Trade Me Property vs. Realestate.co.nz - the debate continues

by Alistair Helm in


My recent article on the state of the online property space here in NZ has raised some interest in the media - clearly the issue is topical, but more importantly there is much at stake. The potential value at play here is anywhere between $100m and $1,400m per annum. The former amount being the total expenditure by the real estate industry on marketing; the latter being the total value of the commission based services charged by the real estate industry upon its clients - the sellers of residential property. Clearly Trade Me is not intending to disrupt the whole industry but equally the real estate industry feels threatened and so their value is under threat!

For Trade Me the goal of the lion’s share of the $100m a year in property marketing is critical. The most recent estimate would put their annual revenue from real estate (licensed agents, excluding private sales) at $15m, this would more than double if not triple if they can secure their new pricing structure. Trade Me is a listed public company and its ambition and its shareholder expectation is to dynamic growth and from that a healthy cash-flow based on an earnings-to-sales rations of over 75%. To achieve this, as they have said, requires a growth in its best performing sector - classifides of which property is the key.

For Realestate.co.nz its goal is to block the Trade Me ambition and in so doing wrestle control of the digital advertising platform from Trade Me so as to provide its shareholders (The Real Estate Institute of NZ (REINZ) and the 5 largest real estate companies) with a cost effective marketing solution; whilst at the same time transition advertising from print to online.

I very much appreciated the very detailed response to my recent article from Jimmy McGee, the Head of Commercial at Trade Me, who has been holding the reins of Trade Me Property awaiting the start of Nigel Jeffries who steps into the role as Head of Property shortly.

His response can be read in full in the comments to the last article. I have chosen to dissect the complete response and in so doing respond specifically to all of his comments, somewhat in the form of a Q&A.

 

Trade Me Property

1. We think things will settle down over time and Trade Me Property will remain an obvious marketing option for agents & vendors. Why:

  • because it is the #1 source of buyers
  • because it has a huge audience
  • because it is great value at less than $200
  • because of our private listings that buyers won’t find on industry websites

 

Properazzi

I would concur Trade Me will remain an obvious marketing option for agents and vendors. More people, more of the time use the web to search and research real estate. In many countries property websites are in the top 5 of all trafficked sites (UK & Australia) Trade Me is certainly a Top 10 website in NZ so it is logical all agents would see it as a valid option.

Anecdotal evidence from agents - in fact almost universal evidence from agents over the past few years from my experience is that Trade Me Property delivers far more buyer leads than any other medium (not just than any other website).

Trade Me audience is huge and brand awareness massive - no question

At a base cost of $159 +GST as recharged by an agent, the cost of a listing on Trade Me is stunning value for money. Nothing comes close - especially not print media with single page insertions costing thousands

The value of the private listings as a unique added content on Trade Me is huge. Up until recently with both Realestate.co.nz and Trade Me Property having the same level of agent listings the advantage to Trade Me has been key - the consumer will always seek out the richest content

 

Trade Me Property

2. Trade Me Property is a compelling marketing option for agents and vendors. It provides listings with huge exposure to a massive audience of passive & active buyers. We know around half of property buyers found their home on Trade Me Property – and realestate.co.nz was well behind with 2%. (These statistics are from a Perspective Research survey)

 

Properazzi

This statistic is not shared lightly and is massive. Trade Me is a publicly listed company and as such has to be carefully and prudent when making any claim - to claim then that a competitor achieves a level of just 2% of all property buyers (in a survey) as compared to Trade Me Property at around 50% is not done rashly or without careful consideration.



Trade Me Property

3. We’re not resting on our laurels. We understand we need to keep working hard to demonstrate the value and effectiveness of Trade Me Property as a marketing option for agents and their vendors – it’s not something we take for granted. As we’ve always said: “You should only use TMP if it helps you sell houses.” We’ve recently released aerial boundary images, will show school zones soon also. Plus well have map-based search for desktop out in a month or so. And last but not least, we’ve got some exciting stuff in store for our mobile products.


Properazzi

Now this is where I think that Trade Me Property has been deficient for a considerable amount of time. They have not been a significant innovator. Even today the user experience of Trade Me is of a single unified platform built around auctioning household items which leaves the properties section woefully underserved as compared to other property portals overseas. I would have to say Realestate.co.nz has not been that innovative, however their latest version of their iOS app is a good step forward, despite the stumble!

Trade Me Property has been weak in delivering a credible mobile experience - certainly as they cite later in their response, many people may well use the general Trade Me mobile app for property searching but it is not a step forward in property  searching merely a mobile version of the web search.

 

 

Trade Me Property

Trade_Me_Property_on_the_App_Store_on_iTunes.png

4. There’s a sense of back to the future: we’ve been here before. TMP was started from scratch back in 2005 at a time when the RE industry had their own website with thousands of listings on it. There are important philosophical differences between TMP and industry sites including::

  • TMP is designed to empower consumers and puts private listings and agent listings on a level playing field.
  • TMP is independent, not industry-centric, and aims to provide buyers with as much transparent information as possible.
  • We believe that over the long-term, loyalty from buyers and sellers will come via TMP being an effective and good value marketing option, and providing users with the best experience. 

 

Properazzi

I would agree there is a sense of Back to the Future here. Back in 2008/9 there was a stand-off by the industry resisting the desire to have their listings on Trade Me. In 2006 only around 30% of licensed listings were on Trade Me. By 2008 that had risen to 65%, but some of the major groups held out, most notable Harcourts. By 2009 all groups were on Trade Me Property, not for the reason of negotiated buying rates, but simply because vendors demanded agents put their property on the site, these agents demanded that the business owners agree to list on Trade Me. Today we have the opposite effect of business owners telling agents to tell vendors that they don’t want to be on Trade Me - because they don’t want to pay $159 + GST to market their clients property!

I would agree Trade Me has always been about empowering consumers. However it has also always been about creating value and enhanced shareholder wealth.

Trade Me is independent as much as Fletcher Building is independent or any other publicly listed company is. It's a publicly listed company with shareholders and a board of directors representing those shareholders who hold the executive team to account to enhance the value of the company. It's there to make money - Trade Me is not a charity.

I think the comment “not industry-centric” may have been a mistake, for a property portal to be successful, it has to be customer centric where the customer in this case is the agent. Not the consumer, and thereby the business has to be 'industry-centric'. I think in someways this is at its core, one of the issues that has caused the problems in Trade Me Property this year.

 

 

Trade Me Property

It’s fair to say we’ve got some concerns about the flyer and the overall impression it creates that the industry-owned site has both more house listings and more traffic than other websites. We think this is off the mark.

Total listings:

The nationwide picture is distorted by the actions of some agents who withdrew listings in Hawkes Bay & Hamilton. TMP still has more residential for sale listings in a bunch of areas, including Auckland, Wellington & Canterbury.

This analysis includes lifestyle listings, where we have 1,000 fewer listings than RE. We’ve probably lost a bit of ground there to the way we’ve treated lifestyle listings, rather than agent backlash. We currently exclude lifestyle from residential search, which we’re looking to change soon. We expect this will make it a far more compelling proposition for agents and vendors of lifestyle properties.

 

Properazzi

Whilst Trade Me might have concerns over the flyer, my analysis shows the statements made have validity. At this time Realestate.co.nz does have more listings. 

I have gone back to examine the listings data as at the 6th April utilising the same methodology to compare each category of listing on both sites across the main metro centres.

Auckland sees Trade Me Property with 6% more listings overall, however when stripping out an estimation of privately listed properties to examine side-by-side licensed real estate listings Realestate.co.nz has 479 more listings - an advantage of 5%.

Untitled_2-11.jpg

In Wellington the two websites classify the region geographically using differing boundaries, for the sake of comparison I have excluded from the Trade Me Property listing the districts of Carterton, Masterton and South Wairarapa which are not included in the Realestate boundary of Wellington, thereby as best as can be evaluated the listings data is like-for-like.

Wellington sees Trade Me Property with just 1% more listings overall, however when stripping out an estimation of privately listed properties to examine side-by-side licensed real estate listings Realestate.co.nz has 346 more listings - an advantage of 12%.

Canterbury sees Trade Me Property with 11% more listings overall, however when stripping out an estimation of privately listed properties to examine side-by-side licensed real estate listings realestate.co.nz has just 92 more listings - an advantage of 3%.

So it is fair to say that in the major metro regions of NZ Trade Me Property have more listings, however from a consumer standpoint to be able to examine the true comprehensive picture of all property advertised for sale you would need to use both websites.

As the analysis includes Lifestyle properties the comments about the display structure of these listings on the Trade Me Property site is more an internal issue for the company and its design team.

 

 

Trade Me Property

Audience: Trade Me Property’s audience (average daily unique browsers during March 2014) as independently measured by Nielsen, is more than 3x the audience of any other property website in NZ. Looking at data from the past 7 months, Trade Me Property’s monthly audience has included an additional 76,000 and 92,000 more browsers each month than any other competitor site. According to Nielsen, 77% of visitors to TMP didn’t visit RE (Feb ’14, NetRatings, total traffic).

 

Properazzi

I am grateful for the exact Nielsen data provided in the response. I have mapped the data and added it to the chart Trade Me Property also presents on its agent home page which shows data from April 2012 to March 2013. As can be seen the differential between Trade Me Property and realestate.co.nz is significant. Trade Me Property has 3 times the average daily traffic but a year ago the differential was 5 times and 2 years ago the differential was 6 times. In March realestate.co.nz average daily visitors were up 95% as compared to a year ago - Trade Me Property average daily visitors up just 8%.

 

Trade Me Property

Hawke’s Bay listing numbers:

Some agents are disregarding their vendors’ best interests.

Agents in some parts of the country are taking advantage of their role as a trusted advisor and using vendors as pawns in a real estate industry power play.

Not having listings on Trade Me Property means less people will see the house for sale which means the vendor is less likely to sell, or get the best price.

We don’t believe these realtors have their clients’ best interests in mind as their clients’ properties are not being seen on the country’s best property marketing channel.

We think agents should do what is best for their vendor, and that would generally include using Trade Me Property as a way to get properties in front of the largest audience and helping them sell more property.

 

Properazzi

I believe some of these comments are valid. Given the significantly larger audience to Trade Me Property and the data on those who visit Trade Me Property and not Realestate.co.nz then an agent not advertising a clients property on Trade Me Property is disregarding their clients best interest. Further this action of refusing to advertise or telling clients that they don’t recommend Trade Me Property is using clients as pawns in a power play that is out of all proportion - a fee of $159 + GST is the cheapest form of advertising. It's time the agents woke up to demonstrating their role and either pay it out of their commission or re-charge it.

Stating that not advertising on Trade Me Property means less people will see the house for sale which means the vendor is less likely to sell, or get the best price, is a serious stretch. This can never be proved and as I have written recently property sales never have a ‘control’ environment.

 

Trade Me Property 

We understand why you’ve compared the iPhone app for TMP and RE, but it’s only part of the picture. This is because as well as the TMP app, heaps of New Zealanders use the TM app to browse for property on their iPhones. Nielsen’s research has also found that more people downloaded or used the Trade Me app to search for property than the Realestate.co.nz app.

 

Properazzi

Whilst the fact that ‘heaps’ of New Zealanders may well use the standard Trade Me app to browse property on an iPhone, that experience is not comparable to the inherent value of a mobile app for property which is what both the Trade Me Property app and Realestate.co.nz app deliver - the battle grown is now, and in the future the mobile space / app environment. If Trade Me Property want to win this battle they need to avoid relying on users engaging with Property on their main app. My advice would be to exclude property listings on the main app and create a mindset change that will get those users to download the property app.