“Someone should never take part in a fight unless they know they will win it”.
This was the opinion voiced in an article by David Hargreaves on Interest.co.nz in February 2014. Over 5 years ago. The article expounded the view that the real estate industry had more to lose than Trade Me, over the then, bust up over increased fees being introduced by Trade Me at the end of 2013.
Five years is a long time in our fast-paced digital world, yet the prophetic view expressed in the article is coming true all these years later, only not quite as imagined. The view then was that the real estate industry’s very business model, could in some way be impacted by the squabble with Trade Me. That has not eventuated. However, the real estate industry has lost in their ability to control the digital marketing platform. A loss far less financially significant, but none the less a squandered opportunity.
I have written at length over the years on what I see as the problems of Realestate.co.nz, and its ever weakening position against Trade Me in the competitive arena of digital marketing, including an impassioned address to the Real Estate Institute AGM last year. Sadly time moves on, and with it, the ever growing strength of Trade Me Property; and for its rival Realestate.co.nz, as the title of this article states, things look bleak.
The half year results of Trade Me published last month stated “The performance of Trade Me Property is exceptional and should continue into the second half of F19”. Not only is it exceptional at $22.3m, it is also sustainable. Trade Me Property in my opinion has found its sweet spot and for now the future looks bright. This result and optimistic outlook are the direct result of two significant successes that have yet to be fully realised. But before I examine these two matters, let’s pause a moment to look at Trade Me Property revenue over the past 4 financial years as reported in financial investor reports.
The most recent 6 months to December 2018 is outstanding, and follows what has been a fairly average performance over the prior years with revenue growth barely hitting double digit percentage growth.
I am no financial analyst, but I would hazard a guess (as I have done in the above chart) based on my experience and knowledge that the second half of the FY2019 year is likely to see year-on-year growth of 30% resulting in a full year revenue of over $48m, up over 80% on 5 years ago when things went so wrong for Trade Me.
So to what do I ascribe this remarkable performance of Trade Me Property. Firstly a smart and highly successful new product launched last year – Premium Listing.
This product works exceptionally well, Satisfying the needs of both the vendor and agent. The standout presence of this large listing creates impact in the search results and delivers a markedly high level of page views, not just on web browser pages but also on the Trade Me apps. This is significant, as up until the launch of this product there were no premium listings on either Trade Me Property or Realestate.co.nz that delivered a premium impact on the mobile apps in standard search results. The product design is loved by agents as it incorporates the agent and agency branding to great effect. Priced at a significant premium to the existing offering of Super Feature, the new Premium Listing has achieved a high penetration rate in the key markets of upwards of 15% of listings. This product is likely to benefit from the power of the virtuous circle. Agents love it, they include it in marketing budgets, the results are a delight to agents and vendors, other agents see the power and brand influence and they become adopters and for the buyer searching for property the design is as ever from Trade Me beautiful.
So that is one of the powerful drivers of this new rejuvenated and growing Trade Me Property business. The other is inventory.
I reported back in October last year that Trade Me had then surpassed Realestate.co.nz in terms of total listings of property for sale (including private sales). This was a key milestone as it destroyed the long standing cornerstone of marketing by Realestate.co.nz that they were the leader when it comes to inventory of listings. Subsequent to that turning point Trade Me has powered ahead and as of this month they have surpassed a new milestone.
Trade Me Property now features more property for sale from real estate agents than any other website. This is significant, really significant. Five years ago things went wrong for Trade Me over the price changes and the real estate industry endeavoured to boycott Trade Me. Today more of the industry support Trade Me than support Realestate.co.nz - the property portal that is owned by the industry. The charts below highlight this recovery by Trade Me, firstly for all listings and secondly for agent only listings.
For Trade Me Property to be displaying significantly more agent listings than Realestate.co.nz on the website today (28,483 vs 26,277), means that real estate agent office are questioning the value of Realestate.co.nz. For the past 5 years the industry has rallied around the industry owned site seeking to consolidate support to make it the critical asset that it had the opportunity to be.
Sadly the industry, whilst well intentioned and principled as a body, is in reality a loose aggregation of over 600 independent business owners and over 15,000 independent contractor-status agents. They all think and act, first and foremost to their own best interest. Trade Me is a marketing tool, just as is the Property Press and the newspaper supplements, as well as Realestate.co.nz and when individual agents select marketing campaigns for their clients’ property what matters most is results. Those results are judged in page views and enquiries, as well as agent profile and presence, and this is where the rubber hits the road. Trade Me is winning this battle and likely to press the advantage even harder in the coming months and years, leaving the events of late 2013 to be a distant memory.
Disclosure: I have over the past 13 years been a senior executive at both Realestate.co.nz and Trade Me Property.
I am not at this time involved in either company through any role or investment. This article, as with other similar articles are written based on published information combined with insight gleaned from studying the property portal marketplace internationally over the years.