It has been eight months since CoStar acquired OnTheMarket (OTM) in a bid to challenge the dominance of Rightmove and Zoopla.
Having established itself as the UK’s third largest portal in terms of consumer traffic and agent support, CoStar firmly believes that OTM is now on course to replace Zoopla as the number two property portal on its way to achieving its medium-term objective of challenging the market leader, Rightmove.
Until now, a lack of consumer traffic has meant that OTM has never quite managed to succeed in winning over the homebuyer audience but new data provided by CoStar suggests that OTM has made some inroads into this highly competitive market under its ownership.
In terms of OTM’s aim to challenge Zoopla and Rightmove head-on in terms of traffic, CoStar says that average monthly visits for OTM in June were 35 million, up 78% compared to the same month last year.
When it comes to listing agreements with agents, CoStar reports that OTM now has close to 17,000 agent branches advertising (for context, Rightmove’s figure for FY24 was 17,875). However, it is important to note that this surge has been helped by a free listings offer as some agents sign up to a trial period on the portal.
The latest OTM update comes as CoStar posted its figures for the second quarter of 2024, revealing that revenue was $678m (£526m), a 12% increase year-on-year.
Double-digit quarterly revenue growth has become the norm for CoStar with the S&P 500 company having now registered more than 50 consecutive quarters of double-digit year-on-year growth.
CoStar’s latest figures were fuelled in large part by its rentals marketplace Apartments.com which saw revenue climb 18% year-on-year to $264m (£205m). CoStar’s other major revenue driver is its eponymous real estate information service which saw revenue grow 10% to $253m (£196m).
Despite currently representing less than 4% of the company’s overall business, shareholders and analysts were focused on CoStar’s Residential segment.
The company has been making headlines as it looks to increase exposure to in residential property portals sector with a $1bn (£780m) marketing investment for Homes.com in the U.S. and plans to spend £46.5m in the first year of a multi-year investment initiative here in the UK on OTM.
Very little actual focus on OTM in this piece other than the increase in traffic year on year which was to be expected if you’re giving your proposition away for free. You have to assume that the acquisition of OTM was a bit of a punt as it represents only a minuscule fraction of its overall business and if it pays off great if not I doubt it would ultimately put much of a dent into their overall strategy of revenue growth by acquisition. Be interesting to see what the current level of write down OTM is showing on their books as it sure isn’t making any profit. Sadly I don’t have time to attempt to find it but I suspect it’s pretty eye watering. Once OTM actually start charging for their services we should see some context to their investment but as always the very best of luck as it’s their money not mine.
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“When it comes to listing agreements with agents, CoStar reports that OTM now has close to 17,000 agent branches advertising (for context, Rightmove’s figure for FY24 was 17,875). ”
If Rightmove only has roughly 875 more companies listing on their portal than OTM, the time is fast approaching when Agents can cut their contracts with Rightmove, as if nearly every property is on OTM buyers will have to swap their allegiance to them.
RM’s year on year 74% profit margin is obscene and has gone on too long. CoStar take a 22% margin across their vast empire and they are spending 3x as much on advertising as RM.
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The only challenge is the publics perception of RM. We, as an industry, have our feelings, especially regarding fair costs, but its the viewing public that matter, and if RM is ingrained on their property psyche, thats where they go, in the main. So, OTM needs to be ramping up the public advertising / perception, so the viewing public see them as an obvious choice. (In my opinion )
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Their budget is more than 3x RM for this year. That is brilliant and is already raising awareness.
I didn’t join OTM when they started with the them plus one other ruling, but I know that most of agents in West Wales dropped RM and stayed with Zoopla and saw no downturn in inquiries. Buyers quickly learn that where they need to search to find the best / most properties. We have been listing properties with OTM 24 or 48 hours before RM and Z for a couple of years, since they did the “Find it here first” campaign and we get a lot of cash buyers contacting us straight away through OTM.
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