OPINION: OnTheMarket – Is it Rightmove in disguise?

For about a decade the estate agency industry has railed against Rightmove and its approach to the sector given its massive increases in subscription fees each year and, many say, a somewhat distant and unsupportive attitude to its agency customers.

This is all well documented as are the occasional, seemingly futile, moves to rise up and challenge the Rightmove regime, led by a gaggle of disgruntled agencies that shout ‘boycott’ and then just run away again. Their protests are about as effective in persuading Rightmove to change as Insulate Britain are in gaining public sympathy.

More occasionally a rival to Rightmove’s dominance rocks up, with mixed effect. By mixed I mean they have either little impact or none at all.

Zoopla, always the bridesmaid and never the bride, has never managed to topple its bigger competitor but nonetheless has made its founders rich regardless. The silver medal here is deemed good enough.

Then along comes On The Market, the portal that should have triggered the property equivalent of an Arab Spring in light of the might of some of the UK’s biggest and best known estate agencies behind it. It should have been a slam-dunk as a Rightmove challenger in that he who owns the inventory wins – and its founding agents owned big inventory.

Yet defeat was clutched from the jaws of victory and the thing clumsily swerved into a ditch and almost overturned, such was the weight of misjudgement and ego upon it.

On The Market has since been given a bit of a kiss of life, rescued by Jason Tebb, an actual agent at the helm for once and with lots of agency experience – albeit none leading a plc.

Tebb knows that to win he doesn’t need to be number one or even number two. But he has to maintain the bronze medal position.

This is going to be increasingly difficult as newbie Boomin continues to ramp up innovation and marketing spend and both are things that Tebb will not be able to compete with on equal terms because he simply won’t have the cash. And they do.

But messaging is important too and this aspect is all new at OTM now and frankly needed to be, off the back of Springett and his board sticking two fingers up at their agent customers and listing on the stock market when they said that they would do no such thing.

Interestingly, many of this original ‘two finger’ fraternity are still in place behind the scenes at OTM Towers. That’s worth noting given the following…

OTM’s recent fawning as being the ‘agents’ portal’ is a nice line against a backdrop of general angst against the top three aggregators, but this rhetoric will only carry Tebb so far.

What his investors will want to see, those that have funded the business to little personal benefit very recently, is financial growth and this is why you are starting to see in OTM’s results an effort to throw the thousands of estate agency branches that pay nothing, over the side. And hence the reduction in average monthly advertisers in their 2021 interim numbers.

But in order to satisfy major investors such as Schroder (they own 5%), Jason Walker (4.4%) and Albert E Sharp (3%) Tebb will have to drive revenue and profit growth and, in turn, share price sharply upwards. And I’d wager that Tebb’s own medium-term compensation package is predominantly linked to these three things too.

Given that today’s OTM share price is 36% lower than at their stock market launch, he has much work to do if he is to embrace the pot of gold that awaits him at the end of the rainbow in bonus, share options or whatever.

Again, to be clear – revenue, then profit, then share price. One leads to the other and that’s the game here. That’s what happens when you succumb to the bright lights of PLC stardom – you sell your soul.

Because how does a portal achieve a fast increase in much needed revenue? Well, by putting subscription prices up of course.

And lo and behold this is exactly what OTM is doing with their latest financial results demonstrating this shift toward a hike in monthly costs to agents from £108 per month in 2019; to £129 per month in 2020 to a significantly higher £207 per month in 2021. These are their numbers, in their accounts.

Seem familiar? Yes. It’s straight out of the Rightmove playbook – and, if this huge hike in ARPA (average revenue per agent) at over 60% last year alone were to be extrapolated each year to 2025, OTM agents will be paying MORE than Rightmove are currently charging – £1366 versus Rightmove’s average of £1163.

There is no way of separating this. OTM cannot have it both ways. If they wish to increase growth in revenue and profit and their share price to the satisfaction of management and shareholders they WILL continue to increase monthly subscription costs to their agency customers. And so they are.

My question then is this… How is OnTheMarket plc any different to the Rightmove plc that you all detest so much? Because in essence both are just the same, aren’t they?

Russell Quirk is co-founder of property PR specialist ProperPR. The opinions expressed are his own.

OnTheMarket were invited to respond to this piece.

 

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15 Comments

  1. JonnyBanana43

    Tebb is a legend and has turned OTM around.

    Not comparable to RM and certainly nothing like Xoopla.

    Boomin doesn’t seem to be going anywhere does it Quirky?

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  2. Mrlondon52

    Well, er, yes. Any publicy traded firm has a duty to its shareholder before its customers. That is mega obvs innit?

    The real question No 1. is whether £207 pcm is value for money? Eg the quantity & quality of leads. Twas ever thus.

    Agents will pay for value. They will pay for good leads. Whether they’ll pay for 4 portals is another matter.

    Extrapolating 60% increases per year seems quite crass.

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  3. ScottL

    Mr Quirk’s ‘opinions’ on the big 3 portals are becoming as predictable as Kate Price’s various nuptials just with less credibility.

    Reading the OTM results Russell is referring to here, it’s easy to understand why their average ALPA has gone up since 2019. Because OTM have either removed or converted most of the free agent contracts to fee paying ones over the last two years which has raised the average figure.  The free and low paying contracts reduced the average which is why the 2019 figures is so low.  But that just that doesn’t make for such a good story does it?

    PIE’s ongoing relationship with Russell must surely soon be called into question. This has more than a tinge of personal gripe about it, and that’s not a good look.

    Peter Knight would be well advised to review having Russell’s PR firm attached to the EA Masters event next year if he continues like this.  Its not good journalism or very professional. But thats just my ‘opinion’.

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    1. Woodentop

      Sure is questionable. It isn’t good journalism …… PIE’s ongoing relationship with Russell must surely soon be called into question. This has more than a tinge of personal gripe about it, and that’s not a good look.
       
      Your comment must not defame an individual or entity nor bring them into disrepute.

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  4. MichaelDay

    What Russell fails to point out in his comments about a rising ARPB at OTM is that this is largely as a result of converting those agents on free contracts to paying customers.

    His comments about Boomin fails to point out that their agency customers are currently not paying and are scheduled to be asked to after a year. This will be an acid test of success.

    Their undoubted innovation is to be commended but will need to see a ROI. Others, including OTM are rapidly improving their offerings and value propositions to customers. Ultimately though a portal needs inventory and eyeballs.

    Innovation has been in relatively short supply in the portal arena for some time but is changing and, in Boston Box terms, the big boys are currently cash cows. They probably have some way to go before becoming old dogs and it will be interesting to see how things develop with the new Rising Stars.

    As a shareholder in teclet I declare an interest in OTM but my real interest is in cream rising to the surface and in my agency clients having choice and taking informed decisions for their businesses.

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  5. Robert_May

    I really do try not to  rise to these deliberately vexatious reckonings but   Mr. Tebb has done what he needs to do and is now getting on with the stuff  that allows him to do.

    I posted a couple of weeks back that On the market has overtaken Zoopla as a challenger to Rightmove. As soon as the duopoly was broken Zoopla’s  strategy of running  no2 to Rightmove, it meant ZPG were suddenly alone and having to fend for themselves; A  no2 portal with a set of legacy CRM systems  is  problem few would relish and even fewer people could resolve.  If  ZPG  weren’t owned  by Silverlake they might have time on their side but  PE/VC projects  usually work to a much stricter time-frame  before the exit strategy becomes the focus.

     

    Mr. Tebb doesn’t have that pressure, he can build what the industry needs him to build in a time frame that doesn’t have that time pressure.

     

    Jason has  earned respect for what he  has already done and achieved and the  dignified way he is going about it. That is winning him friends, support and most of all respect.

     

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  6. Bosky

    I get what you are saying Russell, but, as ScottL & MichaelDay have both picked up, the main reason for the average increase in fees is due to agents being removed from the freebie deal.
     
    I suspect you really know this, but, you neglecting to mention it, spoils your argument.
     
    The real test of value is not what it costs to be on RM and OTM, but the cost per quality lead. I guess this mainly applies to those sitting at their desks waiting for the lead to arrive; just covering myself Robert_May!
     
    Plan for the day, analyse leads from OTM & RM at the end of the day, but twiddle my thumbs in the interim.

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    1. Bosky

      Thumbs beginning to hurt, but, so far, no quality leads from either. Let’s see what the afternoon brings.

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      1. Bosky

        Ditto for this afternoon.

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        1. Robert_May

          without  giving  too much away that will identify you, pick an outcode area you know I’d like to blind test some functionality and see if I can identify  if there are any quality leads on your patch.

          As an example in  ‘M25’ I reckon there are about 260  quality conversations to be had. 30% prospective vendors, 70% hot and local applicants, in M26 there’s another 300 calls on a 27/73 split.

           

          With the market log jammed as it is at the moment a lot of people are stuck in incomplete chains where passive listers/agents aren’t reviewing sales to see  if the chain can be reassembled. That will only be resolved by  getting on the phone

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          1. Bosky

            Morning Robert,

            Reluctant to provide area, but I doubt this is the issue, more to do with very limited stock, so not much to entice enquiries.

            Did agree a deal though yesterday on a quality enquiry from Monday, so my thumbs did stop twiddling for a moment!

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  7. surrey1

    I could count the leads I’ve had from OTM this year on the hand of a leper.

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  8. PeeBee

    “…and, if this huge hike in ARPA (average revenue per agent) at over 60% last year alone were to be extrapolated each year to 2025, OTM agents will be paying MORE than Rightmove are currently charging…”

    The Quirkster doing what The Quirkster does best – picking convenient ‘statistics’ regardless of accuracy or relevance and milking them for all he’s worth.  Unfortunately, however, for him (as is documented throughout the archives of EYE and EAT before it), his past performance for picking juicy numbers to milk has been woefully poor – having landed him and his failed agency on the naughty step at ASA on many, many occasions to the point his ickle wristie must have had a permanently purple hue with all the slappings it took.

    As pointed out above, reported average monthly cost has risen due to the conversion of branches going from free to paying Contracts, and reduction in numbers of Agents on ‘freebies’.  This is a fact that Quirk is most likely painfully aware of, as (what I presume to be) a paying OTM customer himself.

    OTMs current ARPA is still around 35% down on what Gold Members were paying on Day#1, seven years ago.  They went down the route of increasing mass by giving away advertising on the back of that guaranteed income, which did not go down well at ground zero with those paying £300+ for others to be standing side-by-side with them, paying bu99er-all.

    But of course Quirk was not an OTM Agent – paying or otherwise.  His agency was excluded and he made a mahoosive song and dance over it.  Actually predicted that OTM wouldn’t see its’ first birthday.  Not that and of his predictions have fared particularly well – the one that went “even once we’re at 50% market share they’ll still find a way to deny progress. That will happen by 2020” being my favourite spectacular fail…

    OTM is of course now a very different animal.  But The Quirkster isn’t. SSDD (credit: Stephen King)

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  9. Epicurus

    A Day in The Life of a PR   (Acrostic)

    Quickly stir the moody pot
    Until the stew is good and hot
    Inject a few stats just for “clarity”
    Release the hounds!……… (create polarity)
    Keep well back….”My job is done”………

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  10. Woodentop

    Shock horror  …. costs to agents from £108 per month in 2019; to £129 per month in 2020 to a significantly higher £207 per month in 2021. 

     

    Just remind us Quirky how much in 2021 the second medallist is charging and RM over £1,000. Another biased article that avoids good journalism.

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