Simon Baker, chairman of Mitula and former CEO of Realestate.com.au (REA) says portals will transact property in the future.
The classifieds mogul, who originates from Australia, made a prediction at the recent Property Portal Watch conference in Bangkok that portals will move from classifieds to transacting property in the future.
EYE reached out to Baker to dig deeper into his thoughts on the future of portals. We have invited Zoopla to comment.
Eye: Zoopla famously started out wanting to transact property online before pivoting to copy Rightmove’s business model and page structure. What’s changed that would allow a direct to consumer model to work today?
Simon Baker: There are a number of changes that have occurred over the last 5-10 years that make it easier for portals and horizontals (think Gumtree type businesses) to enter the transaction stream.
Firstly, they have access to high levels of good content. There is now more and more information available on all listings (new homes and established homes) that make it easier to identify the right types of buyers.
Secondly, with the use of big data techniques, more and more information will be captured about the visitors to the sites. This means portals will know what you are really there for, as well as all sorts of information about you. They will build deep links into social media and work out not only where you are in the property purchase or rental cycle but also exactly what types of properties are most likely to be bought or rented by the visitor.
Finally, the portal will then be able to use direct marketing to really target properties to buyers and sellers, and in the process be able to share in the transaction stream.
Eye: Will it be portals themselves that pivot to this new model, or new companies that transact property online?
SB: It will be hard for UK portals to pivot. Rightmove will have the hardest time as it is 100% reliant on the industry. OnTheMarket is in the same place as Rightmove and really just a defensive play in a changing market. Finally, Zoopla is the most interesting. Given the movement away from Zoopla by agents, it opens up the opportunity for them to go direct and enter the transaction stream. In theory, they could be worth significantly more than Rightmove IF they pivoted.
The best chance will come from new businesses that truly embrace the new world. They may take some time to emerge, but when they do, they will be fighting for the transaction revenue stream, not the much smaller property advertising revenue stream.
Eye: Will the role of portals change from classified products, or will transactions be an ancillary product?
SB: Rightmove and OnTheMarket will most likely remain classified products while Zoopla could move to being a transaction based engine. It will be hard for the classifieds model and the transaction model to co-exist unless transactions are solely focused on the new homes market.
Eye: In this new future, will the importance of companies like Mitula increase or will their function disappear? [Mitula is a ‘vertical’ property search engine – essentially a classifieds site paid by portals like Zoopla to drive traffic back to them.]
SB: Mitula is in a very good place to benefit from the movement to this new model. Its traffic driving engine has the ability to serve both classifieds and transaction based businesses.
Eye: Rightmove and REA are famously some of the most profitable companies in the world, precisely because classifieds are a simple business. Is there a middle ground where portals offer an ‘enhancement’ to classifieds? Or do they need to become full marketplace in your view of the future?
SB: I think REA and Rightmove have probably painted themselves into a bit of a corner as they are very reliant on the industry for listings and revenue. As we have seen with OnTheMarket, if agents listings move their listings en-masse to another portal (in this case from Zoopla) there is the chance to impact performance. However, they will slowly move to a transaction model as they chase even greater revenue streams.
* Simon Baker is the organiser of proprietor of Property Portal Watch, which is an industry news website and hosts the Property Portal Watch conference around the world. His video predicting the future of portals can be viewed here:
http://www.propertyportalwatch.com/ppw-bangkok-conference-concludes-with-window-to-the-future
Comments (16)
Currently legislation will have to evolve to make this really work. Not going to happen!
Funny seeing this mention of dis-intermediation of the agent in the transaction. The line of thinking is that a company like a realestate.com.au who are possibly more dominant equivalently than rightmove in their native Australian market have reached a saturation point of how they can squeeze revenue out of agents, and therefore their only real way of taking things to the next level is direct interaction with the vendor, and cutting agents out of the transaction. So this kind of goes against what he’s saying, which is they’re (market leaders) too reliant on content to be able to do this. I actually think being a no1 by a country mile puts you in a better position to go straight to vendor as a next form of revenue growth. Which is at odds with what he’s suggesting….
It’s about profit margin.
To do the job of the agent requires a lot more operational costs.
Classifieds are relatively a very simple business.
And one that can pass on the costs of the ultimate service to their partners/customers.
Agents fight with each other to serve the consumer. And Rightmove/REA get paid regardless of who the consumer chooses.
It’s like a tax.
Surely It’ll never happen,
If OTM has taught them anything it is to be careful. They lost lots of estate agents when OTM arrived and they are likely to lose the rest of us if they continue down their all encompassing path to ruin.
I see the logic though, it’s the only part of the business that they do not have their grubby fingers into YET. They survive because of eyeballs that view property, the property on their site is OUR stock, if they compete or try to interfere we do have somewhere else to go – OTM. They have the data streams tapped for every opportunity already and the most important part of the transaction is controlled by US, the sale and progression.
This is the final revenue stream that is all our own, we facilitate the transaction not Z. Z introduce them to a few pics we work on the rest – all of it.
They say that getting estate agents to agree is like herding cats but if they try to milk the transaction they will just scare all the cats away. Can’t see the risk/return working in this case.
I quote, “Rightmove and OnTheMarket will most likely remain classified products while Zoopla could move to being a transaction based engine”.
Why would one of these three sites be any different than the other. From what I have read, no site more than Zoopla have categorically said they will not do such a thing.
Invited Zoopla to comment, what about RM, OTM and other portals, of which we must not forget, there are many! Surely the industry would be interested in there thoughts on these comments.
A number of times I have stuck up for this site against the integrity doubters, but I must now admit, I feel I was wrong. Just a site sponsor, you say?!
The reason I didn’t ask Rightmove or OTM for a comment is because Simon Baker’s assumption that neither of them would go transactional ruled them out of the headline.
And Rightmove is very different from Zoopla.
For one, Rightmove is the only portal agents need. It has more than twice the traffic of Zoopla by uniques and even more (like 70-80% of market share) when you count page views.
That’s why Zoopla needs a different business model.
And that’s the story, what will the also-rans end up doing.
Many agents reckon compete directly with them.
I personally can’t see it, but many smart people I know think it’s inevitable.
Interesting – though can you imagine the cost of the Professional Indemnity insurance?
The spiraling cost of the same has put many firms out of business. One lawyer friend of mine has ONE office in London. It’s a busy practice but his PI costs are nearly double that of our entire network.
I can’t see this ever happening.
As soon as agents get a sniff of a major portal planning this they will remove their properties in droves.
Without a mimium of circa 70% of all available stock in a particular area listed on their website. It will deliver a poor user experience and potential buyers will no longer visit their website.
Too much of a risk for them.
I think Zoopla have the right idea of moving into adjacent markets like with their aquisition of uSwitch.
I always knew the usual suspects would comment on this story.
Naturally… and your point is ?
I reckon that if OTM hadn’t rocked the boat, Zoopla would already be taking ads directly.
A while ago, they said something along the lines of having no plans to move into the sector. When I read that I couldn’t help thinking of Neville Chamberlain returning from Munich with his infamous piece of paper.
Propaganda alert, tinfoil hats at the ready!
Which bit don’t you think is correct?
For goodness sake. portals are just that. portals. either they do what we pay them to do or they are not one of us.
One of US !
I think it will take more than a portal to push through a deal. Unless they start hiring experienced agents to work on their behalf.
Agents – are you comfortable with the idea of being paid by the portals themselves and trading in your highstreet office? Why? Why not? Could be interesting to see if this is actually feasible.
The fact Mr Baker sees the portals as having a future is a curious irony; sort of ‘internal combustion engines? Pah! Steam’s the thing’
He is correct that the G3 stuff has had its day but Zoopla’s passive intermediary route? There is a flaw which firms like Purplebricks, Emoov, Easy property and the likes are demonstrating.