August 13, 2004 1:56 PM PDT

eBay looks to go local with Craigslist stake

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eBay's announcement on Friday that it took a 25 percent stake in online classifieds site Craigslist illustrates how the Web's biggest players are putting a heavy focus on going local.

Craigslist, launched in 1995, is a bare-bones classifieds site for people looking for almost anything, such as apartments, dates or baseball tickets, in 45 cities. The site has since created a flourishing network of online buyers and sellers while maintaining a simple look and feel free from banner ads.

Although the companies did not disclose any financial details, the investment will allow eBay to establish a stronger presence in local transactions. For now, the partnership will be based on learning from one another rather than integrating their services in some fashion, the companies said.

"Whether it's to trade goods, help neighbors or speak out on important issues, Craigslist has become the online gathering place for local communities," eBay chief executive Meg Whitman said in a statement.

eBay is not alone in trying to win more local business. Web giants such as Yahoo and Google have recently turned their attention to tapping local revenues. They are looking to give their booming Web search technologies a better way to target local businesses to sell more regional ads.

"Clearly there's a theme here, the move towards localization," said Mark Mahaney, an equity analyst at American Technology Research. "You see it in search advertising."

Local search advertising revenue is expected to reach $502 million in 2004, up from $408 million last year, according to market researcher Jupiter Research. That number is expected to hit $824 million by 2008.

Earlier this month, Yahoo and search provider AskJeeves introduced their own local initiatives. Yahoo said it was building a search feature that could pull information from yellow pages, maps and directions, and reviews in a user's neighborhood. Ask Jeeves struck a deal to use content from InterActiveCorp's CitySearch, which runs sites in dozens of metropolitan areas.

Google in March began testing Google Local. The service allows people to type in keywords followed by an address or city to retrieve maps, local business listings and Web sites.

However, only 5 percent of all paid search advertisers target local markets, choosing instead to reach a national and international audience, according to Jupiter.

CNET News.com's Stefanie Olsen contributed to this report

 

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