Agents could leave Rightmove once those who are currently free on OnTheMarket start paying.
The suggestion is in an article in Investors Chronicle, which says that OTM is “vastly cheaper” than Rightmove “at a time when estate agents are under pressure to find cost savings”.
The piece, by Jonas Crosland, points out that, like OTM, Rightmove was started by agents – Countrywide, Connells, Halifax and Royal & Sun Alliance (which has since morphed into LSL).
However, these agents have since sold down their holdings while OTM is 70% owned by the agents who supply the listings.
Meanwhile Rightmove has grown to have “virtually total market penetration”.
Crosland says the point is that OTM can offer a cheaper service, “whereas previously agents had little choice but to stump up whenever Rightmove increased its prices”.
He continues: “And stump up they have.
“In 2001, Rightmove’s average rate per advertiser (ARPA) was £100 per office per month.
“By 2017, this was up to £922, giving a compound annual growth rate of 14%.
“And these are averages. Nearly half of its subscribers pay over £1,000 a month, and some as much as £1,500.
“All this has come at a time when estate agents are experiencing a really rough patch as transactional volume flatlines.
“And whereas Rightmove reported operating margins of 75.8% in its last annual results, OTM is expected to operate on margins nearer 30% and ARPA of £300 per month.
“Suddenly OTM starts to look attractive but it needs to gain a greater market share to be able to fund further growth.
“And at the moment agents are being brought on board without having to pay a fee. The revenue stream will be turned on when the model achieves critical mass. At this point, the idea is that agents will start to pay and save money by leaving one of the other portals.”
Crosland believes that when agents start paying OTM, they will be asked to sign five-year contracts – the point at which they will leave Rightmove.
Crosland thinks Rightmove will find it very difficult to respond. It can’t buy OTM because 70% of the shareholders are agents. And it won’t be able to cut its prices without demolishing its own bottom line.
He concludes: “So, having nearly doubled its profits in the past four years, and trading on nearly 30 times forecast earnings, Rightmove’s share price must at some point start to look vulnerable.”
The full piece is here (on subscription):
https://www.investorschronicle.co.uk/property-matters/2018/07/12/challenging-times-for-rightmove/
Comments (74)
I am sure Rightmove HQ will be taking notes of all these comments. If so, all I would like to say is your days are numbered. Greed Greed Greed!!!
I would say cutting off the overnight data upload with its former T&C’s on the 4th July 2016 was a huge mistake as it shows you for what you are?
Independence Day is for those struggling against injustice!
@Thomas Flowers
Cutting off which data feed? on the 4th July 2016 are you referring to?
I can see a movement starting.
PIE are providing the platform.
Judging by the comments, I think agents need re-assurance from the agent network that we can move our stock to another portal and pay a reasonable figure to display our adverts.
If OTM came up with a 5 year Fixed deal without any tie ins, this could be the game changer.
Collectively, today’s posts display the strongest show of dissent and disgust yet at estate agents being fleeced by rightmove.
A couple of years ago I was a keen supporter but I can’t stand mercenary greed, especially in the face of such tough times – talk about biting the hand that feeds you.
It’s a great shame OTM kicked off with the ‘only one other agent’ stipulation and have subsequently caused such confusion with their future plans otherwise I, and I believe most other agents, would have jumped ship then.
Cloud cuckoo land but wouldn’t it be fascinating (and productive) if EVERY RM member resigned w.i.e?
Perhaps they would – if only they knew where to go.
Perhaps there is a place to go …I’ve mentioned it three times …they could even deliver the notice on behalf of the members, something along the lines of ” we the undersigned give you RM notice etc etc” with all the agents noted below. That would be a good letter to deliver !!!
Property Ear
Data is the new oil.
Can RM grow its income stream by taking ownership of the data they process?
Has RM and Z already achieved this?
Time for the sector to wake up?
Good point well made Thomas
Estate Agents wanting a service provided to them more cheaply, how dare you even suggest such a thing!!!
If only there was a someone in the advertising team at Purplebricks reading this thread!!
Your agent wants to pay less so why dont you!!!!
This is all said in jest but i found it quite amusing.
See my previous post about value for money versus cheap.
As attention is being drawn to RM potentially losing a bigger chunk of business to OTM than they did three-and-a-bit years ago, I think it’s appropriate to re-post something I’ve said before as a reminder of what will happen if that “potentially” looks as if it is starting to become a reality…
Zoopla picked up the baton in terms of anti-OTM and ran with it like you wouldn’t believe. That put RM in the good books – but in reality they were just sitting back watching the handbag flying. There was never any need for them to make it a three-way… and if they had – as I said many, many moons ago – it would make Zs attempt at retaliation look like a peashooter against a tank.
RM ain’t gonna sit still and watch. They ain’t gonna roll over and let it happen.
They will act. Swiftly and decisively.
How Peebee?
You wouldn’t post a diagram of a dirty bomb on the internet without expecting someone to try to build it.
I for one really don’t think it would be a sensible idea to draw Rightmove a diagram of a digital dirty bomb here on the pages of EYE – do you?
I would suggest they already have the blueprint and are in advanced test stage.
If they aren’t – then they should be – because the writing’s been on their wall long enough to prepare their defence.
By doing what Peebee? By lowering prices? that is all they can do in a market that no longer has to sing to their tune.
I really, really wish you were right, Beano200062.
Setting aside why OTM V1 was captained onto the rocks, yet by magic/rich rewards was able to refloat using the ideas that V1 Members had signposted previously – trial free membership etc!
Anyway, I’ve always detested Rightmove and have never paid for anything other than the basic package! Amazingly I’ve watched experienced agents fall for the rep sales pitch and clamber over each other to buy next level products… in doing so they have hoisted their business and our industry by the financial neck!
I would be amazed if Rightmove have No Plan B? …..don’t kid yourselves. However, if OTM are to become the New Rightmove then take note what Our Industry history has taught us folks.
This Online Opera has been run before and we have sauntered into this cul de sac before, always led by the Online Pied Piper.
Keep your eyes wide open and your brain switched on, learn from past mistakes. The stakes are much higher this time.
Plenty of quotes out there about change, here’s Obama’s;
Change will not come if we wait for some other person, or if we wait for some other time. We are the ones we’ve been waiting for. We are the change that we seek.
“smile please” has a point, but perhaps not the one he meant. RM could readily charge on a per property listed basis that could, at a stroke, level the subscription playing field for smaller and larger firms. This could genuinely restore the viability of smaller village branches (either one office outfits or as part of a larger network) where, with fewer instructions, they don’t have to bear the same overhead as a larger town centre firm.
RM now have zero room for manoeuvre other than to raise fees which is pretty tough in a slow market and with 2 competitors charging less.
As Rightmove have near 100% of Estate Agents registered with them there is no other way of growing their business other than increasing their fees. It has been widely reported in the financial press that their target is £2500 per month per agent.
Of every £1000 sent to them £750 is profit, a monopoly in all but name and at a time when sales activity in the resale market is 20%-25% down. The business model is just like your insurance or energy, stay put, be loyal and get royally rogered!. Until large numbers of customers leave they will not change. As an aside, their attitude is appalling, they have forgotten who their customers are, us, and seem to believe that they have become an institution we can’t do without.
We have cancelled our contract after the last price increase and are just using Zoopla. To be honest I have seen no drop off in business whatsoever.
WiltsAgent
If you can get OTM for free as well, why not give them a try.
We do not want to create another monster with Z alone. Alongside an agent owned portal, this should keep any other portals in line with our expectations and not their shareholders.
I suspect, like some other agents I’ve spoken to, they have a lack of trust in the integrity of OTM whilst Mr Springett is at the helm.
He was a marmite choice…which in reality has hampered the progress
There are agents out there with multi offices and putting all the properties through a single branch to avoid the additional subscriptions.
This is against RM’S T&C’s. And also unfair on other companies that play by the rules.
Since the turn of the year we have reported 6 firms doing this (one is a nationwide franchise) and pleased to say we have helped increase our competitors spend and in one case i beleive it was instrumental in closing a competitors second office.
If RM wanted they could just police the market better and add numerous new branches to their subscriptions.
If you cannot reduce your costs with RM make sure your competitors are paying what they should be.
We are heading into a tougher market, it will be survival of the fittest, and if you can close a few of the competition all the better.
LOL, wish you were on my High Street Smile Please, I think we’d have a ball 🙂
That’s the beauty! – You never know 😉
Rightmove is essentially monopolising itself into a cartel.
And like a mafia who owns the local police, Rightmove chooses their tax for safety and protection.
Only a revolt can end the rule of the bad boss, and OTM has stepped up to the plate where no others would.
It’s time to provide some foot soldiers, ladies and gents.
With ludicrous unsustainable profit margins at our expense, agents only have themselves to blame for not realising that the rate rises RM has imposed each year, exploiting the near monopoly we gave it, through good or bad years, were going to have to end soon. Sadly the choice has not been attractive with ZPG having little appeal to many in the regions, and OTM facing an uphill struggle facing entrenched and sceptical views.
The future is more exciting as OTM seems to have gained traction, Zoopla’s offering is more cost effective, so now has never been a better moment to tell the monkeys at RM where to stick their price rises,enhanced listing packages and feature agent rubbish. I’ll be saving £80k p.a .by doing so for my branch network.
I believe that Propertymark could play a very positive role on behalf of their members on the subject of RM fees. I have spoken to them on this subject and in fairness they were encouraging. They have the resources…They already have contact with most agents looking at the market report questionaires that are sent out….why don’t they do some market research on the fees. They have a publicity department to send out statements to the media to express how agents feel about the excessive fees….if nothing else it sends a warning shot to RM… and there can be hidden messages in these articles that agents will do something about it, such as the perhaps a 24 hour switch off, as has been suggested in other posts. Act like a trade union would….
I would see it being a positive for Propertymark also that they will be seen to be doing something good for members.
This was suggested and dismissed out of hand to PMark over a year ago, however, someone else suggesting it may receive a kinder ear.
It will be interesting if I hear back. Frustrating that it was dismissed, as at a local meeting there was lots of news about how they were fighting the good fight on various subjects and had a voice in the corridors of power so of course I’m sat there thinking why not get stuck into RM….just need a few jabs to get a bit warmed up…
Well I say “STUFF RIGHTMOVE”!
We thought we were taking a risk in dropping zoopla for OTM. In reality it made absolutely no difference.
We now get a decent amount of leads from OTM and our plan by the end of the year is to go back to Zoopla, stay with OTM and kick Righmove into touch.
They have stuffed us, their customers… well now we can repay them!
Paulnight12
Why wait ?
Unless you are tied into a contract – do it now. It has made no difference to our business – and when I explain my last 12 months analysis to my Landlords and Sellers – they agree.
I have not lost a single seller or Landlord since I made the switch back to Zoopla from RM. And this was the biggest fear I had in doing so.
I think as Agents we fear that we will not get an instruction or lose our clients if we drop RM. I can say with some conviction that this is not been the case for my firm.
I could not wait until the day I felt confident that my clients would not suffer by dropping RM and the day has finally arrived. A weight off my shoulders when I gave notice and also a healthier bottom line !
Agents moaning that Rightmove are pulling their pants down and seeking cheaper alternatives… Brilliant
Not cheaper, better value for money. A concept most call-centre agents and their backers fail to comprehend and lose money as a result.
I hate my Rightmove rep.
Anyway rant over. Another rep who I turned to told me that there are now no multi-Office discounts available across the country!!!
is this true?
Every Office pays at least the basic £1000 per month. Which incidentally has just been increased by another £50 from next month!!!
Good Business for them; bad for Agents now.
We also scaled back to a basic package. Everything else exists only to milk agents of more cash and, imo, adds nothing meaningful to our business.
I’ve recently moved our 4 offices back to the essential package. This was mainly due to research, I looked at all the branches conversion rates in the area and they all seemed about the same, so I didn’t see any value in additional spend. This was further compounded when I made a couple of suggestions to the BDM and she told me Rightmove wouldn’t spend the money as there was “nothing in it for them”. Saving about £1500 a month and noticed no difference!
The problem as we all know is that (at this point) the public know who Rightmove are, and they search for property there. Hardly anyone has heard of OTM and many still arent aware of Zoopla. As we stand i see remaining on Rightmove as essential, however there is not need for all the add ons, featured property, featured agent, premium lisitngs, they are all a waste of your money and IMO do not generate any extra enquiries.
Sack most of it off and save yourself a shed load of money.
The agents promoted Find a Property and made them strong.
Then agents promoted Rightmove and made them strong.
The portal is only as good and the stock on them. The rest agents can promote.
In order to kick RM back to reality you need to have more stock on OTM otherwise Z will also increase their price.
the public will go were the properties are ..if there’s none on rightmove they’ll soon find out where it’s gone !
Totally agree.
I think we, as agents stronly believe that Rightmove are THE brand and first place people go to search property.. I disagree, I think most start with the search engines such as google and then recognise the brands. Again, I am sure many buyers and tenants will simply go to where the properties are listed.
Too much brand awareness comes from agents all over the country promoting the likes of Rightmove in their shop windows, on their websites, etc. (I call that free advertising!)
” RM can’t buy OTM because 70% of the shareholders are agents.”
They possibly could (subject to Competition Authority consent ) but certainly Axel Springer too should they wish to get a foothold in the UK to add their listings on the continent . Many potential buyers will be casting their eyes over OTMP
Certainly ownership by agents won’t be a deterrent .Don’t believe that for one moment if the price is right every agent has their price! Why are corporates able to expand by acquisition?Just ask those lucky partners who received fat cheques from CWD for disappearing turnover
Crosland already highlights that agents are under pressure to make savings and they are more than likely to jettison their shares if a profit is on the table than cull staff.The SP has been highly volatile and it’s highly likely that agents have already cashed in some chips
Should imagine that Springett whose shareholding is locked in will be first up to the counter if an attractive offer is forthcoming .
OTMP certainly going to be the scene of some action
Are Springett’s and other existing/former ‘key-management’ shares locked-in like their yes voting members?
Remember the ‘Corporate event’ and ‘resignation’ total share sale proposal clauses for those shareholders?
Post-floatation, I presume the key management and/or their ‘family’ share beneficiaries who were due shares and not part of the new management team resigned?
Would these share sales be attributed as Director sales in the new set up?
For too long, Rightmove has treated its client Agents with impunity, applying seemingly arbitrary price increases. Whilst I am no ‘fan’ of OTM, (which in my view has built on a commendable ideal- but has been delivered in an entirely disingenuous manner) its about time Rightmove is called to account and kept in ‘check’ by an evolving market/industry.
Rightmove are only doing what their shareholders expect them to do; and being perceived as the portal to be on, allows them to get away with it.
If there were only three agents in your town, Rightmove Estate Agents, Zoople Property Services and OTM Sales & Lettings, and you owned Rightmove Estate Agents, I suspect you will be taking advantage of your commanding position when charging your clients. Now, if all your clients decided to move to OTM Sales and Lettings, what will you do with your pricing? And what will OTM do with theirs! As for Zoople, who cares.
As an MD (and one that strives to apply good moral principle in all that I do), I am a firm believer that excessive monetary ‘greed’ is a short-term strategy, and is only successful in the short/medium-term where a monopoly is in place (but ultimately, such monopolies are doomed to fail). Applying the principles of decency and integrity has done my firm well, and has served to improve our bottom line, not to disadvantage it. On that basis, I can’t agree with that which you ‘suspect’ (in the context of the hypothetical scenario you state above), but I respect and support your right to put forward your views. It is such debate that is most enjoyable, and if discussed openly and plainly…we all benefit.
“As an MD (and one that strives to apply good moral principle in all that I do), I am a firm believer that excessive monetary ‘greed’ is a short-term strategy”
Looks like we have a very similar ethos.
Excellent, I have no doubt that our ethos’s will continue to serve us well in business and in life!
(I can’t imagine on what basis a ‘dislike’ may be issued- perhaps the poster wishes to share his/her views?)
Perhaps PIE would like to set up a virtual confession box, where (verified) agents can list what package they have, how many branches and what they pay. Information could then be corralated anonymised and published.
Sorry Chris, I posted my message before reading yours! It needs to be done!
I’ve always been an advocate of rightmove and valued the service they provide. Never hidden my concern that with OTM growing, agents wouldn’t leave the big two but take on all 3 ( which has happened in my area with some big name agents and a couple of independents) We pay RM £1,750 plus vat for the optimum package and just last week I receive a letter telling me it’s going up another £190 a month because of the ‘value’ the featured agent is providing to my business!
They’re taking the p***! We’re a small one branch business, and I am certain pay more than some of our richer competitors in my area.
Would be be interesting to know what people pay but it’s getting to the point where I feel like telling them where to go. The quality of leads are getting worse so the value they add to the business, apart from brand awareness, is very small when you compare OTM & Z costs.
£0 OTM
£150 Z
We came off RM but they offered £525 when we were leaving. One of my agent friends pays £525 for basic sales and lettings package.
You have to ask yourself if you came away could you use that £25,000 to generate better business.
Property Poke In The Eye,
We put in our notice, but were certainly not offered any reduced incentive to stay. We even offered leaving our Lettings only part of our business on and they only offered a £200 reduction from sales+lettings package.
We were paying £1,100 plus vat. Therefore lettings only would have been £800 plus vat to get around 2-3 enquries per day ! Simply not worth advertising.
I will simply look to spend the savings on other advertising streams.
You are overpaying and we dropped back to the basics with drop in business and zero negative customer feedback (in fact, we’ve picked up, as the money we’ve saved has been used to pay for other means of advertising such as more focussed social media posts).
Appreciate your comments and it’s really interesting to know.
I think I will be having a very serious conversation with my AM today!
Let us know the outcome.
Hi,
In Swansea most dumped RM and committed to a reduced deal that Zoopla offered. That was the first benefit of OTM. We have no issue here in Swansea as only a couple of agents are on RM and we can simply point out to clients that a majority of the stock is on OTM immediately and then on Zoopla in most cases 48 hrs later.
When I used to work for the top company Estate Agency firm in Swansea before setting up my own business 7 years ago the directors approached RM to get a reduction during a difficult period in the market. The business had already reduced staff hours and so on. RM told them no. This really stuck in the minds of the directors and they dumped RM probably nearly 10 years ago. They are still the top brand and best performing agent in Swansea.
It’s not easy I know, but the fear of leaving is always greater than the reality.
Wish you well.
I think that is the key, local associations need to get together, sign a binding agreement to remove listings from RM and all back an agreed portal
You could even start up a countywide portal owned by agents.
This is what OTM should have done when originally launched.
Portals do not have to work on a national scale, they need to work on a local scale.
Exactly…. Propertymark could / should be able to co ordinate this …. they have regular meetings and the resources to bring agents together
So, if independent agents want to fight back against RM why don’t we all publish what we pay each month for what package and our postcode area?
Rightmove bit the hand that fed them.
total disregard for their client! when asked for a little leeway in the last recession they told me to fire staff or close offices in order to pay their bill.
Property Poke In The Eye.
No, they left the hand and ate the rest of the body.
You need a hand to sign the standing order!
Brilliant!!
Lol, good one!
Zoopla is a fraction of the cost (and better than OTM) yet you have not seen agents leave RM on mass for them.
That’s because the decision makers have the fear of missing out.
The acronym of the year FOMO as introduced recently and is so appropriate to agents.
The key bit from the report, and it is time to wake up and save money is to increase the relevance of OTM. Believe it or not, it is in the industry’s interest. The main 2 have allowed the call centre/uber employee brigade to piggy back into a market presence. Its called an own goal! Take back control :-
Crosland says the point is that OTM can offer a cheaper service, “whereas previously agents had little choice but to stump up whenever Rightmove increased its prices”.
He continues: “And stump up they have.
“In 2001, Rightmove’s average rate per advertiser (ARPA) was £100 per office per month.
“By 2017, this was up to £922, giving a compound annual growth rate of 14%.
“And these are averages. Nearly half of its subscribers pay over £1,000 a month, and some as much as £1,500.
Smile Please,
I can only speak for my company, but we took what we thought was a brave decision and dropped RM a couple of months ago. This was after analysing the last 2 years of enquiries from RM and it was simply no longer cost effective and based on the number and quality of leads being generated by OTM
We took the decision to join Z again after many years.
Since returning, Z are generating as many leads as RM were and OTM are certainly driving as many leads and certainly of a higher quality than RM also.
It is important to monitor the quality as well as the number of leads being generated.
I can only speak for my firm when I say that it now appears that we made the right decision going forward and I predict many more, particularly smaller agents will have to look at the cost per lead and then will make the same decision I did.
I have read over the last few months that the number of Agents for the first time, is reducing with RM and they are still pushing price increases.
I don’t care about the leads. I do not need a portal to keep me supplied with valuations and i have a database of buyers for properties.
If i dropped RM the other agents would have a field day and i would not win an instruction.
My core area has over 60 offices servicing it, ALL are on RM.
You maybe lucky and have an office in a village of just half a dozen competitors. Not the case for most sadly.
And that is why RM is the monster they are.
We did the exactly the same many years ago – never looked back. Don’t need Rightmove.