Facebook Marketplace disrupts classifieds ads landscape

16 April 2021 Consultancy.uk 4 min. read

Internet giant Facebook launched its own marketplace in 2016, and has majorly disrupted the online classified ads space over the following five years. A new study suggests that while the company’s customer base and extensive partner network give it the upper hand in most cases, however, some organisations have still been able to outmanoeuvre the social media behemoth.

In 2007, Facebook introduced its first Facebook Marketplace functionality, allowing users to post classified ads within sale, housing, and jobs categories. The feature never gained traction, and in 2009, control was transferred to Oodle, the platform powering the functionality – before eventually folding in 2014.

The international conglomerate remained determined to enter the online classifieds market, however, and learning from its mistakes, it relaunched a new Facebook Marketplace in 2016. This time, the company looked to build on the growth of organised "buy and sell" Facebook Groups, and gave the new version a higher prominence in the main Facebook app – taking the navigation position previously held by Facebook Messenger.

Facebook Marketplace disrupts classifieds ads landscape

Since then, Facebook Marketplace has rapidly emerged as one of the most widely publicised and credible threats to traditional classified business models in recent years. According to research from OC&C Strategy, the keys to Facebook’s threat rest on its massive global user base – something the company has leveraged to help optimise user engagement, while milking it for advertising revenue – ultimately enabling Facebook to provide a user-friendly platform, where customer-to-customer items can be listed for free, and professionals can list for far cheaper than most competitors.

On top of the size of Facebook’s inbuilt audience, the firm’s collection of data from that base means it also has a distinct competitive advantage to traditional classified players. In particular, the ability to “know your seller” is an important component of Marketplace’s success, as messaging about relevant products can target certain user demographics.

On top of this, Facebook has boosted its Marketplace expansion into its most developed markets in North America and Western Europe via an extensive partnership network, and with professional support. In the US and Canada, for example, the feature currently boasts more than 50 partnerships with automotive firms, and nine with rental or housing sellers. Meanwhile, it offers professional listings and support for eCommerce listings, as well as on-platform transactions.

The disruptive offering is something that even one of North America’s most successful online marketplaces has struggled to keep pace with. OC&C stated that classified advertisement company Craigslist – which has been at the head of the market since launching in 1995 – has seen an alarming decline in monthly visits across all platforms since the advent of Facebook Marketplace in late 2016. Since then, visits have tumbled by a CAGR of 24% via mobile and desktop users.

Facebook Marketplace disrupts classifieds ads landscape

Craigslist’s usership had been growing before that, but soon peaked at just under 100,000 million monthly visits shortly after Facebook entered the market. Since then, its decreasing visits have been exacerbated by its inability to keep up with Facebook’s user-friendly interface. As one of the only shows in town, Craigslist has long developed a reputation for resting on its laurels, having scarcely upgraded its interface over its 26-year lifespan – while it also failed to launch an app for mobile phones until late 2019. So far, the launch of that app also seems to have made little difference to its flagging fortunes.

However, OC&C also found that if traditional incumbents box clever, they can adapt to the challenge. The inventory depth and quality of Facebook Marketplace is lower compared to other classified providers, as are seller services and lead quality – while the fact Facebook’s global brand remains mired in various scandals means it is far less trusted than other marketplaces.

In the Netherlands, leading classifieds platform Marktplaats has used these details to press home its advantage over the newcomer. Close to seven-in-ten Dutch buyers still say Marktplaats is their first choice, compared to just 9% regarding Facebook Marketplace. And if the variety and quality of products on Marktplaats is not enough, the platform has also taken care to invest quickly in product features such as a mobile app and a propriety ad platform to help further strengthen against Facebook.