One of the City analysts briefed by Zoopla following yesterday’s announcement of the firm’s acquisition of uSwitch said he remained unconvinced by the move.
William Packer, of BNP Paribas Exane, also said that the briefing revealed a further loss of around 100 more agents to OTM in April.
This followed a loss of some 950 as at the end of March. Packer said that Zoopla had expected 500.
According to Zoopla, at the end of March there were 12,449 estate agency offices listing on its websites, down from 13,402 in February. However, there was a rise in overseas membership and a 6% increase in developer members.
According to a report on the Daily Mail’s website This is Money, dated last November 26, there were at that time 16,460 estate and letting agency branches using Zoopla.
Packer said that total losses to OTM “now stand at nearly 25% of the Zoopla agency client base”.
He said: “In our view, this will pressure longer-term revenues and also brings more pressure on traffic”.
Yesterday, Zoopla said that the pace of losses was slowing with churn returning to normal levels. It also reported that traffic was up by 11% in the six months to the end of March.
Packer said that in the briefing, an upbeat Zoopla said its acquisition of uSwitch – market leader in the energy and communications switching space – is a clear positive for its cross-selling story.
However, Packer said: “We remain cautious on the prospects of the underlying business and see the deal as a defensive move, with a limited strategic rationale.”
Other analysts took a different view. Gareth Davies of Numis described the acquisition as sensible and Zoopla’s trading update as solid. Robbie Capp at UBS said: “We see this as a very attractive acquisition for Zoopla, with a strong strategic fit at a reasonable price.”
Shares in Zoopla maintained their strong performance yesterday, ending on 215p – up 30p, or 16%.
Zoopla is paying up to £190m for uSwitch, whose brand will remain. The uSwitch bosses could earn nearly £40m from the deal.
According to the Motley Fool, uSwitch’s 2014 revenue of £62.9m is a quarter of the £238.1m reported by Moneysupmarket “making uSwitch very much a number two player in this market”.
It went on: “That’s also a fair description of Zoopla’s share of the online property sector, versus market leader Rightmove.
“Zoopla will now be a number two player in two big, profitable markets.”
Sites for switching hit controversy earlier this year with allegations that customers were being directed to providers earning the sites commission, rather than to the cheapest deals.
uSwitch chief executive Steve Weller told MPs that the firm would compensate customers who had been misled into signing up for an energy tariff more expensive than others available.
Last month, Zoopla appointed Gareth Helm, formerly brand director of Moneysupermarket, to be in charge of its marketing.
Comments (12)
The UK Estate Agency Industry announced today that it has acquired the UK Estate Agency Industry with the purpose of providing a client/agent focused Property Portal under the OnTheMarket.com brand.
It is generally acknowledged that the existing Online Advertising Providers, Rightmove & Zoopla have demonstrated that they now view the properties advertised by members as merely baubles in a portal window, placed there to attract/promote other related/unrelated business….. blah, blah, blah….
GPL… an actual living breathing estate agent commented “we have watched from the shore like Duopoly Disciples as this Noahmovezoop Portal Ark has been assembled…. only to find that that it now intends sailing away without us! We must either support the OnTheMarket Ark or face being left to die on the shore…”
Where you on Uswitch before GPL ? Did you come off and see no difference to your business ?
Here we go again. Another Friday night guessing what Danny rhymes with!
Disillusioned?…. that comment made me laugh after a long, hard day!
It is surely a contender for “comment of the week”…. at least in my humour filled world!
“Last month, Zoopla appointed Gareth Helm, formerly brand director of Moneysupermarket, to be in charge of its marketing.”
And at the time we all scratched our heads and asked “why…?”.
Makes sense now hey PeeBee.
My thoughts are that they will now drift even further away from being an agency focused company, but will try to drag agents along for the ride by offering a cut of any business from suppliers that sign up after moving into a property.
We will move further away from selling and renting properties.
“We will move further away from selling and renting properties.”
Already happening, Paul H – as we have been discussing for years…
…it’s called Passive Intermediaries & any Agent who takes a 100% up-front payment. They DON’T NEED to “sell” or “rent” their listings.
“Already happening, Paul H – as we have been discussing for years…”
I know mate, this move however, I fell that this could well take things to a whole new level.
Saying that the general response from the industry on this has been muted thus far, I think everyone is waiting to see which direction Chesterman will take it in.
Isn’t it ironic that a mutual/cooperative is very much a lefty notion and that it’s being run and pitched by toffs!
“is a clear positive for its cross-selling story.”
Tell me, do Zoopla users really approve of Zoopla selling other products immediately next to the adverts of their clients’ properties? Remember, the intention of these adverts is to divert your potential buyer away from looking at your instructions? Even if Zoopla users don’t want to use OTM at the moment, I really cannot see the point of staying with Zoopla now they are embarking on the cross sell route.
Writing is on the wall for Zoopla so they are wisely diversifying
There is a bit more to it than that, yesterday’s story prompted me to dig out the preparation notes for a new year strategy meeting to discuss what was happening in the then current year ( 2000), the next and what we were working towards. In the days before all this utility switching and price comparison business, insurance services were identified as the low hanging fruit to introduce to a user base. It was therefore no surprise when corporations that had previously been unsuccessful accessing agency came back for another go. Off the back of Autotrader and the success transitioning of a successful print magazine onto a digital platform a whole bunch of people started eying up agency again. This isn’t a reaction to anything current, they aren’t up against the wall, it is part of a long term strategy going back more than 12 years, nearly 30 if you include Prudential, Black Horse and General Accident’s first attempt at what Zoopla are bench marking.