Rightmove has cornered its market and has been like a “snowball rolling downhill” with further potential for growth, a City analyst has said.
Steve Clayton, of Hargreaves Lansdown, has compared Rightmove with Auto Trader as an investment case.
He says: “Rightmove’s early start gave it a big advantage; the company was set up in 2000 by four big estate agency chains, so it was able to show a big slice of the market, making its website a must-see destination for buyers.
“Like a snowball rolling downhill, the bigger Rightmove became, the more likely it was to become bigger still, as agents found that if they were not on Rightmove, potential sellers would go to an agent who was.
“Rivals never got quite the same critical mass.”
Clayton goes on: “Rightmove believes that a decade ago, agents typically spent around £2,500 per office per month on print media.
“Today, Rightmove is on target for revenues per agent of £750 pcm.
“Estate agents still spend around £190m each year on print advertising, money which Rightmove hopes will migrate toward it over time.”
He describes Rightmove as “a very high quality business” with over 70% profit margins and the ability to impose “steady price increases” on agents.
Clayton also rates Auto Trader highly and points out: “Auto Trader and Rightmove have many things in common, including the people. Rightmove’s finance director used to work at Auto Trader, whilst Auto Trader’s chairman used to be Rightmove’s CEO [Ed Williams].
“The two shares trade on similar ratings, almost 35x forward earnings. The difference is that Auto Trader only listed this year, and having been owned by private equity house Apax, it still carries a lot of debt.”
While Auto Trader’s debt is falling fast, Clayton concludes that Rightmove has the better prospects.
Why?
“Simply because I think the ongoing level of spending by agents on press adverts that fewer and fewer people see, gives the company a great source for potential future growth, by persuading the agents that Rightmove will give them a bigger bang for their buck.”
“Rightmove’s early start gave it a big advantage; the company was set up in 2000 by four big estate agency chains, so it was able to show a big slice of the market, making its website a must-see destination for buyers.”
Being first to market on a large scale is key. It is the same with all successful brands. Weetabix, Heinz Baked Beans, Cornflakes….many try to copy but they never gain the same traction. They end up scrapping for the remaining market segment. It really is a great example of the 80/20 principle – Pareto’s Law. 80% of ‘the rest’ working hard for just 20% of the remaining market. Rightmove is the 20% that has 80% of the market cornered.
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IBM v Apple, Erricson v Apple, AOL v Google, Microsoft maps v Google maps, Main frame v PC v Cloud, things change Jam01. Rightmove has allowed itself to become a legacy system and as its last update showed it bloated and unable to make the dynamic change required to evolve.
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Your expertise are greater than mine Robert so will bow to your knowledge.
But if they are running a bloated antiquated system (and i am not saying they are not) could they not just change it?
I am guessing they have not done so at this time as no point to invest the time and money,
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Yes they can change and should change but sometimes change isn’t easy, fast or palatable.
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Also with the dominance that RM have would you not agree they have little need to change at this time?
There is always better solutions out there no matter what industry / sector but timing is everything. No need to go through expensive updating if not needed as you may have to do it again not long after. But on the other flip of the coin wait too long and you are surpassed in the market.
I think RM know they “could” update but there is no need to at the moment.
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There is a huge irony, the dominance they have and the fact they revel in being the villain is the reason they have to change.
There is an opportunity for evolution and by failing to recognise or grasp it themselves hand the opportunity to someone else. A classic example is in 1993 Microsoft * had what we know know as Google maps. Microsoft had every advantage but handed their dominance to someone else who saw and took the opportunity.
*Microsoft maps was test data, no-one realised what they had 5 years before Google even existed.
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I think RM are happy with there current offer, not saying it cannot be improved on but they have no need to.
There are always the case where people have waited too long to implement change.
My friend for example reckons he came up with the idea for Airbnb long before they did. At this moment RM are sitting pretty and have no need to change. i am sure they have looked at upgrading and will have plans in place if they need to.
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They are only sitting pretty right now for 1 reason, they are literally 1 phone call and 1 meeting away from a very dramatic change in fortunes.
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Lets hope so!
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Hope is a bit vague and emotional, given the factual and proven achievements of the summer!
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Ahh yes but does the offering make sense to the client and explained as to why they need it.
I have followed what you are talking about from a distant but still confused how it helps the everyday agent unless buyers look at very specific search terms.
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Putting agents and properties ahead of aggregating portals for natural term searches on search engines without SEO breaks the dominance of portals who use historic data to maintain their dominant position.
Dropping Rightmove to position 4 and 5 on a search for now non specific property search terms is a staggering achievement.
Lifting agents 8 full Google pages to outperform all but Rightmove is the sort of stuff Property Paddy describes down below as a game changer.
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What is a natural search term?
Is it estate agent in xxxxx or sell my house in xxxx or house / flat for sale in xxxx
Or is it much more specific than that?
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We are really down to the basics now. Natural search is the stuff applicants ask for so; Bungalow + location is a basic term. Immediately we get beyond that such as a street or local name for an area such as ‘Golden triangle’ or ‘out towards ___’ we hit warp drive.
One of the properties used to test had been on for 2 years in the usual fashion agent /portal fashion (main road, nothing special, sticker) We put it at the top of google (No SEO) for type and location along with an understanding of agency, it’s now sale agreed.
Real live, far more digital than me, folk are putting us to some fairly strenuous tests, reported back to me from Negotiator conference. “Robert is on to something good!”
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You now just need to convince the entire UK population that they should search google instead of Rightmove for properties.
Good luck!
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Okay i think i have a handle on it so are you saying the system allows somebody to type into google
“Houses for sale in County Durham” and that will display the siad property?
More importantly can they type “Estate agents in County Durham” and be on page 1 google?
I dont think you need to stop people using RM – I believe people do not use google because the result at present are so poor.
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I don’t need to convince the UK population of anything, it would be daft to try
There is a bit more elegance to the system than coming top of Google . I am already concious of plugging but it is enough to say the system isn’t looking to replace Rightmove or any other portal, it is complimentary tech that delivers fast and focused results in place on Dos logic match results.
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Understand not wanting to plug Robert and do not think you can be accused of it. As regular posters think this very cryptic conversation would be allowed.
with out reading between the lines is there a straight answer to me question? #buyingsigns
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The results are so strong in themselves the story has been described as a plug. I don’t have the writing skills of Stephen Jury or Chris Welch to undress achieving the Holy Grail of agency into a mundane “news story”
“Estate Agents in County Durham” can’t be achieved in the way you want ie just you as number 1 so I have devised an equitable system that allows you all to be No1 and then divvy up results according to your register of suitable properties. If you have listings you feature, if you normally have listings but not today you feature. If you don’t have listing and don’t normally cover an area agents can not buy a presence.
I have an algorithm that benefits NAEA, ARLA, RICS member firms and am currently working on in-corruptable results based ratings system that flows from instruction figure through to land registry completion price. E thank you cards from vendors linked to completions will ensure trustworthy reviews.
The system places 10 metre accurate digital for sale board on property and sat nav mapping functionality delivers applicants to the front gate of any geo-locationable property.
The fancy veracious search stuff is all still in there and tested in places like Canada, US and OZ.
Sorry if that sounds like a plug but I was only answering the question.
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From their USERS point of view (buyers, tenants and property owners) what exactly do they need to change? The website is quick, clean and gives them everything they could want and more.
Us estate agents are the clients (paying the bill) and we get what we NEED out of it – full exposure of all of our properties to as many potential customers as sensibly possible.
They are a commercial, listed company – they will do what they NEED to do to satisfy their shareholders and principals.
What we want and what RM want can be a million miles apart and still it all works.
I agree with the analyst – RM still has plenty of power to raise prices if they want to – particularly and especially as print media becomes less and less relevant.
The whole Z / OTM thing has been both a farce and a distraction that will end up strengthening RM’s hold over the market.
As I previously stated – bored of the unpleasantness surrounding that whole debate though.
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You forgot, Traditional high street agent vs Online agent. 😉
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Great analogy; Snowballs are at their largest just before the bottom!
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And just before the sun comes out.
Can there ever be a more obvious and clearer example of why we all need to invest in OTM. Like it or not Wrongmove has the potential to cause serious long lasting damage to all agents businesses.
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This is a joke right?
OTM is the best thing to have happened for Rightmove since the invention of the Internet. By the time OTM has more than a few people in Mayfair aware of it, Rightmove will be in a position to charge agents what they want, and if you won’t pay, the consumer will.
If its not a joke, its potentially the most stupid comment ever posted in this place.
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You aren’t correct Harry, I’m not sure what experience is fuelling your confident position but it nothing more than trending group think.
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To be fair Robert OTM is struggling woefully with attracting new members.
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Countrywide were one of the key players, if not the key player in the Rightmove success story……….What might happen when they throw their weight behind OTM?……
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If CW do get behind OTM it really is a game changer. suddenly they will be a very comfortable number 2 with alot of credibility.
But i just cant see them ditching Zoopla at a cost of circa £50 per branch to go with otm for circa £300 per branch.
I know your thoughts are they may ditch their shares and they may but i would be surprised if they ditched them all and even more surprised if they walked away from the subsidized fees.
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Also do not forget they would need to ditch propertywide their own portal which they have and continue to plough money into. Not forgetting the many other sites they advertise on.
CW mantra is all about “Offering your property the greatest exposure” it would be a massive step for them to get behind OTM
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It wasn’t a joke and I hope not too stupid. Why do we allow NAR to get it so right and we get it so Wrongmove? What could possibly be wrong with having our own portal, managed and run for the benefit of the public and agents??
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Is that aimed at me?
Never said it is a joke.
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Smile…Alison Platt has stated that the new Countrywide model is based on cross selling to their database. Zooplas’ / u switch model is based on cross selling to agents data to raise more revenue.
It is therefore impossible that Countrywide could move forward with Zoopla. They will also be mindful that RM will be focussing on major subs increases and also cross selling of data to other agents (which they do already)
They wont have to pay £300 per month per branch with OTM…….Remember the target charges of OTM are much, much lower than that.
Subsidized fees are truly outweighed by the lost revenue that Zoopla plan to make from Countrywides’ data……so it’s nailed on they will leave them in my opinion.
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Time will tell, i hope they do as it makes my decision much easier, if CW got behind OTM i think alot of others would join.
I just cant see it happening but time will tell!
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It wouldn’t be a massive surprise if Countrywide joint OTM, as any short term fee gains by being on Zoopla must surely be outweighed by the long term losses through the cross selling their data and the huge price hikes that will come over the next few years from Rightmove.
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I understand the cross selling but Z have been at it for years, data, mortgages, solicitors. Okay so adding utilities into it now but you think that is enough for CW to walk away?
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Yes they are, they need a Sales Director and an Operations Director to add the experience and domain knowledge that is currently missing and causing those struggles.
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Morning Smile please. The difference is that they now have a viable option (OTM) to join up to and by doing so will help CW to protect their data in the long term. CW must also realise that should they sign to OTM then they will be joining the 2nd biggest portal, they will be selling their Z shares and buying OTM gold membership shares with much needed cash left over to inject in their business.
There is very little risk involved by CW joining OTM, if anything there is far more upside.
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I see your point but from what i know of cw and people i still know there now (not talking about negs in the offices) This is not the route they are looking at taking. Its much more on establishing a central unit with market share and then look to utilise other revenue streams.
It would make some kind of sense walking away from Z but i think highly unlikely
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It will be interesting to see what’s going on in the boardroom at CW although I suspect it won’t only be just about data and fees, and may also be about some of their agents out in the country that can see some benefit in being on the Countrylife website, also brands such as Hamptons and Faron Sutaraia in London may well rather be on OTM with all the other high end agents.
And even if they try a hybrid route at some point then i’m sure there’s some riggle room especially as the likes of Keller Williams have recently been allowed on.
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HarryN?……. I can’t remember, other than some of your comments…. who are you within the UK Estate Agency Industry?! ……I’m guessing a nobody however enlighten me….. where do you sit next to my near 30 Years of success within the UK Estate Agency Industry….. I suspect the Toilet Paper hanging on the wall!?….. however let’s hear all about you and what you have brought to our industry….. I have set aside 30 seconds however can extend this if you prove worthy.
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I’m a nobody in the industry (happy with it too as it all sounds like a lot of very hard work).
I honestly wish OTM all the very best.
I also honestly wish Zoopla all the best too.
The cost of RM in comparison is horrendous.
BUT – they deliver. Which kinda makes them worth every bl00dy penny, which is a bit of a nuisance
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And it’s interesting that the analyst reports/gloats on 70% Profit Margin for Blightmove and that annual dripping roast of increasing fees.
It’s greatness weakness remains that it is a business built and supported by the UK Estate Agency Industry…… therefore their biggest strength….us!…. remains their biggest weakness!
It could all change with astonishing speed if those existing Rightmove Members have an alternative….. which OnTheMarket.com remain….. less than 1 Year on and OTM are way ahead of where Blightmove were 1 Year on…… and that’s the point, it takes much less than it used to to bring an Online Business to the fore, as we see every week ……but the most important thing?…… those estate agency members and their stock!
From where I’m standing….. it’s all to play for and the Smug Snowballing Blightmovers need to remember that when the Sun comes out, Snow melts rapidly!
It remains OnTheMarket.com’s Board of Directors responsibilty to drive the OTM business forward and I look forward to Season 2 now that Season 1 is coming to a close.
As a performing Stockmarket Monkey….. Blightmove are just fab!….. for our industry? …..they are our Trojan House….. excepting the Status Quo that Blightmove provide is like standing next to an Undertaker and offering to hold the measuring tape!
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Web advertising was meant to save us money against newspaper. The guys at CW see their goal as raising our spend to the same levels as newsprint advertising. We should all get behind OTM and give us all a realistic alternative to stop CW picking us bear. I wonder what would happen to the share price if we all went on strike with CW for a week. The buyers would soon find OTM then. How about all standing together rather than stabbing each other in the back?
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That is actually a really good idea!
Why do all OTM members not agree upon a date to switch all there listings on RM to invisible for a week?
Could be VERY interesting,
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It’s a good idea, but not practical as the press fall out could reflect badly on the individual agents. Better to reach a tipping point and then get letters of intent from agents to all come off RM at the same time. If it were a majority then it wouldn’t take long for customers to realise that something was “wrong” with RM and look to go where the majority of property could be seen.
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i think letter of intent are a smoke screen, many agents have signed with no intention of joining once 7,500 have agreed to.
I think its a great idea switching off RM for a week. I would happy join this and leave property on Z for the week even though not a OTM member.
As soon as RM and the industry see there results are driven by are data things will change. Share price will drop and agents will feel braver walking away in the long term. Sure the press might jump on it but if they looked closley and reported the whole story the public will understand.
When i tell sellers and buyers the cost of advertising on RM they are shocked. they honestly think we pay about £100 pm to advertise on the portals.
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I think agents protesting by taking clients property off RM for a week would be jumped on by our online friends……no point in handing them that sort of opportunity at this stage.
The more I think about it, the more I feel that CWs imminent portal decisions will be the only way, in the short term, to change the status quo as it stands. Protests are a great idea but impractical really.
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They well might jump all over it but will the public listen or care?
Yes we have spats on here daily but do the public read this? in the man its people within the industry.
Onliners have managed to get market share by aggressive media and PPC marketing not because a lefty has written an article in the guardian about evil estate agents, dont get me wrong helps them but its not the main issue.
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Sorry freudian slip for CW read RM (doh!)
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google was a game changer to on line search engine. There will be a similar event sometime in the future to estate agency I suspect.
Perhaps all estate agents will just manage landlord properties and offer sales as a freebie service to generate more lanlords…………………………..!
Could happen.
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We should never forget that Rightmove is able to act independently of the rest of the market. This means it is in a dominant position and if it gets carried away with itself and keeps imposing price increases it will rapidly be on the wrong end of a CMA investigation into abuse of its dominant position. This would normally esult in mandatory price controls.
This is it the true restriction on Rightmove and requires nothing more that a properly formulated complain(s)t to the Competition and Markets Authority which any half-decent lawyer should be able to formulate.
What are you all waiting for?
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Trevor is that you?
Its not unfortunately worth a CMA investigation. Its our choice as agents to market our properties on the portal, there are alternatives but with much less brand awareness. we made the monster now we are fearful to leave, we can if we wish though.
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Actually Smile I tend to agree with Reader (I’m pretty sure its not Trevor). We talk about a duopoly, but in reality it is still a monopoly. RM can continue to charge what it likes and make over 70% annual profits. These costs naturally filter through to the consumer whom the CMA is there to protect from blatant profiteering.
You say we have a choice but in our area where there are 15 Agents in a 1 mile radius all on RM, then it would be business suicide not to be on RM.
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Sounds like we are in the same area!
I fully agree we cannot walk away but we could if we wanted. it holds little water consumers having to pay more, fee erosion has set in, Sellers have never had it so good, top class marketing for a fraction of the cost 15 years ago
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BrandNew – You say ‘These costs naturally filter through to the consumer whom the CMA is there to protect from blatant profiteering’. That opens lines of discussion…
a) Accepting that your statement is correct, would it not support the case for agents to join and support OnTheMarket because by doing so they would eventually limit the effect of the rapacious price increases foisted on agents by RM – and so, by decreasing agents’ costs, benefit the consumer? Kind of blows the idea that the CMA would find OTM detrimental to the consumer doesn’t it? (Sorry Mr Mealham)
b) What is ‘blatant profiteering’? What RM percentage profit would the industry generally accept as ‘reasonable’ I wonder?
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You could of course also argue that RM reducing their fees (and their profits) could actually be in their long term interests. It would allow Agents to be more competitive in the face of the on-line threat. To drive a proportion of their own customer base out of business does not make sense.
My own personal view on profit levels would suggest 25-30% profit is ample but I am probably not representative of the whole.
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