A property website or 'The world's most trusted and vibrant home-related marketplace'?

by Alistair Helm in


zillow_premier_agent.jpeg

Zillow held its inaugural Premier Agent Conference last month inviting over a thousand of their more than sixty thousand Premier Agents to a two day event held in Las Vegas. Described by CEO, Spencer Rascoff as the most important event of Zillow's 10 year history, the event itself speaks so much to what and how Zillow is and will develop in the future.

Zillow is in many ways a late starter to the global industry of property portals. When it launched in 2005, REA group in Australia (arguably the most successful property portal globally) was about to launch its international expansion and had been operating for 9 years and was generating A$34 million in revenue - just in Australia. It would take Zillow until 2011 to reach that level of sales and by then REA had powered on to revenues of A$238m!

Zillow though does have a larger pond to play in with a population of over 300 million, annual property sales of over 4.5 million and well over 1 million agents.

I watched the various reports and tweets from the conference and quickly became engaged with the approach Zillow is taking with its customers. It was beautifully summed up in the phrase "a website that has created an ecosystem for consumers, agents, renters, homeowners and lenders to interact around housing". The notion of an ecosystem is very appealing to me, as it is all about a platform. Platforms are the most powerful digital business solution. A platform can deliver a long term value in a space where people can undertake interactions and potentially create marketplaces that ultimately provide the revenue opportunity that all such digital platforms aspire to and must if they are to survive and grow.

Now Zillow more than many other global portals needs to nurture the revenue opportunities from agents as well as ancillary service because fundamentally the US model for property portals provides no income opportunity for subscription based listing services. The US has the somewhat unique MLS structure that effectively removes the opportunity of charging for listings. The model, that for REA Group generates over A$100m in annual revenues from 9,500 Australian real estate offices, amounting to 25% of total revenue. However Zillow and other property portals do not see agents as simply revenue sources, they recognise that the role of a property portal is inextricably linked and closely aligned to the agents. Agents are the advocacy platform for portals as well as the source of all future business. This thinking is what has driven the investment in digital services and customer relationship services entirely focussed on building that bond between the agents and the portal.

What is so appealing in my mind around all of this evolution is how far we have come in the property portal space from the early ideas of simply being advertising websites for the display of listings through into this idea of being a broader media site with listings, and then evolving into this far more engaging and enveloping concept of an ecosystem that provides support and value to all of the community. That is what Facebook has done for our social connections, what e-Bay and Trade Me has done for all types of retailers and what Zillow and the likes of REA Group in Australia and Rightmove & Zoopla in the UK are doing for their respective real estate community and all of the home related services.

Zillow shared at the conference their mission, a mission statement that they had not made public until the conference.

To build the world’s most trusted and vibrant home-related marketplace
— Zillow Inc

In my view we have collectively come a long way as a community. The community of digitally focussed and passionate supporters of the real estate industry who across the globe seek to support and lead the evolution of this industry and those millions of agents that operate day-to-day in the market delivering services to consumers. We have evolved from websites to ecosystems and marketplaces delivering greater services and value to the industry we support.

Here is the video summary of the Zillow Premier Agents conference - in my mind it was a milestone event in the history of the company and of this industry in the US and internationally.



The industry 'circles the wagons' around Realestate.co.nz

by Alistair Helm in


The real estate industry has been rallying around their industry owned website since the radical price change implemented by Trade Me Property a year ago, in a manner somewhat akin to circling the wagons. 

The resultant boycott, although somewhat patchy on a regional basis, has seen the relative strength of Trade Me Property slip from what must have been 100% of licensed agent’s listings to around 75% - a figure that does not seem to have changed much over recent months.

The real estate industry may judge the initiative a success. However the messaging within the industry around the role of the industry owned website may need some refining as a recent video by a loyal and passionate real estate licensee shows.

The video entitled “Support Realestate.co.nz !“ is a somewhat tongue-in-cheek news alert to fellow real estate agents which uses the analogy of “not putting all your eggs in one basket”.


Here is the script of the video:  

Hi, I’m Dave Umbers, I’m a real estate agent, salesperson, licensee, principle. Short message for you all today.

Our industry needs your support, our industry is Realestate.co.nz, these eggs here they represent our listings, if we give them away to someone else to look after we loose control of those eggs. So, keep our own eggs in our own basket by putting them all on Realestate.co.nz. Your business will flourish, our industry will have a future, and everybody will be much much happier.

I’m Dave Umbers, please, please I urge you, this is our website Realestate.co.nz. It’s the goose that lays the golden egg.

Whilst Dave Umbers begins the video with a statement that “This message is unsolicited” the intention is clearly to spread the word widely within the real estate community and seek unified support to bolster the standing of the industry site. 

I find his analogy of the egg basket very interesting. To suggest that placing listings on Trade Me Property is in someway akin to putting all your eggs in one basket is in my opinion naive at best. The real estate industry continues to try and convince their clients that the print media publications from the Christchurch Press, to the NZ Herald and from the Dominion Post to the Property Press are the best form of advertising flies in the face of this characterisation of Trade Me Property. Either the real estate industry genuinely believe online is the best form of advertising or they don’t - they should not speak with forked tongue!

I further find the reference to “loose control of those eggs” equally fascinating. These ‘eggs’ as Dave describes them are adverts for their clients listings, nothing more, nothing less. Adverts that are created under an agreement with those clients to act in their clients best interest to successfully sell their home. So how do they ever imagine that they are “loosing control” of these listings as adverts. The agent has a legal contract in the form of a listing agreement providing them surety to exclusively provide services to their client in the sale of their client's home which includes among other things advertising. So could they possibly think that Trade Me Property is taking control and endeavouring to null and void that agency agreement?

The video somehow portrays the website of Realestate.co.nz as some form of industry foundation using the phrase the “goose that lays the golden egg”. I am sure many in the real estate industry know full well that Realestate.co.nz is not a charitable foundation. It is a private company and its shares are held in part by individuals or companies who are not the subscribers or customers of the website and who one day may well decide to profit directly from the website in the form of profits or sale. So the phrase “the goose that lays the gold egg” may well be prophetic as it may turn out to be the nest egg for some of those shareholders one day to the exclusion of the likes of Dave Umbers and others of his colleagues across the country.

The final reference made to the benefit of placing those listings exclusively on Realestate.co.nz providing the industry with a “future” is fairly dramatic. Does the industry really fear their own viability as a result of an advertising platform changing its pricing model? Does the industry not believe that they deliver value to their clients beyond the choice of where to advertise a property for sale? I do. I believe that real estate agents deliver significant value, unique value in the aspects of market knowledge and intelligence, skills of facilitation, negotiation and that persistent ability to work tirelessly to deliver a positive outcome for their clients. Choosing where to place an advert and worrying about the cost of that advert at $149 pales into insignificance as compared to the overall service they collectively deliver 75,000 times a year.

Sure having an industry website is great. Many of their colleagues in other countries around the world wished they had an industry website, but those colleagues are not fearing their business future over a website platform and how much they charge. Advertising whether in the form of print media or online has always been a part of real estate. Whilst I was not involved in the industry 20 years ago but I am sure there were times that agents were up in arms about the annual increase in fees charged by the NZ Herald, The Christchurch Press, the Dom Post and Property Press. I am sure they felt blackmailed by the then media at the time. Equally I am sure in 20 years time the real estate industry will be up in arms about a media cost for reaching an audience. In that future it may not be Trade Me Property, it maybe Facebook or some future media platform, who knows?

The key thing to remember here is that buyers need to find out about property for sale. Agents need to represent their clients' properties to as wide an audience as possible. To reach that audience they have a professional duty of care to use all and any media that can deliver that audience. In today’s world that is online and for NZ online has to include Trade Me Property as well as Realestate.co.nz. My view would be never put all your eggs in one basket when it comes to advertising whatever the colour of the basket. Always provide clients with options of different advertising platforms.


New challengers emerge to take on Realestate.co.nz & Trade Me Property (Updated)

by Alistair Helm in


There is an expression I always find amusing - "you wait for what seems like an eternity for a bus and guess what two turn up together"!

Well it seems for no particular reason we are experiencing this with real estate websites. For years it was just Realestate.co.nz and Trade Me Property. Not since AllRealestate exited the market in 2008 have we seen a credible competitor to the two incumbents of this digital marketing space. 

Not one but two new residential property websites and one specialist commercial property websites have appeared in the past month and I thought it would be of value to examine these new entrants and evaluate the likelihood of any of them toppling the incumbents.

The new residential websites are Property.co.nz and Rentorsell.co.nz and for commercial property and businesses for sale True Commercial.  

In my mind there are a few critical components required for a property website to be a viable competitor to challenge the incumbents. These are (1) Content (2) User Experience and (3) Brand presence, so let’s see how these 3 sites stack up.


Property.co.nz

This website seems to be dominated by listings from LJ Hooker and First National - collectively it hosts just under 5,000 listings of property for sale and 270 listings of rental property. This is a very small component of the 38,000 properties for sale and 10,000 for rent across the country. Without comprehensive content then there is little to recommend the site.

The site offers nothing in the way of functionally save for what might be thought of as the very basic search. The site looks like a vanilla “out of the box” website that displays listing and nothing more. Clean it may be, but functionality wise it is a pale imitation of the leading sites.

In terms of brand presence, certainly the domain name is impressive - this would have to be one of the first and most sought-after real estate domain names. It was originally registered in 1997. However domain names and websites that are generic to the category I think are a double-edged sword as I can attest to with Realestate.co.nz - you are instantly relevant in the context of the domain name but when marketing the brand is a mouthful as you have to add the ‘dot co dot nz’ to explain what it its - compare that with Trade Me!

Overall I would judge this site to have done a good job of selling the idea to LJ Hooker and First National to get their listings, but a poor job in executing a website. I would also have to question seriously what they claim to be significant engagement through social media. Their site states that they have over 7,000 Likes on Facebook, over 400 on Google+ and over 800 shares on Twitter! The facts are that their Facebook page has 20 Likes!



RentorSell.co.nz 

This website has a long way to go in regard to the content, as of today they have 10 listings of which 1 is rental. Now to be fair they only launched today so maybe we should hold off to see how they go in the coming weeks.  

When it comes to user experience I have to commend this team which is based in Queenstown. They have built a very appealing site in terms of design, very clean, focused on images and with clear details about properties. The image sizes are huge and allow full-screen presentation which can make a very basic house look great. Not only is the design to be applauded they have implemented unique functionality in their compare feature which allows for the side-by-side comparison of your saved properties.

When it comes to brand name I have to hold my head in my hands! - Rent or Sell. It has to be the most unmemorable name - it is devoid of personality and whilst it is contextual I can see why it was easy to acquire - the domain name was only registered in July this year. It would have been better to call it zwango.co.nz at least that is memorable (and you can buy it for $20 today!).

Overall I think they have the right approach to design but their future relies on hard work to get content. My advice would be go and see LJ Hooker and First National as they seem keen to support new sites with content. I would also caution them to be honest when it comes to content. On their home page they have what they title "Client Testimonials" I think these may have been ideas that they threw on a test site - they have nothing to do with their business and I would have to suggest are works of fiction.

(Updated)

I am grateful to an eagle-eyed reader who spotted this website from the US (WPResidence) which is identical to RentorSell - clearly showing that this is a templated 'out of the box' website designed for property. I must say that in my view it is a good design and when stacked up against the leading incumbents in the NZ market clearly shows how far this category has developed and how little we have seen in innovation and user design in the NZ market - it is long overdue!


True Commercial

This new site is very different from the other two in that it is not an entrepreneurial start-up built with investor money and life savings. This is a site built with the muscle of APN (soon to be renamed NZME) - publisher of The New Zealand Herald. In terms of content the site is well developed having close to half the full complement of listings on the market. This is not surprising for the Weekend Herald print supplement has for years been the primary marketing medium for commercial real estate and thereby provided the necessary existing relationship with the real estate companies.

In terms of user experience the site could not be more of a disappointment - it is clean in terms of design which is something that cannot be said for Realestate.co.nz’s Prime Commercial or Trade Me Property, but largely the cleanness is the result of limited functionality and sparse content. There is nothing new, and in someway the site has the feel just as Property.co.nz’s has of being an ‘out of the box’ solution. The site does have far a good selection of commentary and articles around the commercial property industry but that should only to be expected from a publisher of this scale. A pet hate I have of the site is the need to click a button to reveal a telephone number for an agent - why? - just so they can say to agents, we had 2 people click to find your number!

As for brand awareness, well here we have the compete antithesis to the aspiring residential sites because APN has leveraged their print and digital muscle to promote this site. They have renamed their weekly property supplement and advertise the site extensively on the NZ Herald website - that is a lot of advertising impact. As for brand name - a good domain name combining contextual relevance and a memorable name. 

Overall I am disappointed in this site. The Herald should have been developing this solution in 2005 when the digital market place really took off. They might have possibly waited for the collapse of Sella in 2012 to make way for a dedicated site. All of which demonstrates a missed opportunity of massive proportion not just because the industry has been spending millions to support Trade Me Property and Realestate.co.nz over the years but in having a leading site they could have managed the natural migration of print to digital and in bundling a package of print and online advertising solutions they could have achieved leadership. I just don’t see this site being a real challenger or real threat to the incumbents despite the muscle APN could leverage and the pot of gold they could secure. They would really need to better understand their customers and the unique needs of the market to deliver this result and build a compelling site.


 

So in summary all of these 3 new sites are in my view doomed. Good intentions, good ambition and some small pieces of innovation. However the real reason why none of these will ever succeed is not for what I have written so far in this article, but from the single fact that none of them have a mobile app.

 

If I was to start a new digital property platform today in NZ I might well forego the web and launch purely as a mobile app! Real estate is a mobile experience and to not have an app is to miss the point and to show a complete lack of appreciation of the needs of the market.


Premium advertising of property needs smart design thinking

by Alistair Helm in ,


The parallels of online and offline advertising of property are clear. If you want to achieve impact then you need bigger adverts and bigger adverts cost more - this applies to a print magazine as it does to a website.

With print magazines you go from the basic 1/4 page to a 1/2 page to a full page to a double page spread to a cover page - each step more than doubling the cost until you in some cases blast through $5,000 for a single insertion.

Online you go from a standard listing to a feature listing to a super feature and in the future as likely as not a platinum super feature. Costs increase accordingly, although not to top even $1,000.

However my focus of thought and reflection at this time is not on cost but on design and user experience. I think the team at Trade Me Property need to ask themselves some serious questions. For whereas the property magazines design very consumable and appealing publications with inspiring double page spreads and cover adverts that draw you in to support these premium advertising solutions, the online world of Trade Me Property is becoming a jumble which is less likely to draw anyone in as it strives for more and more premium advertising.

I make these comments as I today I have discovered a new header advertising unit on the site.

"Best on the block" takes up the header section of the site and is appearing under all types of searches despite the property in question when you click through to the "Find out more" is actually in Christchurch.

Why would I be interested in a Christchurch property when I am searching in New Plymouth? As you can see the advert provides no location context so you have to link through to see the location only to discover as over 4,000 people have already done that it holds no relevance - adding up to what in my mind is a dumb piece of advertising.

Additionally this new block of advertising pushes down the former super feature to now place the real listings so far down the page that it takes a good action of the scroll wheel of a person's mouse to find a normal listing as the screen shot below shows.

If you then open up the map search in the header things get ridiculous - it is so far down the page that you have to scroll that you might well be forgiven for thinking that Trade Me Property was not interested in basic listings at all.

In my opinion Trade Me needs a major rethink as to design layout.

It needs to decide fundamentally if it is a general classified website where property listings and their attendant premium adverts are to be squeezed in where there is some space just as car adverts and listings and job adverts are pigeoned into the same structured architecture or if it is serious about the property space and create a new design and user experience as a serious real estate website portal. It needs to look at the best run site in the region that of Realestate.com.au in Australia to see how to lay out a website for maximum user experience matched to optimal premium advertising.




Realestate.co.nz invests in new commercials when they should be investing in the user

by Alistair Helm in


Realestate.co.nz this week unveiled its new TV commercial. It’s another execution is what has seen a barrage of advertising undertaken by the second places property portal in the past 12 months, as it has stepped up to compete more aggressively with Trade Me Property as it has weathered the wrath of backlash from it pricing model changes last October.

The new advert is funny which is a great attribute for TV advertising and reading some of the comments posted on Facebook, their followers seem to like it as well. Judge for yourself.

From a marketing perspective rather than a purely consumer perspective I have some concerns. I make these in an objective manner without bias to provide a perspective to the commentary I regularly make as to the competitive tension that exists between these two leading property portals in NZ. I have similarly made the same critical review of Trade Me Property TV advertising in the past.

This creative execution is built around the proposition of comprehensive content “The most homes in NZ”. This is the rational takeaway message that the campaign tries to convey. This message forms a part of the print media campaign and is in the voice-over of the TV commercial. However turn off the sound (which is always regarded as the acid test of TV commercials) and you are seeing the message “Realestate.co.nz Where property finds people” - a very different message and brand promise.

I have a problem with this campaign. We have a clever execution in print with the Monopoly theme - bit of humour and good instant contextual referencing. Then we have a different execution around hats - sure there is the great lyricwherever I lay my hat - that’s my home” but it feels somewhat of a stretch. Then there is the DIY execution which I do get (just) but when sharing it with friends at the weekend most didn’t. Some thought it was to do with The Block or was Mitre 10 now part of Realestate.co.nz?

I also find a disconnect between the campaign idea of most homes for sale - being about the greatest choice, best solution when looking for property and the tag line “Where property finds people”. I know it is play on “Where people find property” - but why not say that or better still use a line which failed the complaint raised by Trade Me Property to the ASA back in 2006The only place with everyplace” - although that would still fail today as Trade Me Property is the only pace to find private sales.

That brings me to the major problem. This campaign is vulnerable!  It could well be the case that given the revised pricing model announced by Trade Me Property in early August, the point of difference of “The most homes in NZ” will become null and void and once again Trade Me Property will claim ascendancy to the mantle of “The most homes in NZ” and these ads - the whole campaign in fact will have to be trashed.

Whilst “The most homes in NZ” has become a point of difference in the context of the competitive powerplay between Realestate.co.nz and Trade Me Property I also have to wonder if it actually has more relevance to real estate agents than to the average property searching buyer jn NZ. When they go to either portal they have no interest in the fact that Realestate.co.nz has 37,892 and Trade Me Property 31,369 nor that when searching in Tauranga there are 1,241 listings on Realestate.co.nz and 1,834 on Trade Me Property (oops looks like Trade Me has regained ascendancy there) - what people are really interested in, is what properties are on the market and for this they rely on email alerts - a process that provides no context to relative inventory as if inventory is relevant.

Let's be clear, in my mind Realestate.co.nz are smart to be investing in brand building and the results prove it - their traffic has grown faster than Trade Me Property and they have narrowed the gap from a factor of 4 to close to 2.5.

However brands are not about messages and facts, they are more around heart and minds. Brand loyalty and advocacy comes from memorable experiences and this is where some of the investment money should be being spent. Developing the user experience of the platform on both desktop and mobile. Adding killer features that are standard on property portals around the world that still allude both of these portals in NZ. These investments would be sustainable and drive brand switching which TV adverts can never do. TV adverts at best only stimulate trial. 


Consolidation in the US property portal market

by Alistair Helm in


This week saw the announcement by Zillow that it had entered into a definitive agreement to acquire its competitor Trulia for US$3.5 billion. The move by Zillow is an aggressive one that further cement its position as a key part of the future of the real estate industry in the US market.

Zillow has long held the mantle as the largest real estate website in the US surpassing the effective incumbent Realtor.com many years ago as it has headed for an aggregated audience of over 80 million unique users per month. Trulia has played a powerful game as the challenger as it has also surpassed Realtor.com and carved out an audience and support base within the industry.

Both companies rely on advertising revenue from agents and 3rd party companies as the US model with industry owned MLS’s (Multiple Listing Services) effectively making access to listings open and free for portals negating the opportunity to build a business model of a subscription as operated in most other countries. Agents are sold advertising packages to provide profile to secure listings as either buyers or sellers agents. With over 1.5m agents there is a large customer pool and with $12 billion of marketing spend across the industry each year these two leading portals and others have a significant cake to carve up between them, especially as the US industry effectively ceased print advertising for real estate a few years ago.

Neither company is as yet 10 years old and equally neither really makes any serious amount of money. For Zillow the 2013 year saw revenues of $197m and EBIDTA of $29m; for Trulia revenues of $143m and an EBIDTA of just $17m. Yet these two companies have a collective market capitalised value of $8.2 billion that is a staggering combined price earnings ratio of 178:1.

Trulia and Zillow are very different operations strategically, culturally and in regard to user experience and consumer brand experience and this has been part of the reason for the healthy and respectful rivalry.

Zillow has always been about data and the desire to empower consumers as home-shoppers with all the information and insight to make better decisions in the real estate process. They began originally as a site with no listings, merely a valuation estimate for every house in the US, matched to historical sale price records which was instantly a much talked about and compelling reason for almost every American to visit the site. This razor sharp focus on data off-sided them in the early days with the industry of agents and brokers as the accuracy and credibility of these valuation estimates “Zestimates” were challenged by the industry. However applying huge technology to the problem their data insight and analysis has turned them into the leaders in property tracking in the US with the largest and most valuable database on US households.

Trulia on the other hand has always been about the agents and the listings, working to empower agents through creating a community for home-shoppers to learn, ask questions and establish contact with trusted agents.  They have tried to engage their audience on a hyper-local basis so that you feel that Trulia is there at your side as a trusted friend, unlike the Zillow role as a trusted advisor.

In terms of business development Trulia has been focused on getting closer to their customers especially through the acquisition in Market Leader last year a leading SaaS CRM provider to the industry. Conversely Zillow has been more focused on the consumer engagement first by powering the leading media portals of Yahoo and MSN and then moving to acquire the New York portal Easy Street last year. They have also outspent Trulia in advertising and has lead a massive social media and PR campaign that has effectively intertwined Zillow into the vocabulary of US home-shoppers.

So Trulia and Zillow are different very different brands, different in culture, focus and user experience; however they are competitors. They both fight for the same advertising dollar of agents and brokers, as well as 3rd party advertisers eager to engage with home-shoppers. For this reason I hold no long term belief that Zillow will continue to operate both websites - Trulia as a website and a brand has a finite life. Zillow will be the gorilla in the market. A portfolio strategy as advocated by Spencer Rascoff Zillow’s CEO is a laudable strategy when the portfolio is made up of regional players or segment specific portals for rental property or holiday property or commercial property, but two national residential real estate portals - I don’t think so.

This acquisition will drive Zillow’s growth and earnings. For a start, the combined companies were due to be spending over $100m on advertising this year - no point in wasting half that money to try and out-flank your sister site! A single site will allow Zillow to begin to leverage their massive audience to drive lead generation solutions for agents and brokers, unchallenged by a competing offering from Trulia.

This consolidation is very unlikely to be challenged as anti-competitive even allowing for the shear scale of the combined audience share; as the marketing of property listings will not be impeded by the deal with the MLS structure still effectively allowing any real estate company to be a local portal with all the listings; after all real estate is far more a local business than a national business, especially across 100+ million homes and 300+ million people across the vast continent of 50 states.

Zillow have however not won the war with this acquisition, they have merely avoided a distracting skirmish with a competitor on the road to their ultimate goal of getting closer to the advertising cake of $12 billion a year. They will continue to innovate and acquire on their path as they will continue to grow in influence and power. Both companies have been highly innovative with technology across all platforms and whilst the acquisition could potentially be seen as a chance for Zillow to take a breather on such innovation, I suspect not. Zillow is all about empowering consumers and they are at their core a tech company so I see no easing up in the flow of smart user friendly innovative future tech. This is good news for the consumer and the real estate industry in the US who have nothing to fear and much to gain from this consolidation. However within the US real estate industry the general feeling is of the threat this acquisition brings to the core operation of real estate. That view is in my view more a function of the industry's inherent lack of confidence that their business model (with dual agency services and c. 6% commission fees) being ultimately sustainable.

As to the implications and ramifications for other countries and specifically for NZ. This deal demonstrates the stakes that the key players are playing for in the global property portal space. Zillow is by no means the poster child of the industry, those accolades rightly belong to the likes of Rightmove in the UK and REA group in Australia who deliver significantly stronger financial results from far smaller markets. Those operations though do have very significant competitors who have gained significant ground over the past few years. The likelihood of consolidation in these markets of the #1 player acquiring the #2 are less likely. What is far more likely is regional consolidation with more acquisitions of emerging market players by these two key specialist portal players and other media companies such as Axel Springer and Schibsted.

In NZ Trade Me has no need to consider acquisition, nor would it probably be able to as the ownership of Realestate.co.nz is more a strategic asset for its shareholders than a financial investment. The key focus for them as it is for Zillow, will be cementing the relationship with the industry customers at all levels, agents and business owners. More likely on the agenda may well be the benefit of an integrated CRM system as Trulia saw with the Market Leader acquisition. In NZ and Australia new operations offering SaaS solutions for real estate CRM look to be redefining the digital backbone of the industry and this could be key for Trade Me and other property portals who all rightly recognise their core customer are agents and brokers / business owners.

The fact is that nowadays the property portal industry is far exceeding the value of the real estate industry they support and rely on for their business. This is largely a function of a continued belief that the digital transformation of the whole industry process will occur at some time and smart tech companies will be the ones to take advantage of any such trend. For real estate companies there are massive efficiency gains to be made through working with portals, however collectively the industry around the world still holds an adversarial relationship with their local portal. 



Trade Me Property changes its pricing model - again!

by Alistair Helm in , ,


Trade Me Property today announced a new pricing structure almost a year after the implementation of the radical switch from a subscription model to a pay-per-listing business model. That model has, so it seems, proved to be a too great a stretch for the industry to accept and likely as not, too troublesome an issue for Trade Me to continue to deal with as it approaches it annual reporting just 3 weeks away.

The new pricing structure is on the face of it, a significant win for the real estate industry as it re-establishes the subscription model, whilst at the same time offering a scaled per-listing fee and a regionalisation of pricing.

The real estate industry mobilised itself into action upon the announcement of the new pricing model last November with clear messages passed within the industry from, at the extreme a  complete boycott of Trade Me Property, to merely advising clients that the website had changed its pricing and was no longer a mandatory component of marketing of a listing.

At the same time the industry circled the wagons around the ‘industry-owned’ website of Realestate.co.nz as a means to provide the home-shopping public with an alternative to Trade Me Property.

As the standoff ensued over the next 10 months there has been a clear demonstration that the impact on Trade Me’s business was being felt in both customer loyalty as demonstrated by listing numbers and in investor confidence as evidenced by the share price (although it is not accurate to entirely correlate share price to the issues with the Property sector, however it is a critical sector).

It is my belief that this new pricing scheme will in one fell swoop patch up the issues that Trade Me Property has faced, resulting in a solid re-population of the site to full strength and full loyalty (and if not loyalty then at least patronage). It will not deliver the much hoped for absolute gain to the bottom line that the original pricing model of a pure per-listing fee would have delivered but it will get the company back on track to build its business for the future.

So what are the details of the new price structure, who will benefit, who will choose which of the options and what will be the medium term outcome, as well as an assessment of the winners and losers within this tussle?

 

Return of the subscription 

The new subscription service with unlimited listings will be open to all offices with a regional split with metro offices in Auckland / Wellington / Christchurch paying $1,399 per month, an increase from the previous monthly subscription from last year when fee was $999. For those offices outside of these 3 metro areas the monthly fee will be $999 - no change.

This subscription model based on location is a smart move in that it moves the company away from a single flat fee structure, to regional pricing. This will go down well with provincial customers who have long fought to be recognised as having a wholly different cost base than the metro real estate operators. Once established, Trade Me Property may well apply this regional structure to their premium property advertising and also potentially further segment by geography as I am sure Southlanders will likely argue that Hamilton and Tauranga should pay more than them or rather that they should pay less. Regional pricing makes sense and it will be interesting to see if Realestate.co.nz follow suit.

 

Listing fees based on rateable value price

Trade Me Property will continue with the per listing fees in what they describe as the "Flexi option" however to mirror the differential pricing that was introduced for private sellers a year or so ago, single listings will be $159 for a property with a rateable value over $450,000 and $99 for those under $450,000. This will also go down well especially with the smaller offices. On top of this they are making a very public statement that the scale of a customers business affords discounts in the form of Gold / Silver / Bronze.

The average office in NZ is actually quite small handling around 100 listings a year / 8 listings a month, with many of these offices in provincial areas of the country where the median listing is more likely $300,000 this change will be welcome news. A year ago these offices would have been paying $999 a month for unlimited listings. The per listing fees bumped this up to $1,272 whilst this new structure will cost them $800 - a win!

The retention of the listing fee based model is in Trade Me’s words a method whereby offices can seek to remove the sunk cost of Trade Me Property and appropriately pass the cost on to the consumer, in effect saving them thousands of dollars a year. Time will tell if this is how the industry see it.


So overall the industry will feel I think, vindicated in leveraging their collective muscle against Trade Me and maybe Simon Tremain of Tremain Real Estate in the Hawkes Bay and Tim Mordaunt of Property Brokers in the Manawatu and Hawkes Bay will be hailed as heroes for staunchly refusing to capitulate and effectively completely boycotting Trade Me Property for all this time across all their offices.

I think it is likely that the vast majority of offices will switch back to a subscription model, the metro offices absorbing the higher monthly fee and relinquishing the charging of the fees to vendors. Many small offices will choose the per listing fee not to pass the cost on, simply as a means of saving money.

So the question has to be asked - so who’s the winner and who’s the looser in this change?

For my money the short term winner is the real estate industry. They will be happy and as I say feel vindicated. In the medium and longer term Trade Me Property is the winner. They will once again re-affirm their dominance of the lead generation business for agents from the largest and most comprehensive portal of listings covering licensed agent listings and private sellers. They will now, once they have regained patronage (if not as yet loyalty) build a growing business in premium services sold more aggressively through a growing field-based sales team. They will naturally hike fees regularly and in time seek to move to a pure per listing fee, probably as a more bundled offerings as other leading portals do. This will deliver the bottom line that the company and the investors want.

As for Realestate.co.nz I fear that they will be the loser in the short and long term. They have emerged from this period a lot stronger in audience terms and with a greater industry appreciation, however with Trade Me Property back with a full listings complement the delivery of leads through Trade Me will return and Realestate.co.nz will be back to being judged by the industry as a championing industry site, yet hardly a comparable adversary. Compounding their problems will be a more aggressive and significantly larger resource base across the Trade Me Property sales team out in the field who will seek to develop a stronger relationship with agents and offices matched to a significant ramping up in their technology team


Disclosure: I was CEO of Realestate.co.nz from 2006 to 2012. I provide consultancy services to Trade Me Property from time to time, but I note those services do not extend to advice on pricing and offers.  All insight and opinion expressed here are without any reference to any knowledge or insight I have gained through my work at Trade Me Property. 


Property price searching online needs to be more accurate

by Alistair Helm in ,


A recent appeal against the findings of the Complaints Assessment Committee before the Real Estate Agents Authority on the subject of online search pricing for property highlights a major issue which in my opinion should have been addressed long ago, as it continues to frustrate buyers as to price expectation of property on the market.

Here is the heart of the issue. Well over 1 in 4 of all properties on the market today are advertised without a price, in Auckland that figure is closer to 1 in 2. That means in Auckland there are 3,485 properties for sale with no detail in the listing as to any guidance of price expectation. Buyers often comment that such properties are deliberately avoided as they hate the uncertainty and risk associated with discovering properties only to find it is way outside their budget due to the price search bracket on the website.

The decision not to display a price on a property is in the view of real estate agents due to the fact that in their words “the market will decide the price”. That is entirely true, as the sale price has no bearing on any displayed price or indicative price. The selling price is the agreed price based on the willing seller deciding to accept the offer of a capable buyer prepared to offer such a price. However the market decides the selling price for all properties, not just those with no price indication.

This problem confounds buyers and is at the heart of this appeal to the REAA Complaints Assessment Committee. A property should only be displayed in search results on a website within the range which includes the assessed price. That is the price which the REAA requires every agent to complete and submit to the vendor when listing the house. So if the agent assesses the house at $625,000 then the property should feature in a search range of $600,000 to $650,000. Not in a search range of $550,000 to $600,000 nor in a range of $650,000 to $700,000.

In my opinion one of the issues that results in properties appearing online within too wide a search price range is that real estate websites whether aggregator property portals or real estate company websites provide too wide a price range in the search filters and should refine their search process to reflect the needs of buyers, not play to the marketing tactics of the agents.

It should be required of suchwebsites that increments of price ranges be more narrowly defined so that buyers can input their budget and expect to see properties displayed which based on an agents appraisal would likely sell within that range

Let's look at this case in point and through that see exactly how this situation arises within the industry’s approach to property marketing. This particular appeal received publicity in the NZ Herald recently and concerned a Harcourts agent who listed a property in August 2012. The property was appraised with a price range of between $880,000 and $980,000 with the vendor expressing a clear opinion that they wished to achieve a sale price of $980,000.

Now this is the first issue I have. The Real Estate Agents Act enforced through the REAA requirements of Agency Agreements for selling a property requires the following:

A written market appraisal: This is the agent’s best estimate of the price they expect your property could be sold for, based on sales and prices for similar properties in your area or a similar area.

The best estimate of the price - not a rough guide with a range of $100,000 amounting to more than a 10% variance. Reading the particulars of this case clearly the agent chose to provide a range that happened to stretch from the agents best estimate of $880,000 to the vendors expectation of $980,000 - a clear disconnect which would be bound to lead to issues between agent and vendor.

The property was listed with an auction method of sale with no price displayed on the web. The listing had a search range of $750,000 to $950,000. 

Here is the second major issue - the agent provided a market appraisal of $880,000 to $980,000. Why then did the agent list the property on the web with a search price of $130,000 below their appraisal and $230,000 below the vendors expectation?!

The reason is to be found in the evidence to the REAA enquiry provided by the licensee who stated in the submission that:

It is industry practice to load a property within a certain price bracket. Generally, this price bracket is quite wide, in the vicinity of $200,000, as this allows person searching for a property within that region to view properties that are above their price search criteria and associated properties below their price search criteria. This is useful to the vendor as it allows a wider range of parties to view their home and can often generate interest in different price brackets from parties who originally had a lower or higher price that they wished to spend.

The licensee went on  to state:

Price search criteria are not the price of the property and they have no bearing on the final value - their use is purely to assist prospective purchasers who might use price search criteria to assist in narrowing their search results. I also make the point that only a small sample of buyers indeed search for property using price search criteria. Rather my experience would suggest they are more intent on searching for property based on key criteria of suburb and amenities such as bedrooms.

This assertion by a real estate professional is frankly staggering and I would have thought that the REAA would challenge this view that a $200,000 range is acceptable, and to state that the intent is to generate interest fromm parties where the property is outside their intended spend. To then go on to state that buyers don’t use the filter criteria on websites is hardly credible.

All the main real estate portals and leading real estate company website have price ranges of $100,000 between $500,000 and $1m, below $500,000 some operate with increments of $50,000 and over $1m the increment rises to 200,000. 

In my view it would be of great benefit to all buyers to have the listing price search in increments of $50,000 right up to $1m. Leaving the user to refine tightly their budget criteria to within $50,000 or to widen it to $100,000 or more. Additionally properties should be loaded on such sites with a single price which whilst not displayed, should accurately reflect the market appraisal presented by the agent. In this way the buyer would get to see properties that meet their budget as opposed to being shown properties that the agent judges that they should be enticed into viewing and end up being sold  for far more than their budget or the price search criteria.

As in this case where this property would have been seen by prospective purchasers who may have been searching for property between $700,000 and $800,000 due to the search range of $750,000 to $950,000 when in fact the vendor was not prepared to entertain any offer less than their view of the value at $980,000 shown by the fact that the property passed in at auction at $880,000 and a subsequent offer of close to $900,00 failed to secure a sale.


Trade Me Property - an insight into a new design?

by Alistair Helm in ,


It’s about this time each year that we start to get glimpses of the potential look and feel for a new iPhone - the rumour mill goes into overdrive ahead of the latest design and the people at Apple panic lest a test version is left behind at a bar!!

When it comes to design at Trade Me Property I am not sure there is quite the same amount of excitement, rumour or speculation. So let me take on the role of cheerleader of what I think may be a future direction of Trade Me Property in the mobile arena and possibly the web overall !

This potential new design style isn't the result of any leaked documents left idly behind in the rubbish bins of Wellington as Trade Me relocates across the road to some seriously smart new offices, no this design look and feel is as they say ‘In the Wild’ - as per the new design of a Windows 8.1 app.

Now I know Microsoft tablet installed base is not that huge. Estimates for last quarter of 2013 was 4 in every 100 table sales was for a Microsoft OS version - potentially rising to 1 in 10 by 2017, but it is clear that NZ has some very smart Windows 8 developers.

This I think is the key. For the development of this app, Trade Me has worked with an outsourced team from LazyWorm Apps. In doing so I think they have brought some fresh thinking to the Trade Me Property look and feel. Up until now mobile design has been somewhat constrained by what appears to be very hard baked-in principles of the core design principles of Trade Me design, which whilst ensuring super intuitive design user interface has ended up looking a little samey and dated. So I think this new look and feel is the result of a smart decision by Trade Me to let things run a little bit wild on what is likely to be their smallest installed base tablet app. However what we may see is this design creep across the web and other mobile platforms.

 

The Design

This is the screenshot that got me hooked from viewing the profile pages of the app ... sadly I don't have a Windows tablet to view it on so the comments are limited to the look rather than the user interface.

There is a simplicity and cleanness to this design. The function menu uses the colour cue of the brand whilst the logo is recessed. The images of properties are clean and engaging.

 

The map view of search uses neat shaded circles to cluster listings in a very clear way with density of colour reflecting density of lisitngs

The listing image viewer consumes the screen in an immersive manner with the overlay providing the necessary contextual information



Competing property portals in Australia go head to head

by Alistair Helm in


NZ may have an impasse between agents and Trade Me - however across the Tasman it looks to be heading for an outright war between the two leader property websites!

The Australian digital property marketing space is a heavyweight boxing ring with the incumbent REA Group (majority owned by News Corp) facing off against a newly resurgent Fairfax owned Domain. The clash is about to get elevated to a whole new level given the email sent out by the CEO of Domain, Antony Catalano calling on agents to pull the plug on REA Group.

The email has been sent as an open letter to the real estate industry and pulls no punches. Stating that “If Australia's real estate industry had any doubts that it is fuelling its own demise it need look no further than the reality behind REA's latest round of price hikes.” This will sound familiar to NZ real estate agents if you were to replace REA with Trade Me, however we have yet to hear this level of rhetoric from Realestate.co.nz.

The argument expounded in the email is nothing new and is something that I have often stated over the years - that the headline traffic numbers of websites bear no relation to the scale of the industry in terms of genuine buyers. Catalano states that the 23 million visits made to the REA platform per month bares no relation to the monthly property sales of 33,000, just as a monthly traffic to Trade Me Property of around 2 million unique visitors a month bares no relation to monthly property sales in NZ of 7,000.

Real estate online listings appeal to a far wider audience than buyers alone and always will do - its a fact and therefore the key determinant of true value delivery by a property portal is leads - quality leads that turn into buyers, as that is what agents want.

The email is emotional and colourful as is the writer who has quite a reputation in the industry in Australia. Antony Catalano was at one time the top executive for Fairfax Newspapers in Victoria in the real estate advertising business before leaving and starting up a rival publication which in the space of a few years came to virtually destroy the Fairfax magazine and driving Fairfax to acquire 50% of Catalano’s business.

The email is a carefully timed piece of incendiary media marketing. REA Group have just announced their latest round of price increases of as they like to present it - a market based pricing which whilst still based around a monthly subscription is edging ever closer to the per-listing fee structure implemented by Trade Me Property. In Australia these revisions to REA’s pricing policy are an annual event and always generates enormous vitriol amongst the industry but somehow the industry ends up paying the invoice and another year rolls around.

The other critical timing opportunity Catalano has played to, is the transition from the outgoing CEO Greg Ellis to the new CEO Tracy Fellows who although announced last week is not due to start in the role until September, so the interim CEO will be attending to this media barrage.

The stakes are high in the Australian real estate digital marketplace and the ego’s no less so. REA Group with its primary interests in the Australian market with the websites of Realestate.com.au and Realcommercial.com.au also owns websites in Italy and Luxemborg as well as Hong Kong, employing more than 700 people - its recent full year revenue was A$336m delivering an EBIDTA of A$164m giving it a capitalised market value of A$5.8bn. Domain by comparison has a revenue from Australian operations of the residential website of Domain.com and the commercial site of Commercialrealestate.com.au generated revenues of A$141m and an EBIDTA of A$45m.

It seems somewhat duplicitous for Catalano to challenge the industry to boycott REA as he trying to take the high ground as some white-knight to defend the interests of the industry, his agenda is as clear as day - to maximise the shareholder returns of the business he is charged with running.

It will be interesting to watch from the sidelines in NZ as the aspiration for Domain is to seek an IPO in the coming year or so as a further cash injection to support the ailing print media business of Fairfax - wasn't that the purpose of Fairfax selling Trade Me though!?


The UK's challenger property website Zoopla heads for an IPO

by Alistair Helm in


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The property portal space in the UK keeps getting more interesting as the #2 challenger in the market Zoopla signals it's decision to float as a public company. The changing competitive landscape in the UK portal space as well as the approach to the IPO is interesting and has pointers for the NZ market - here are some of my thoughts

The UK real estate market is in many ways very different to New Zealand. For a start the structure of the industry, offering a different degree of service and a lower commission fee structure of around 1.5%. Equally the process of purchase (certainly in the England) is a lot more tortuous with the system of accepted-offers on property purchases amounting to no more than an intention to buy right up until the settlement date when as a buyer or seller you get to know if the process will all go through.

When it comes to marketing of real estate the landscape is also somewhat different. Firstly the industry has moved almost wholly to online with the dominant player Rightmove growing into a highly successful and valuable company.  

Rightmove was founded in 2000 by the top 4 real estate companies as a free to list service, fully industry owned. The site and the business grew in size, relevance and value as firstly subscription fees were introduced in 2002 and then premium advertising products in 2007. In 2006 the founding sahreholders decided to float the company with an IPO which listed the company on the London Stock Exchange in March of that year at a initial price of  £3.35 valuing the company at £425 million. The IPO raised £76 million representing 18% of the company with the balance retained by the founding shareholders.

Over the following 8 years the company has grown in scale and financial performance from revenues of £18 million to over £140 million (an increase of 670%) and at the same time the value of the company has grown to over £2,360 million ( an increase of 450%).

At one time around 2009, Rightmove seemed to have the market sewn up as the competitive threat was fragmented with competing sites such as PropertyFinder, PrimeLocation and FindaProperty as well as innovative property information sites like Globrix fighting it out for a weak number 2 position. It was through smart acquisition of these competing sites that Zoopla came striding through the market to become over the space of 8 years a real challenger to Rightmove. From the latest stats as measured by SimilarWeb the traffic to Zoopla is around two thirds of that of Rightmove with an estimated 16.7 million visits per month.

The financial backing for Zoopla came largely from The Daily Mail & General Trust the publisher of the same name which is still the largest shareholder in the company with 52.8% of the shares. Zoopla whilst not attaining anything like the revenue and profit levels of Rightmove (£38m in revenue and £10m in profits) has driven the business to create a very strong number 2 player in the market. Core to this success has been data around sales prices and estimated valuations. In very much the same model as Zillow in the US, Zoopla took public record data on property sales prices and mapped it on the site day one and this as with Zillow has delivered a valuable unique proposition for the company. Nowadays Rightmove and the other sites feature such data but back then the advantage was played well by Zoopla.

Zoopla has now announced its decision to undertake its IPO with an expected valuation of £1,000 million, providing a healthy return for its largest shareholder which has invested close to £80m in the business.

What is most interesting within the news of the IPO is the decision by Zoopla to offer a special share purchase scheme for its customers. The scheme available to existing customers of which there are an estimated 20,000 in the UK - real estate offices and property developers, is a two stage purchase of £2,500 each - one tranche now and one in a year's time. Based on a say a share price of £15, with say 23 million shares on offer, this scheme would over the two years if fully subscribed create a 10% ownership within the industry. A very smart move to tie-in their customers (something I have advocated for Realestate.co.nz in my recent strategic proposal).

To sweeten the pot Zoopla has announced that existing customers will get a 20% discount on the issue price, which they recon represents a discount of £20 million - a great gesture and one that I am sure will attract a significant uptake.

There is another reason for this strategic offer and intent to create a shareholder structure within the industry. Last year it was announced that a collection of real estate companies fed up with spiralling increases in fees and the perceived excessive profiting by these real estate portals (despite the fact that RIghtmove was started as an industry owned site) was going to create a new genuinely industry owned website to champion a fairer (lower cost) portal - sounds like a familiar situation to those in the NZ real estate industry battling Trade Me's fee increase?!!

What was very interesting in the announcement (and I personally do not believe it has much hope of success - have a read of an opinion piece I wrote at the time) was that the new site called Agents Mutual was going to require subscribers to commit to its site and only one other portal - saying to the industry, you choose Agents Mutual and Rightmove or Zoopla - but not both! - consider the influence of being a shareholder in Zoopla on this decision now??


Realestate.co.nz - Where to from here?

by Alistair Helm in


I have been fascinated over the past 6 months with the issues facing the real estate industry and Realestate.co.nz as the industry grapples with the issues related to the new pricing policy implemented by Trade Me Property. I have commented on these matters a number of times, each time though, I have thought  "what would I have done if I were still running Realestate.co.nz"?

For over 6 years I was the CEO of Realestate.co.nz and in that time faced many challenges and implemented many initiatives. I got some things right and some things wrong; ultimately though I parted from the organisation largely the result of an impasse with the board as to the future direction of the company. I had a view as to the level of investment and structure required to drive the future development and create the leading property website in NZ, it was not the view shared by the board. I lost, that is the reality in business.

Subsequently the company has invested in new developments and undertaken up-weighted marketing as it has sought to leverage the dissatisfaction of the real estate agents to the policy changes at Trade Me Property. These investments have paid off as Realestate.co.nz has strengthened its position which I am delighted to see. However I still reflect on what plan I would have adopted in such a situation.

So purely as a hypothetical exercise and in an open manner for the benefit of the real estate industry I have outlined here my thoughts around a strategy for the future of Realestate.co.nz, a strategy to power it into being the leading digital property platform in NZ. Now clearly this plan is by no means guaranteed to work or would be in any judged to be full-proof. It is merely my opinion and in writing this I am in no way criticising the current management or board. I simply felt the desire to articulate my thoughts.

There are 4 distinct components to my proposed strategy:

 

1. Engage your customers

In my mind this is the most important strategy for the company. For whilst the website has to deliver a valuable experience for consumers searching for property for sale or rent, the business will be of no value without the support of the real estate industry. In this regard I am not simply  talking about support as in the listings. I am talking about support in an evangelical way - you need to empower the industry to support the site and advocate the site. I often stated during my time in the role that the salesforce for the company were not those few account managers (excellent though they were!), but the 10,000+ real estate salespeople who through their everyday contact with consumers could become our full time evangelists.

Real estate salespeople are independent contractors and whilst in the past the decision as to online listing was a matter for the office manager and the admin team the critical importance of online marketing now and in the future requires all salespeople to engage with online marketing for every listing and with every client. To achieve this involvement and evangelical support requires investment in field based sales people together with comprehensive training. The real estate salespeople are the channel to future marketing products and services and need to be supported. I believe that currently neither Trade Me Property nor Realestate.co.nz has more than a couple of field based account managers and/or trainers compare that to the Australian market where REA group alone would have over 250 field based people dealing with customers - that would translate into the equivalent of 50 in NZ, now that might be excessive but I can be sure that if a customer in Morrinsville saw a visit from either Realestate.co.nz or Trade Me in the past year (or two) I would be surprised!

Beyond the critical customer group of real estate salespeople there is another subset of customers whose support the company needs, they are the business owners. Business owners are the 600+ individuals who own and operate the majority of real estate companies around the country. For whilst 80+% of the industry operates out of the 5 major brands, these are brands are franchise groups. The real influence and ultimately the buying-power rests with these business owners.

To empower and engage these business owners you need to provide them with motivation to support the company and nothing screams motivation more than “skin-in-the-game” and that in the case of the company this means real equity. Equity in Realestate.co.nz would be the motivation to ensure commitment of marketing budget and loyalty. That would provide the security of commitment for the company to attain the future vision to be the outright leader in the market.

Realestate.co.nz uniquely could enact this as it is notionally industry owned and a private company. For whilst the current shareholding is split between the REINZ and the 5 leading real estate companies, the reality is that the 10,000+ sales agents and 600+ business owners are disconnected from ownership, particularly as the shareholding of the large real estate companies is tied up in the franchisors to whom the business owner pay their franchisee fees. Effectively the business owners particularly are being asked to continue to support a website that benefits their franchisors at their costs - effectively making them pay twice.

Imagine if a cooperative structure was established much along the lines of Fonterra. Business owners having an equity stake in the website business through a capital raising by the existing shareholders. Shares could only be held by a subscribing and  active real estate business. Dividends would be payable based on usage support commensurate with shareholding. Shares could be traded to allow for businesses to enter and exit the industry and thereby allow business owners to realise the value in their continued support of the company.

 

 

2. Focus on experiences

The company needs to invest. It needs to create a compelling digital platform that delivers experiences for users that excites and delights. Experiences across all platforms to provide solutions to property buyers and renters, helping them navigate the buying or renting process.

The tablet experience is the most critical at this time, this is the device that you want users to fall in love with your brand and service, capture the emotional early searching part of the home buying process and thereby guide people to then go on to use the more functional smartphone app. Win the app environment and you can effectively ring-fence your users and secure competitive advantage.

The company also needs to think laterally to envisage the next experience opportunity. How could the smart TV be a complement to the lean-back tablet browsing experience? 

Realestate.co.nz is a technology platform for the real estate industry. It needs to showcase innovation to the users and go as far as to assist the customers in their quest to better understand the future of digital engagement.

 

3. Empower consumers

Consumers need to feel engaged and empowered especially around decisions that are complex and involve high risk. The advent of the internet has opened up access to enable consumers to be better informed and to have a true sense of involvement in so many aspects of their lives. This is not reversible. Real estate in someways epitomises this and yet at the same time it is the most opaque industry for data and empowerment. From the simple process of how to find and evaluate an agent, to what is really going on in the real estate market, and what is the best method of sale, there are as many answers as there are individuals willing to share opinions on the questions.

This situation opens up the opportunity for Realestate.co.nz to create a digital oasis of insight and assistance, to be a partner to the home buyers and sellers. This positioning for the company could provide it with an unassailable position of influence, respect and trust. Developing this in partnership with it customers ensures that the two sides operate in tandem and both benefit. It all comes down to data. If the customers could have the confidence to trust and influence the way the market data of transactions is collected, analysed and reported then a single repository of knowledge through Realestate.co.nz would benefit all stakeholders in the company.

The final component of empowering the consumer is almost akin to the final blow to the competitive threat of Trade Me Property to which I refer to private listings. These listings will for ever be the differentiator that enables Trade Me to retain its massive hold over the real estate industry. Cutting them off from this unique differentiator would finally allow Realestate.co.nz to create the winning move. There is no valid reason why private listings should not not be displayed on Realestate.co.nz. To the consumer it makes not a jot of difference, all they want is comprehensive content on a consistent single platform, nothing more frustrating for them than hopping from site to site to ascertain the total portfolio of listings on the market.

As for the attitude of real estate agents to private listings, surely by now the logic must be established that this approach to selling your home will not go away, nor will it undermine the role of the agent. If agents somehow believe that by not advertising private listings on Realestate.co.nz they are in some way cutting off oxygen to these sellers they are mistaken. Equally if they think that denying private sellers access to Realestate.co.nz is some how a demonstration of a value proposition for agents, then the value of agents is not valuable enough. As a final sweetener, surely the potential of $6m of revenue a year would quieten the loudest sceptic, especially if they were a shareholder of Realestate.co.nz

 

4. Build passionate brand adoption 

With a laser-like focus on the customers, a cooperative structure of ownership, matched to a resurgent investment funding to power new innovation, the last component of the strategy would have to be building the brand identity such that the brand becomes a byword for the process, a trusted and recommended single solution to all aspects of the property market.

Clearly the emboldened financial situation for the company as a result of greater support matched to a capital raising would create a war chest worthy of a major brand campaign, however burning the budget on flashy TV adverts does nothing more than stoke the coffers of the TV companies (even if one of them is state owned). What would be needed is an approach to marketing that created a real sense of why Realestate.co.nz is the logical solution. It should be as much about the innovation and experience as it about creative messaging. It should literally wrap itself around the agent process and support the agent in their day-today work as a part of the very foundation of the industry in all aspects of training, materials, communication and success. The brand should be there with the agent in the home of the potential client on the day of the first presentation as much as on the day the contract is signed, as on the day the keys are handed over and then the brand should live on with the consumer through the life of the property. This takes time and takes commitment, however the goal is audacious and yet highly achievable.



That is my proposal to the industry. My view as to how to push home the advantage and ultimately remove Trade Me from the equation, or at least marginalise them to the role of auctioning tractors with a 20 acre farm thown in!

As to the measure of success for the adoption of this strategy, which by no means is guaranteed, you need look no further than the overseas markets whether the digital real estate marketing platforms are reaching stellar levels. 

In the UK a market of 60 million population the leading property portal (Rightmove) as a listed company has a market cap of $4 billion and the #2 (Zoopla) is about to list at an estimated cap of $ 2 billion. The US has two leading property portal players both listed companies in a market with a population of 320 million - Zillow has a market cap of $5 billion and Trulia a market cap of $1.5 billion. Finally Australia with just 5 times to NZ population with its powerhouse property portal REA Group topping all of them with a market cap of over $6 billion. These valuations are not reported here as inducements to demonstrate the upside of the future value of Realestate.co.nz, for with this cooperative structure why would the future shareholders sell? The key demonstration of these numbers is to highlight to the industry as to what to expect if Trade Me is given a free run at the future, as its aspiration is to emulate these performance metrics from the real estate sector, and as a consequence the industry directly or indirectly will end up paying to generate the revenues to create the profit to support these levels of profitability, many times their current level.


Spring has arrived in the US and with it a new battle of real estate websites

by Alistair Helm in ,


There is a war being fought right now in the US - a high stakes tussle between the 3 aspirants of the property portal industry. The prize is a slice of the more than US$6 billion a year spent by the real estate industry in marketing, coupled with the potential of a foothold into the influence of more than US$60 billion in transaction fees a year. By comparison the NZ comparable numbers are around $100 million in marketing and $1.4 billion in fees.

The three players in the market for the eyeballs and influence of the buying public of the US are Realtor.com, Zillow and Trulia and each have today rolled out their new season TV commercials perfectly timed for the Spring home buying season.

I have always been partial to TV advertising and in some ways I'm sad that the heyday of TV commercials is past and their relevance is diminishing - they are the ultimate creative medium, as creatives and production crews combined with massive clients' budgets all seek out that holy grail for that one special ad that transforms a company and becomes enduring and memorable - think Coke ads and Toyota ute ads.

The latest collection of adverts for these real estate portals reflect perfectly the differing personality of these three companies and their distinct point of difference and viewing them further reinforces these differences.

Realtor.com

The industry stalwart, serious, factual, professional. The site is the 'official' site of the National Association of Realtors and as such focuses on facts - more listings, more accuracy, more up-to-date. All wrapped up in a warm 'idealised' family of wholesome values from a place only existing in TV commercial land - lightly glazed with humour.

 

Zillow

Zillow is the leader in eyeballs at the moment with a staggering 77 million unique visitors per month and plays an emotional card creating beautiful vingettes of real people 'looking for a place for your life to happen' rather than a boring functional requirement to move home, or just find or buy a house. It's another tear jerker to complement the homecoming advert from last year. In some ways it is similar to Realtor.com full of purity and the idealised perfection of a perfect couple - mid market, middle America. The search functionality featured in the ad might have been more convincing if the search term was "tree house" instead of 'big tree' but that would have killed the punch line and I just did! 

 

Trulia

Trulia has the appeal of being the battler in this threeway tussle, not the scale of Zillow and not the authority of Realtor.com, however they create a unique experience, they focus on real situatons and inject subtle humour and insight that is hyper-local which is important. It is the subtly l love, the insinuation that is made of the situation - creates memorability and this ties into the campaignable idea of 'Moment of Trulia' - gets my vote. Shame though about the competition as the end frame - seems to spoil somewhat the authenticity and emotional connection.



Trade Me Property adds map based search

by Alistair Helm in ,


Call me cynical, but I struggle to feel that our online property searching experience here in NZ is taking bold new leaps forward with the announcement of 'map based search' from Trade Me Property.

It also appears that I am not alone in this regard as my ever insightful news-service of Twitter clearly shows.

Now the cynicism may be from a 'geek' perspective as both Layton and Dave are certainly respected in the realm of NZ Geek Society. However as Dave rightly asked me "how many years ago did we (realestate.co.nz) do that?" - the answer is 6 years ago,  January 2008 as this article I wrote on Unconditional testifies.

I certainly go along with Layton's view that the solution is well executed - something that Trade Me excels at - delivering a great user interface, great design and an intuitive feel.

However I keep coming back to this fact that this is not so much a step forward as a very long overdue catch up.

To be at least taking a step forward, Trade Me should have executed this service with the ability to "draw your own search area" as many real estate websites offer around the world. This example from Trulia in the US highlights this capability - allowing you to be very granular and definite in your search area for property, in this case, no more than 2 blocks from the beach offering just 7 properties that suit my specific requirements.

Another even better execution I found was by Homely - a new innovative start-up real estate website in Australia - far from being a multi-million dollar company, this small passionate design lead team have produced a lovely execution of "draw your own search area".



Trade Me vs. Real Estate Agents : 5 months on, could the boycott be growing?

by Alistair Helm in , ,


Back in November last year when the news of an agent boycott over proposed fee increase by Trade Me hit the mainstream media, I was pretty sure that sanity would prevail and more importantly vendors would not be used as 'Pawns' in this issue of internal costs of marketing.

It's now 5 months later and the issue is still not resolved and as each week passes I would judge that the balance of power is tipping significantly in favour of the agents.

Back in February I reported that the then two highlighted areas of the country where the initial boycott had begun - the Hawkes Bay and Hamilton still had a situation where Trade Me listings were significantly reduced and in some cases dominated by private sale listings. Revisiting the situation today shows a continuing gulf of listing stock stock between Realestate.co.nz and Trade Me Property in these areas.

Taking the Hawkes Bay region - as at this week Trade Me Property is displaying less than half of the property listings for sale than Realestate.co.nz (based on all house types as well as lifestyle property).

The data analysis of the Hawkes Bay I have undertaken this time has broken down the listings by real estate company.

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As reported at the time, the regional players of Property Brokers and Tremains who between them represent close to 40% of all listings in the region continue to boycott Trade Me Property; they currently feature less than 1 in 20 of their active listings on Trade Me Property (most of which are listings added by the vendor with the agent details). This means that from amongst the 1,594 active property listings on the market at this time in Hawkes Bay, Tremains and Property Brokers between them are not displaying 583 of them on Trade Me - that is significant over 500 properties for sale from the two big players in the market not being displayed on Trade Me Property!

Given the extent of this boycott it is clear that these companies are not facing any adverse reaction from sellers - properties are being listed and sold in the Hawkes Bay without the exposure on Trade Me Property.

Widening boycott?

What is also significant from the Hawkes Bay data is the extent to which Harcourts are boycotting Trade Me Property, with less than half of their listings in the region displayed on Trade Me, that amounts to another 181, adding to the 583 from Property Brokers and Tremains not featured on Trade Me.

The extent of this boycott by Harcourts is dramatically seen when doing a search on Trade Me Property for Harcourts listings by listed date - there have only been 3 new listings across the whole of the Hawkes Bay region in April from Harcourts whereas in fact from data on Realestate.co.nz shows the total number of new properties listed by Harcourts in the region in the month was 227.

The National Picture

Applying this analysis to the national picture, Trade Me Property is displaying 8% less listings of property than Realestate.co.nz (this total includes private sale listings).

The analysis below details the extent of the support or boycott by real estate company. Clearly Barfoot & Thompson and Ray White are at this time supporting the use of Trade Me (or as an alternative conclusion these companies agreements with Trade Me have yet to reflect the new charging rate).

Whereas Harcourts are only featuring 7 out of 10 of their active listings on Trade Me Property. Harcourts are the largest real estate company in the country with over 190 offices and currently 8,315 listings of properties for sale.

Equally as significant is the analysis of listings from Bayleys and LJ Hooker who also appear to be boycotting Trade Me Property which in the case of LJ Hooker with 2,664 active listings on the market results in only 1,755 of them displayed on Trade Me Property.

 

Boycotts in Other Regions

Further investigation of the listings data shows that in addition to the Hawkes Bay, the Manawatu / Wanganui region is also witnessing a boycott of some significance.

From amongst the 3,223 active listings of properties for sale across the Manawatu / Wanganui region (using the boundary definition of Trade Me) as showcased on Realestate.co.nz, just 2,567 of them are shown on Trade Me Property (actually somewhat less as this number includes private sale listings). The breakdown by company, shows that it is only Ray White that has almost full support for Trade Me Property whilst Harcourts display less than a third of their listings on Trade Me Property. Equally other key players in the market such as Professionals and LJ Hooker display less than 70%. 

The anomaly though is Property Brokers. This region is their heartland where they hold close to a 30% share of all listings on the market, yet they are displaying over 60% of their listings on Trade Me Property - a very different situation than that in the Hawkes Bay.

So in conclusion it looks like the boycott of Trade Me remains and if anything is growing, given the extent of the Harcourts representation (or rather lack of it!) on Trade Me Property. In my view as each week passes without some action or decision or negotiation (which clearly will be going on behind closed doors) the market position of Trade Me Property weakens and the muscle flexing by agents appears to be working.

 


Smart marketing!

by Alistair Helm in


This week you could not have missed the annual ritual of creating April Fool's jokes to bring some brevity and lightness to the daily news. For me the favourite has to be the proposal that should Scotland decide to vote yes in their referendum on Independence in September then they would instigate a more to switch to driving on the right from 2017.. with all the consequential challenges that would create! Added to this all road signs would be re-written replacing the 'M' motorway reference to 'S' for Scotland naturally and 'A' roads will be called 'N' for National roads. I commend the Guardian for creating this great spoof - apparently one of 4 such spoofs based around Scottish Independence.

Spoofs aside the other April's Fool joke that caught my eye was of more relevant for property addicts and followers of digital real estate marketing. Trulia in the US produced a great piece of marketing - they produced a completely new site which demonstrated a great brand extension - from property searching, to searching for a partner for those in the real estate industry - welcome to Truluvia

Totally convincing, although these days developing such websites are not a massive piece of work, the concept is smart marketing in my mind. I love the simple idea that match-making can be based around the specialisation of real estate agents - Trulia's target customers. The Trulia brand has always been distinctive for being design based, warm, friendly, a true partner in the real estate process.

There is also a smart call-to-action from this site which not surprising is not that 'deep' in content - you get to update your profile on Trulia, thereby driving users to engage with the main Trulia site.

I think smart marketing speaks these days to demonstrating a genuine personality, showing a personal connection with your customers and being prepared to laugh a little at yourself, especially when the service you provide is so emotionally engaging. Smart work by Trulia!


New boundary view - a step forward down a narrow lane! (Updated)

by Alistair Helm in ,


Trade Me Property has announced the introduction of a new feature for property listings, the boundary details of properties. This service complements the existing map view and street view. It is not universal across all listings as it needs an accurate address detail. Scanning the site randomly checking listings from different parts of the country showed that it is somewhat 'pot luck' as to its availability.

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This new feature is sadly long overdue, firstly as it a core layer of content that has been available through both Terralink's 'Property Guru' service and Property IQ service for many years - these two competing services are only available to real estate agents and other property related companies as a subscription service, although it has been on the Zoodle and QV sites.

Secondly it is the first innovation we have seen from either Realestate.co.nz or Trade Me for a very long time - we have seen both of these companies prepared to spend millions of dollars recently on advertising campaigns trying to prove who is biggest! - yet sadly the consumer as a buyer of property has not seen any innovation. This is in marked contrast to overseas property portals where innovations flow on a weekly basis and provides the competitive tension between players in other countries - the consumer being the winner whereas here the TV companies are likely to to be the winners.

Speaking of competitive tension, it will be very interesting to see if and how Realestate.co.nz responds to this innovation. In the past there was a degree of a partnering of the two major property websites with the two property data companies - Trade Me with Property IQ and Realestate.co.nz with Terralink. However effective 1 January 2014, PropertyIQ NZ Limited and Terralink International limited officially came together as CoreLogic NZ Limited. This came after the Commerce Commission cleared the merger between the two businesses in November.

So now there is effectively only one player in town when it comes to detailed property mapping and if Trade Me has secured CoreLogic as a partner as this latest innovation suggests then it leave Realestate.co.nz out in the cold. Far from the principle of how the Commerce Commission saw this situation.

In the documents relating to the merger and in the findings in favour of the merger the Commerce Commission stated that:

“The Commission considered that PropertyIQ will continue to face competition from existing and emerging competitors in these markets. Furthermore, we consider that new competitors entering these markets are able to access the key datasets through negotiations with local Councils and other sources and will also constrain the merged entity,” said Commerce Commission Chairman Dr Mark Berry.

Certainly when it comes to general mapping there are numerous suppliers - Google being the main service used by both property websites, however when it comes to boundary details this is a very local mapping service here in NZ and 'drawing' this detail on maps will continue to be done by one company (as it was in the past) the main difference is that in the past 2 competing companies could sell this service - now there is only one player to offer this service, in my view lessening competition and denying the consumer a valuable service across their property website of choice. 

Updated - Friday 28th Feb 10am

I tweeted this post and received this reply from Trade Me Property

Now I think I understand the tweet - if I am right what they are saying is that the code integration to create these boundary link images takes about 4hrs and at tis time the system is busy doing open home data load.

If this is right then the question is why not do all this code loading on a beta site before releasing it publicly. The images being shown under boundary views are images (as a picture file) and therefore all it requires is a database look up on an address and then bring into the website the weblink from the CoreLogic image server - if no file then don't show.

If I have this wrong then I have asked Trade Me Property to comment below to clarify.


TV campaigns by Trade Me Property & Realestate.co.nz

by Alistair Helm in ,


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The new year has kicked off with the two competing property portals slugging it out in a marketing war to capture the greatest attention and thereby assert their respective role as the platform of choice for advertising property in NZ - or is that really the story?

Trade Me was the first to kick off with their campaign. As a company they historically have not been a significant advertiser across what is generally described as traditional media - TV, radio and print media. The exception to this has been where they have faced significant competition (as in the case of Trade Me Jobs vs. Seek) or where they have a new proposition to convey (as in the buy new retail strategy). 

The reality is that Trade Me enjoys unprecedented spontaneous awareness and engagement such that they really have no need to tell people that they exist or how to use the site or the benefits of the service.

When it comes to real estate these facts are indisputable. Trade Me is used by all real estate agents and private sellers, it is the most effective means of advertising property for sale or rent. Buyers and renters go to Trade Me first and most often to check out the properties on the market as well as being driven there by email alerts. So why is it that Trade Me is running TV adverts as well as other media?

The simple fact is this campaign is not targeted at property buyers in an effort to secure greater usage of the site, nor is it really targeted at property sellers trying to encourage them to list on Trade Me Property as the creative would suggest. They have undertaken this campaign to put pressure on the real estate industry to secure continued listing support under the new pricing model implemented late last year and ensure the threatened boycott does not eventuate. The ads are very much a trade marketing campaign using consumer messages.

 

There are three 15 second commercials in the campaign each supported by other media using the same animated stylised imagery somewhat reminiscent of clipart characters. This is a new creative execution very different from the new products campaign run last year and the Trade Me Jobs campaigns.

The commercial are very focused on features, rather than benefits as befits the trade marketing strategy, example being “4 times more potential buyers than any other property site or No. 1 source of property buyers”, in this regard the commercials feel a trifle wooden. Trade Me over the years has built a close affinity with the population of NZ. A warm and engaging sense of the underdog championing the individual to allow them to buy and sell anything and be in control. To do things easily, cheaply and for themselves and in so doing become a trusted place “run by good people like us”. I get none of this sense from these adverts, they seem disconnected from the brand values of Trade Me and in someways have a smugness that suggests that they are overly sure of their position and merely need to state the fact that they are the No1.

Realestate.co.nz on the other hand are launching a TV campaign clearly with the intention of building brand awareness and through that to drive traffic.

The commercial plays heavily to the mobile platform and the iPhone app as the access point to the content. Unlike Trade Me the advert does not use unique features or facts to sell the message it simply takes the generic requirement of the market and state - “browse through thousands of properties throughout NZ - anytime anywhere”.

 

The short time frame of the commercial does not allow the opportunity to establish a classic call to action - such as to download the app or check out specific aspects of the site. The reality is that 15 second adverts as this is, are best when used as recall ads supporting a longer form 30 second or 45 second that establish the premise of the campaign. To rely solely on the 15 second version as this campaign seems to be doing leaves a risk of insufficient impact.

Realestate.co.nz has not used TV advertising since the launch campaign for the website back in 2006 and therefore they are effectively starting out as a new brand - pitching into the wide ocean of TV viewers. This is likely to see massive dilution of the message. Given the likely budget, the money would have been better invested into media where their core audience are more likely engaged.

Not knowing the scale of the expenditure behind these campaigns it is difficult to assess the relative impact. Clearly Trade Me has a considerably larger war chest of marketing dollars and could outspend Realestate.co.nz many time over, however I doubt they will. Their campaign as stated is really targeted at the industry as a trade marketing push, in this regard merely to be doing the campaign and telling the industry about it supported by the outdoor advertising will achieve the objective of exerting pressure for industry support without a massive expenditure.

Realestate.co.nz on the other hand in my judgement are caught as the expenditure of the campaign I suspect will not be sufficient to really influence consumer behaviour or drive action. Certainly they will benefit from trade support in that they will be seen to be advertising which has long been a call by the industry. 

Overall I am left with the distinct view that the total campaign of these two competitors is a complete waste of money. The beneficiary of this campaign are as ever the TV companies. The losers the real estate industry. The expenditure in the case of Realestate.co.nz takes money away from smart investment in the site and the apps and in the case of Trade Me the expenditure is a small investment which will ensure continued usage of the site and thereby further their financial ambitions to take more of the marketing dollar from the real estate industry.

If these campaign were really about seeking to market to property buyers and sellers the respective marketing teams would have bypassed old media and looked to established deeper consumer engagement within the respective groups through online campaigns and social media marketing.


It's all change at Trade Me Property

by Alistair Helm in


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Trade Me Property is the most important component of property marketing in NZ. As I have written before, without Trade Me Property, a house on the market for sale or rent is effectively not being marketed as the vast majority of buyers (and sellers) rely on Trade Me Property to provide the definitive picture of the property market. No other medium has as comprehensive a selection, nor an audience of its scale.

This pedestal though is being tested effective the 1st November by the implementation of a new pricing structure applicable to real estate offices detailed in an earlier article I wrote. The news has certainly been a wake-up call to real estate offices who have up until now absorbed the costs of subscription based listings on Trade Me.

In the article I wrote, I included a quick poll asking readers to let me know if these new charges should be passed on by real estate agents to vendors as an advertising cost of around $200 or if the cost should be absorbed by the real estate agents.

Over the past month I have been collating these responses. Now the survey is hardly statistically valid as in total I have had 53 responses but the results have been to my mind surprising. 

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An overriding majority of readers who have contributed with their vote (for which I appreciate the response) have proposed that the industry should recharge the costs of Trade Me advertising, just as with other advertising costs! 

I would interpret this response more as a demonstration of the value and criticality of Trade Me as the advertising platform of choice for all sellers than as a reflection of the principle of vendor-paid-marketing on top of the commission fees. This would somewhat seem to somewhat fly in the face of the comment made by the CEO of the Real Estate Institute who commenting on the Trade Me fee increase described the outcome as likely to result in Trade Me becoming "an 'added extra' for vendors, rather than automatic when signing up with an agent"

 

Change of leadership at Realestate.co.nz

The other big news from Trade Me Property last week was the very surprising announcement that Brendon Skipper, the Head of Trade Me Property since 2006 was leaving to become the General Manager of Realestate.co.nz. 

The board of Realestate.co.nz made the announcement ending a period of more than a year since I left the company as CEO in September of 2012. During this period the leadership of the company had been undertaken initially by the Chairman and then by Philip Dunn who assumed the role as acting CEO from his role of COO.

I must admit I am very surprised by this decision and have fielded a number of calls from within the industry also expressing surprise. Brendon is a very capable person who I have known over the years and he has overseen the significant growth in Trade Me's role and relevance within the real estate industry from being a little trusted challenger to the industry to being a much trusted and highly valued part of the marketing portfolio for the industry.

Why then with this success would he leave the No.1 online business in NZ - a company valued at over $1.7billion, with a property business which commands an audience 5 times that of its competitor, to take up the role running a much smaller business. A business which is not a listed company and in many ways not a true commercial entity given its shareholding securely locked between the Real Estate Institute and 5 of the large real estate companies. A company which from all reports is solidly focused on cost control and tighter integration with the Institute as a member benefit rather than an ambitious consumer focused property service business.

I wish Brendon well and hope we may see more innovation from Realestate.co.nz as a result of his new position. Realestate.co.nz is in my judgement a true specialist property portal rather than a horizontal retail marketing portal with a property section, however being defined as something does not make it that way or prove its value to its target audience, that has to be earned through the value judgment of its customers and consumers.