In a previous article I wrote about a number of different business models that there are in the property portal world (Click here to read the article). However, not all of these models can be applied to every market and to understand where to apply a business model, you must first understand the type of market you are operating in to determine the likelihood of success.
These four market types are - Maturing Markets, Emerging Markets, Early Stage Markets, and Non-Existent Markets. Each of these are discussed in turn in this article.
A maturing market is best defined as one in which the agents know and understand the power of online marketing of their listings and their brands. These markets tend have the following characteristics:
The property portal structure in these markets is usually one dominate player and a number of aspirants.
|Australia||www.realestate.com.au||www.domain.com.au, www.myhome.com.au, www.realestateview.com.au|
|United Kingdom||www.rightmove.co.uk||www.findaproperty.co.uk, www.propertyfinder.com, www.primelocation.com|
|United States||www.move.com||www.trulia.com, www.zillow.com|
|New Zealand||www.trademe.co.uk||www.allrealestate.co.nz, www.realestate.co.nz|
The challenge for any aspirant in these markets is that the market leader is so entrenched in both the minds of the agents and the minds of consumers that they are will be almost impossible to dislodge. In fact the marketing of the aspirants drives up awareness of online in the country and it is the market leader that tends to benefit.
As an investor, unless you buy number one, you will be faced with a long, hard slog to reach market leadership status unless you adopt a truly innovative approach.
Why call it a maturing market? Well i don't believe we have reached the natural plateau in the growth of these markets. While the overall growth in revenues and usage in these markets will be slowing, it will be in the 20 - 40% p.a. range and the business models will continue to evolve.
An emerging market is best defined as one in which the agents are starting to understand the value of online marketing of their listings. These markets have the following characteristics:
The property portal structure in these markets tends to be two or three co-market leaders (well not much between them) and they are trying different models as the market structure is not fully defined.
These markets are good for investors as they provide for relatively low cost entry while the upside is pretty clear.
Early Stage Markets
An early stage market is best defined as one in which agents know of the Internet but it has relatively low usage by agents and the consumers - especially for searching for real estate. These markets have the following characteristics:
The property portal structure structure in these markets tends to be all over the place. There are many players and no one really knows who the market leader is. Everyone has their own statistics and they tend to make a number of dubious claims. The models they adopt are also many and varied as they try to establish a market presence. Suffice to say, no one is making any real money.
For players in these markets, it is important that they run like mad and sign up as many customers as possible. They need to make sure that they have adequate funding and resources to reach their goals. Many of them will not succeed and they should be looking at mergers to gain some sort of scale in the market. In addition, they need to focus on education of the market as the market doesn't fully understand the value from online advertising of properties.
For investors, this is all about option plays. You need to take a presence in a number of these markets and watch what happens over time. By having a presence in a market, you will be exposed to significant information and therefore be able to make better decisions about where the market is heading and what other plays you may need to take in that market to reach scale.
Early stage markets are all about patience.
These markets are pretty clear - there is just not a market for a property portal site. These include Africa and some of the more troubled spots around the world.