"The industry must band together to fight the profit hungry market dominant portals who only exist because of the very listings that we pay them to advertise. Its time to rise up and take back what is rightfully ours ..." or so it goes. Similar catch cries can heard around the world as agents huddle together to complain about the latest price rise, profit announcement, or outrageously high market caps of the likes of rightmove, the REA Group and Immoscout24.
These water cooler discussions have been going on for years. I remember when I was the CEO of the REA Group having agents complain at paying $200 per month for all their listings - now they are paying 10 x that amount and nothing has changed. Occasionally agents do band together to try to form a new site as is happening in the UK at the moment with the Agent's Mutual initiative. Whether this amounts to more than a local initiative is yet to be seen.
Some of the questions I am often asked is, "what are the weak points of the market leaders? What can be done to impact their market power and potentially eat into their high margins and growth rates?" Well the answer is simple and complex all rolled into one.
The bread and butter of any portal is its listings. They have to have a high number (preferably the complete market) of high quality listings that are easy to find and view. Search and presentation is basically the same for all portals around the world. However, the one area that is a challenge is building a view of the market (i.e. all the listings) and making sure that the listings are of the highest quality.
Consumers will naturally gravitate to where they can see the highest number of high quality listings and while the move will not be overnight, it will gradually happen. Volume is relatively easy but quality is much harder to achieve. Just talk to any of the portals operating in emerging markets - they are challenged daily with poor quality, out of date, no picture, duplicate listings.
So what would happen if a large advertiser (like a franchise group, large broker, or MLS) decided to reduce the quality of listings they syndicated to portals or even delay their syndication?
One strategy could be to only send 2 or 3 pictures and, via the text on the listings or via one of the images (with a watermark) direct the viewer back to the franchise group's site to see more pictures. Sure this would be against the T's and C's of the portal but in any relationship you can get away with a lot more when you are a big valuable customer. It would be interesting to be a fly on the wall when the CEO of the portal meets the CEO of the franchise group or MLS to discuss what can and can not go into listings - especially when the franchise group or MLS is paying a rather large fee to the portal.
Another approach is the delaying of the syndication of the listing. The Inman News people recently reported that CLAW (Combined Los Angeles / West Side) MLS had decided to delay the syndication of its listings to the likes of Trulia and Zillow by 48 hours. The reasoning is relatively simple: "[the agents] would like the traffic to go back to the brokers instead of driving the traffic to Zillow and Trulia".
This is an interesting tactic and could impact major portals in places such as Australia, the UK and Europe. The leading portals are seen as being the market (a privately operated for (very large) profit MLS) and as such expected to have the most up to date listings. However if a franchise group, large broker or even MLS took this approach and coupled it with a strong marketing campaign around their own site, the tide could start to turn and while they would not eliminate the need to use the major portals, they would reduce their reliance on them for their major source of leads. This would ripple into less need for premium packages and less pricing power for the portals.
While these strategies seem simple, they are also complex. It requires coordination, marketing, patience and courage. The portals will not take it lying down and will probably fight back - even potentially marketing direct to the home sellers. Still, it is a fine balance of power between those with the eyeballs and those with the listings.
The old adage goes ... you can only eat an elephant one bite at a time.
Simon Baker is the former CEO and Managing Director of the REA Group, the former Chairman of the iProperty Group, a serial investor in property portals and the founder of Property Portal Watch.