Written By Kate Zimmermann | May 11, 2007 | Share This |

The New York Times reports that Facebook will soon offer free classified ads through a future network called the Facebook Marketplace. This leap into classifieds could “deal another blow to newspapers” that depend heavily on classified advertising for revenue. Local and college papers will be most affected, says the NYT, because the majority of Facebook users are college students.

The Marketplace will take advantage of the trust-value of Facebook’s closed social network,

“Facebook users who create classifieds can choose to show them only to their designated friends on the service, or to anyone in one of their “networks” — their high school, college, company or geographic region. They can choose to make the listings appear on their profile pages, and send them out on “news feeds,” the automatic updates that appear when users log in to the site.”

This ‘network’ angle gives Facebook a huge competitive advantage over newspapers and other online classified sites, notably Craigslist, that don’t have social filters for ads. Writes Scott Karp at Publishing 2.0,

” Neither Craigslist nor newspapers can compete with prospective roommates being able to size each other up based on their Facebook profiles. Facebook could achieve a Google-like disruption by offering the ads for free to increase Facebook usage and monetizing that usage in other ways.”

There’s certainly a huge opportunity for Facebook to parlay free classifieds into some kind of e-commerce revenue stream. As Josh Catone on Read/Write Web writes,

“The Marketplace means that Facebook, which has rebuffed a billion dollar take over offer from Yahoo!, is serious about diversifying its revenue stream, even though it will be a free service for now. Social networks are ripe for ecommerce…There is a large piece of the $211.4 billion/year online shopping pie that social sites like Facebook could potentially be dipping into.”

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