool to work would put a strain on the company’s servers. Though that feature remains one that users ask for the most, it’s unlikely to reappear.

    The site keeps its appeal, Buckmaster says, as "a local, stand-alone entity for people in that area to communicate." Moreover, he says the companies that post jobs "don’t necessarily want to have responses from all over."

    The city-by-city approach works just fine for the company. Year-over-year gains in market share of total visits to sites in cities like Fresno, California, and Providence, Rhode Island, topped 400 percent for the week ending June 25, according to figures compiled by Hitwise, a company that monitors Internet traffic. Advertisements have been plentiful in newly added cities like New Haven, Connecticut, and West Palm Beach, Florida, which Buckmaster says is probably due in part to strength in those regions’ economies.

    Eventually, Craigslist’s growth is likely to have some sort of disruptive effect. Some say it already has. Last year, Classified Intelligence, a newsletter that covers the classified advertising market, estimated that Craigslist takes as much as $50 million out of the San Francisco classified market each year. Buckmaster calls the report "rather inflammatory" for blaming his company, and he dismisses the role that Craigslist plays in whatever dips in revenue newspapers may experience. He says the real culprit is national job boards "using salespeople calling up and down the newspaper’s customer lists, trying to pry them away."

    Competitors in the employment category don’t sound worried about Craigslist. CareerBuilder CEO Matt Ferguson says that Craigslist doesn’t compete with his company, in part because of what he says is Craigslist’s "limited" geographic reach. Though he concedes that "they’re really strong with a niche audience," he says companies still pay for a CareerBuilder ad after posting on Craigslist for free.

    Monster provided a statement that emphasized, in part, its "combination of career-minded site visitors with customizable recruitment product solutions." Executives at HotJobs declined to comment for this story. Each of these companies remains competitive, and profitable. Monster still lives up to its name, leading the category in terms of number of visits, according to Hitwise figures. In the second quarter of this year, its revenue rose 40 percent to $198 million, or 20 times the amount Craigslist reportedly generates in a year. HotJobs and CareerBuilder recently announced significant changes to their sites’ functionality. And the question of whether Google will get in the job-search game continues to hang over the market.

    Ultimately, says Classified Intelligence’s Jim Townsend, the market force that prevails will be the one that succeeds in proving most valuable to recruiters.

    Craigslist’s advantage, Chiron’s Damaschino says, might be that it’s not really a job site. "I’m not certain that if it were a job site that it would have as much appeal as Craigslist, the portal that grabs passive people," he says. "It would still be cheap and serve local purposes, but would lose the cachet of being the local bulletin board."

Workforce Management, September 2005, pp. 63-65 --Subscribe Now!