OnTheMarket has told the City of its aggressive plans to recruit agents and ‘close the inventory gap’ between it and the incumbent portals, particularly Zoopla.
At an investor lunch yesterday, CEO Ian Springett and CFO Clive Beattie outlined their plans.
These include an aggressive recruitment drive of agents in the coming months through a mixture of a free 12-month trial or equity in return for long-term subscriptions.
They are promising “restrained pricing” in comparison with the incumbent portals, especially Rightmove.
Assuming the planned membership growth is achieved, implicitly closing the inventory gap, OTM then plans to aggressively spend on marketing – £50m over two years – to close the traffic gap.
Yesterday’s investor event was hosted by Exane BNP Paribas for OTM to meet investors.
William Packer of Exane said afterwards that he sees OTM’s new push “as potentially disruptive to the competitive equilibrium”.
However he said that Rightmove’s status was a ‘must have’ with vendors and was a key differentiator, liming the competitive threat. He also said that each element of OTM’s plans faces “significant hurdles”, although he added: “We see the potential for OTM’s actions to further pressure ZPG’s portal pricing and marketing spend.”
He went on: “Longer term, we see the key challenge for OTM as converting outsized marketing spend to web traffic market share gains. Market share has historically proven very resilient, especially for Rightmove.
“However we note Cargurus (NR) has meaningfully impacted the US auto classified market through a combination of fremium pricing and savvy marketing.”