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!?