The real estate industry's transition to digital marketing

by Alistair Helm in , ,


Walk past any real estate office and you will likely see a couple of wire framed baskets chocked full of the latest copies of the local property magazine - in Auckland these tend to be for Property Press, The Herald Homes and then there are some other local options and usually these days a Chinese language real estate magazine.

I don't need to procrastinate on the visual pollution these create on the high street or the lack of value they represent, nor the fact they never seem to diminish in number of copies until the next week's edition rolls in. The fact is the world over real estate marketing is going digital - it's only a matter of time until we see less of these publications cluttering up our footpaths.

The scale and pace of this transition is something I am often asked about when providing advice and consulting to businesses. I hold a fairly detailed and what I think is accurate picture of this for New Zealand. So it was with great interest whilst reading the Prospectus for the IPO for Zoopla Property Group the operators of the UK property portal Zoppla that I found data for the UK market on just this subject.

Quoting from the report:

According to Ender’s Analysis, total UK classified property advertising spend was £389 million in 2012,
comprised of a 45 per cent and 55 per cent split between digital and print advertising, respectively
— Zoopla Property Group prospectus (page 48) - June 2014

It is anticipated that during the current year in the UK year the total spent on digital marketing by the real estate industry will for the first time exceed that spent on print advertising. In total the UK real estate industry will spend  £427 million on advertising this year. The future trend estimates for the next 3 years clearly show an accelerated divergence between print and digital with digital set to grow by 50%.

Screenshot_10_06_14_10_34_am.png

In New Zealand the make up of the spend by the real estate industry is somewhat different. Print media has done a laudable job of defending its position and through its relationship with the major franchise groups has constrained the digital media spend to less than 20% at this time, although it is, like the UK forecast in my estimation to grow significantly in the coming years. It is though not expected to exceed the print media spend in the next 3 years.

Clearly the drive for the cannibalisation of the print media across the globe holds the prospect of a significant pot of gold for the challenging companies in each country which more and more these days are publicly listed companies of significant value; be that Rightmove and Zoopla in the UK, Trulia and Zillow in the US or REA Group and Domain in Australia. Each is fighting for an ever greater share of the cake of advertising dollars of its customers - the real estate agents of each respective country. In New Zealand we have the challengers of Realestate.co.nz and Trade Me Property - a duelling pair, however the pot of gold for which Trade Me aspires may not be the same reward sought by Realestate.co.nz as an industry owned portal.

Comparing such data of advertising dollars between countries is hard to undertake unless some benchmark can be established. For this analysis I have chosen to index the NZ and UK real estate digital marketing spend by an index to the number of property transactions in NZ$ terms. Presented below is this analysis showing the extent of advertising spend per country over the past 7 years per property sale. In the UK total property sales over this time peaked at 1.23 million in 2007 before falling to 616,000 in 2009. In NZ over the same period sales peaked at 92,000 in 2007 before falling to a low of 56,000 in both 2008 and 2010.

Interesting to see the NZ real estate industry spends more per sale than their UK counterparts. The relative difference in the digital spend is staggering - a two and a half times factor. It makes the whole discussion around the relative cost / value of a charge of $159 per listing from Trade Me seem a bit moot!

The other point to note in this index comparison is the fact that the total of NZ$1,065 spent per property sale by the UK real estate industry comes straight out of their commission margin where average commissions on sale are around 1.5% whereas NZ agents who charge around 3% commission on sale price secure around an average of $200 per sale of vendor marketing contribution to offset their average spend of NZ$1,244.


The global industry of property portals

by Alistair Helm in


I have spent the past week running a global conference in the beautiful Spanish city of Barcelona. The conference, part of a regular series of conferences hosted around the world by Property Portal Watch, for which I am CEO; brings together a wide variety of executives of property portals from numerous countries for a 3 day conference to discuss the trends and developments in this fast growing industry.

With over 230 attendees from more than 40 countries the conference provided a unique experience for like-minded executives to network and share insight and experiences around the development and operational performance of property portals. Represented within the attendee list were executives from leading portal operates in developed countries such as Italy, Germany, Spain, France and Ireland as well as those representing more emerging markets from Eastern Europe with attendees from Estonia, Lithuania, Poland, Russia and Romania. As well as European attendees we had attendees from Australasia, India as well as Latin America and Africa.

I thought it would be interesting to share some of the headlines from the conference to provide a sense of this now well established global industry.

Whilst no accurate figures exist ( a task Property Portal Watch is currently undertaking ) there are probably over 2,500 property portals across the world employing well over 20,000 and conservatively with a market cap in excess of $25 billion. The top 3 global leaders (all of which are listed companies - REA Group (which operates the Australian portal Realestate.com.auRightMove in the UK and Zillow in the US are collectively valued at over $14 billion. This is by no means a start-up industry, this is a significant and well established industry attracting significant investment funding and delivering significant return on investment. Rightmove in the UK delivers a EBIDTA margin of over 70% - that is to say for every dollar of sales revenue they deliver 70 cents of profit (before depreciation and amortisation).

The leading players in these developed markets of Europe and Australia especially are continuing to see growth in sale revenue through greater marketing services of premium advertising that they deliver to their agent customers who more and more ignore the print media and focus exclusively online to deliver marketing profile and buyer leads, something that seems to be a challenge for NZ agents to accept. In many European countries print media for property advertising is virtually non existent, Talking to the leading operator in Poland (far from a developed market) who stated that close to 90% of real estate marketing spend of properties for sale went online.

Whereas the revenue growth of leading operators is slowing as markets reach a degree of saturation from listings fees, those in more emerging markets continue to experience continued doubling of revenues as they spearhead the adoption of online marketing by agents. The focus of these emerging markets seems to be focussed less in Asia these days and more around Africa, the Middle East and Latin America. Africa particularly seems to be a very hot market with new entrants operating in Nigeria, Kenya, Morocco as well as Uganda and Rwanda.

A significant topic of the conference was the role of horizontal vs vertical portals in the property space, this has particular relevance to NZ as a horizontal operator is best defined by Trade Me, having as it does under the one site the categories of general classifieds, motors, jobs as well as property. This contrast with realestate.co.nz which is a specialist vertical. It focuses on just property. Many other countries experience a similar challenging environment whereby these horizontal operators attracts a significant aggregated audience across the various sectors thereby creating massive audience numbers often far ahead of the vertical property operator. There was extensive discussion around the emergence of more of these horizontal players and the consolidation of these operators by companies acquiring such operations through Europe, interestingly despite the global dominance in online classifieds E-Bay does not present itself in any market as a significant player in property marketing.

The global property portal industry is diverse not only in scale and market development but also in ownership for there are many industry owned property portals around the world some like Funda in Holland and Hemnet in Sweden completely dominate their market. The challenge for them and something I can relate to is the political issues of balancing the needs of the industry organisation to service the desire of the industry to ‘protect’ this vital marketing media matched to the desire to continually offer enhanced and innovative user services and tools to ensure continued engagement and loyalty. It seems a shame that so little of that seems to come from realestate.co.nz these days.

Overall the conference was a great success and this being the 9th such conference over the past 5 years has demonstrated the value that can be created by a facilitated collaboration and sharing of idea and experiences by industry professionals prepared to open up and get together.

The next conference our 10th for PPW will be held in New York on the 13th / 14th January - very likely to be a well attended and comprehensive insight into this fast growing industry.


Overseas property websites report strong interest for NZ property

by Alistair Helm in


The leading property website for the UK Rightmove produces a very detailed report on the source of visitor traffic to their extensive selection of overseas properties. Over 3.6 million visitor sessions per month check out the more than 80,000 properties on their specialist selection of properties from around the world.  

The latest report for September highlights a seasonal trend that sees interest in warmer countries as the northern hemisphere winter approaches. One of the countries to benefit from this increase is NZ. Of all the countries profiled in the search content of listings NZ ranked at #11 rising one place with Australia in  6th place behind the leading countries visited by property seekers - Spain, France, USA. Italy and Portugal.

As ever seeing such a rich set of the data in the report got me wondering that given the sheer scale of the competing countries ranking higher up the league table, if the data was to be weighted on population for example the picture might look somewhat different.

Well the fact is when adjusted to reflect the population of each country the ranking looks somewhat different - especially when you see just how fascinated brits are for some of the smaller Mediterranean countries!

The weighted data of visitors to NZ property per million population pushes NZ to # 6 in the league of most viewed property locations - certainly reflecting the interest of potential emigrants to NZ.