Traditional growth strategies at the world's largest property portals are now largely redundant and senior management should be very concerned, as their businesses could face collapse in the next 5 years or sooner.
From my own work as counsel for, supplier to, partner with and entrepreneur in the PropTech space, I’ve analysed 80 of the top portals from 34 of the top OECD countries around the world and the results are very clear.
Property portals the world over have a similar north star that informs and leads their growth strategy, “get more properties advertised!” This simple idea brings more estate agent subscriptions, more eyeballs from the public, more advertising revenue and voilà you have a growing, healthy business.
With growth comes the expectation of more growth and on a fundamental level as a business if you are not growing you're dying. Well it seems for many of the top portals around the world this north star is now at the end of its life and the supernova has blinded the leadership.
The fundamental problem with the top portals is that they are victims of their own success.
In their relentless pursuit of more properties, it looks like they never considered they would actually achieve their goal and from an analysis of the market, no coherent growth strategy has emerged from these top portals. For example, the iBuyer model was being aggressively pursued and is now being completely abandoned. Likewise, M&A activity amongst the top portals shows such a diverse range of deals that no identical strategy is being followed by the market leaders.
Over the past 20 years or so they have cannibalised the competition and cornered agents into subscribing to their services. As a result, we are starting to see the largest portal in each market having a near 100% share of all properties. This has brought the corresponding eyeballs from the public and yearly upticks in advertising revenue.
Papering over the cracks.
What comes after success? It looks as though portals are making the same old mistakes that companies make without a strong long term plan, they take the easy and short-term route. We are seeing the large incumbent portals increase average revenue per advertiser by citing increases in traffic and lead volumes, but this strategy can only last so long and portals need to start thinking differently.
What we are witnessing is property portals squeezing the last drop of blood from the estate agent stone. This has the effect of only papering over the cracks and has led to growing discontent and threats to leave from their subscribers. Portals are now vulnerable to subscriber revolt as soon as better, faster, more equitable alternatives appear... and they are appearing.
What should property portals do to protect their position and grow?
The answer to this question lies in the assets already owned by portals. They have one of the best pieces of real estate on the internet that gets millions of monthly views. The strategy for future growth is in monetising their viewers effectively.
The acquisition history over the past few years of some of the largest players in the property market gives a clear indication of where the market is going and where the growth opportunities are. Acquisitions including: Glanty, Van Mildert Landlord and Tenant Protection Limited, uSwitch, HomeTrack, Expert Agent, Money.co.uk, Penguin Portals, Finanzcheck.de, Movem, OpenListings, OS National, Starberry, The Property Jungle, Vermietet.de, Trussle, Rent4sure and Propoly.
By virtue of their own success, the problem large incumbent property portals face is the amount of time it takes to move in any direction. To overcome this lack of flexibility one of the most successful strategies we are seeing from portals is partnering with startups and scaleups.
This new cohort of entrepreneurs is working on solutions that, given the opportunity, would take a property portal’s existing viewers and quickly build billion-dollar companies of the future. One successful example is lintil.com’s virtual home-buying assistant and its partnership with the leading portal Daft in Ireland.
We've partnered with Daft to effectively white-label our virtual home-buying assistant on the portal. Daft's users get assistance with the most complicated purchase they'll ever make, Daft's portal gets increased engagement with high-intent users and generates revenue from the hot leads it sends to mortgage brokers, lawyers, insurance providers, property surveyors and the rest.
On the back of lintil’s success in Ireland our virtual assistant is going to launch in the UK in early 2022. Lintil’s business is predicated on making the sales process easier for the home-buyer. We're providing virtual home-buying assistance which has transformed the home-buying journey from a self-administered complex and stressful process to one in which a professional takes control and ensures the transaction is flawless.
Portals will have to start taking into account other members of the property ecosystem such as home-buyers if they want to enjoy the growth rates of the past. The logical next step is to monetise their visits via collaboration with new tech being developed out there.
Whether budding entrepreneurs will be patient enough with the bureaucracy of the legacy companies or if the portals themselves can free themselves from historical thinking and get back to the risk-taking entrepreneurial energy that brought their initial success remains to be seen.
Emmet Creighton is the founder of Lintil, a Dublin-based PropTech company providing virtual home-buying assistance services.