The online classifieds business is growing at a monumental rate in both the mature and emerging markets.
Revenue in the “Classifieds” segment amounts to $250 million this year in Africa and the Middle East, according to available statistics.
Africans could be buying some $75 billion worth of goods and services online by the year 2025.
Most of these classified sites might not charge you a shilling for the service.
You can search for items you wish to buy, for free.
You can also advertise what you want to sell, for free.
So, how do they make money?
Classified sites such as OLX and Craigslist are essentially free.
You can, however, choose to pay for premium services or value additions.
They have adopted a freemium model.
This is a pricing strategy by which a product or service, typically a digital offering, is provided free of charge, but money (premium) is charged for proprietary features, functionality, or virtual goods.
Most sites will concentrate on building a strong platform and having diverse quality content that can attract and retain users.
A highly satisfied user base is the beachhead for generating revenues through different streams.
Some users will want value adverts when selling or buying and will not mind taking them up at a premium.
Classifieds have introduced these product offerings at a fee for users wishing to pay, while still leaving their sites free of charge for the rest of the users.
A high traffic of users having a great site experience is important and directly determines whether an online classifieds business will monetise and when.
This is the sweet spot and gives these businesses an option of having a free base offering for most users and some paid features for power users.
Featured listings and adverts are the easiest and most common way classifieds have used over the years.
It applies users who need more visibility for their adverts.
These users can pay to have high visibility for the ads, otherwise known as featured ads or highlighted ads.
The advert will be placed at the top or highlighted to stand out from the rest of the ads.
This, in turn, means that your ads will get more eyeballs, increasing chances of finding a buyer.
Online businesses such as the US-based Etsy use this model, but eBay charges 10 per cent of the total amount of sale for every item sold on their platform.
In mid last year, OLX introduced featured ads known as Top ads for users seeking more visibility to sell quicker with a minimum price of Sh95 and a maximum cost of Sh13,000 based on the item category and the number of days it gets featured.
A simpler way online marketplaces monetise is by using Google AdSense.
Google AdSense pays you for others viewing and clicking on advertisements on your site.
Whenever you visit the online classified sites and blogs with high traffic, you might see adverts in either section.
The site gets paid for people clicking on the advertisement and linking to the advertiser’s website.
They also get paid through the number of page views a page or post gets, otherwise known as impressions.
The better the quality, the higher the traffic, and the easier it is for you to have adverts placed on your site through Google AdSense.
You get paid for the number of views your page with the advertisement gets.
There are inexhaustible ways the various online businesses monetise.
Based on the business model and audience type, online classifieds can use a pool of these options or even reinvent.
User base may not be the only one, but will definitely give classifieds marketplaces more reason to cash in by giving more premium services to their users.
Ms Buyole is a PR and communications specialist at [email protected]