On December 1, 2016, Craigslist, the 16th most popular website in the United States, changed how the boating industry listed ads by enacting a $5 charge/ad. Now, dealers have to allocate a budget and determine if there is an ROI for Craigslist.
Prior to the market being paid, dealers could list as many ads as they wanted for free. A dealer could post 500 ads and only a fraction of those would remain live on the site due to flagging and ghosting. Now that Craigslist is paid, flagging and ghosting are no more.
Dealers who posted 500 ads at $5 each would now need to spend $2,500 to see those same results right? Wrong! The data we analyzed will help you understand how many ads you should list to ensure your dealership reaches its revenue goals.
Why did Craigslist go paid for boat dealers?
When Craigslist was free, dealers tended to spam the marketplace by posting the same boat multiple times, cross posting to too many marketplaces and posting in the wrong categories. Now that Craigslist is paid, those days are gone and ads are valid for 30 days. The user experience for consumers has become more friendly and cleaner with a truer representation of local dealer inventory.
Let’s analyze the data
When dealers heard the news about Craigslist going paid, they either embraced it and pulled out their checkbook or they shut it down and decided to no longer post ads.
We looked at the data from our marine dealers who use LotVantage to post on Craigslist and found very positive results.
October 2016 – Free Marketplace: Boat dealers posted 7,152 boats using the LotVantage software on Craigslist. Those ads generated .25 leads per ad.
December 2016 – Paid Marketplace: Boat dealers posted 590 boats using the LotVantage software on Craigslist. Those ads generated 1.91 leads per ad.
Once Craigslist went paid, boat dealers saw exponentially better results and the reason why is simple. The number of boat ads posted through LotVantage went from 7,152 to 590. The dealers that decided to stay on Craigslist really benefited because consumer behavior didn’t change. Craigslist had fewer ads and each ad was generating an average of 1.91 leads/per ad.
What budget should you dedicate to Craigslist?
Figuring out what budget to dedicate to Craigslist takes some simple math, knowing what your close ratio is and what sales volume you are looking to accomplish. We’ll use the LotVantage posting data we analyzed to give you an example.
In December 2016, boat dealers posting through our software saw 1.91 leads/ad.
Let’s say your dealership closes 5 percent of leads that come in and your average margin per $10,000 is 20 percent.
If your dealership needs to sell 6 additional boats a month, you would need to post 63 ads, costing your dealership $315.
In this example, we suggest 63 ads because in December 2016, dealers received 1.91 leads/ad. If your dealership has a 5 percent close ratio, you would need to generate 120 leads. 5 percent of those 120 leads is 6 boats.
If you’re dealership is making $2,000 per $10,000 boat, you just spent $315 to make $11,370 profit for the month.
Here is the formula to make it even easier:
- Six units to sell / .05 close ratio = leads needed
- Leads needed / 1.91 avg leads per ad = ads needed
- Ads needed x $5/ad = Total Craigslist budget
As you know, advertising means spending money to make money and it’s important you do your due diligence to understand what marketing sources are driving not only the most traffic, but leading to the most sales.
Keep in mind, the data we analyzed only shows leads that came in through calls, texts, emails. credit applications and form fills for boats. We didn’t analyze walk-in traffic as we don’t record that data so that means your potential to make money from Craigslist is even higher!
If you are interested in discovering more about how Craigslist can generate profit for your dealership, at a very low cost/lead, visit lotvantage.com or call 1-888-569-3865.
Jim Jabaay is the vice president of LotVantage, a digital marketing company for dealerships and original equipment manufacturers. LotVantage specializes in posting dealer inventory to Craigslist, eBay and driving engagement on social media on behalf of their customers. Visit lotvantage.com or call 1-888-569-3865.