OnTheMarket is not a threat to the established property portals Rightmove and Zoopla, at least not in the near future.
That’s the view of analyst Peel Hunt, which has maintained a “buy” rating on Zoopla’s parent company ZPG following a “short but reassuring” trading update yesterday.
ZPG updated investors on its progress for the trading period 1 October 2017 to 31 December 2017 ahead of its AGM on Tuesday.
It said it was “comfortable” that it would meet financial year 2018 market expectations of £310m in revenue and £122m in earnings before interest, tax, depreciation and amortisation.
ZPG’s websites and mobile apps attracted 53 million average monthly visits during the period, while it has signed multiple new long-term portal listing and data services agreements with estate agents and mortgage lenders.
Alex Chesterman, founder and CEO of ZPG, said: “We have had a good start to the 2018 financial year with continued strong consumer traffic to our platforms and strong partner demand for our products.
“We are delighted to have signed further multi-year agreements with a number of leading estate agencies and mortgage lenders.
“And the addition of Money and Calcasa to our portfolio has materially strengthened both our consumer offering and partner proposition across the business.”
Analysts at Peel Hunt said ZPG’s update was “short but reassuring” and that it continued to perform well across both its property and comparison segments.
Peel Hunt maintained the “buy” rating it put on ZPG the day before, in which it said its investment case for the business remained “intact” ahead of OTM’s flotation on AIM on February 9.
OTM announced on Friday last week that it had conditionally raised £30m through a placing of ordinary shares, rather than the £50m it had originally aimed for.
Analysts at Peel Hunt said: “Even with the new money raised to fund marketing, we do not view OTM as a threat to the leading portals in the near future.”
They added: “OTM is aiming to spend £25m per annum in the first two years to raise the company’s brand profile.
“This compares with Rightmove, which spends less than £10m per year, and ZPG, which spends around £15m-£20m on marketing for its portal.
“Although OTM’s annual spend is higher when compared to Rightmove and ZPG, it is important to note that ZPG has spent multiples of this amount in marketing since its launch, to reach its current level of brand awareness, and is still the number two player in the UK.”
Comments (8)
Post stock market launch what will the selling point be to get new advertisers. How do they intend to increase their client base?
“OnTheMarket is not a threat to the established property portals Rightmove and Zoopla…”
Never was. The ‘threat’ to the portals was going to be the strength of the Membership.
A Ford Fiesta is never a threat to a Mini – or vice versa. They both cater for different markets within the same market.
Beef will never substitute for pork in a restaurant in Tel Aviv.
Unless those that favour one, make the change, nothing changes.
The only thing that AM/OTM has proved beyond doubt is pretty much all of what was said before its’ birth.
Couldn’t have said it better – Agent V.
With profit margins of 70% or more, what more motive could we (traditional estate agents) have had to take matters in hand, rather than put up with such eye-watering annual price hikes from RM ?
RM sustained such rises even during the worst of the credit crunch, so all credit to RM from recognising the shambolic, disorganised response of our industry to such exploitation. Through its costing structure it has accelerated the decline of print advertising, reducing the choice of media we can deploy on behalf of our clients.
With support one might have assumed, OTM should have been a real threat to the duopoly and I still hope that it succeeds. Carping about its impact, ultimately by our lack of support, seems unfair.
RM has given its shareholders dramatic returns for long enough at our expense, and ultimately at the expense of our customers. If OTM offers the only realistically priced alternative, surely it deserves the support of those it has sought to represent, despite the somewhat blurred relationship it shall have with investors in the future.
Thank you Scruffy and well said.
Why not join us at the ‘Ideas Network’ where we are working on new software to help Full Service agents fight back!
in@agentv.co.uk
Agent V,
Although this is a great idea, and would possibly increase the numbers of renters and buyers using OTM, the difficulty also lies with stock levels. Already we have seen the One Other Portal Rule being dropped and now the Online only agents being allowed onto the site.
OTM should have allowed, from the start those that do not compete with Agents such as Builders with their New Homes.
It’s simply the chicken and egg scenario, more stock -> more viewers -> more enquires -> more agents come on board.
What still amazes me is the lack of support from Agents to support the initial offering of OTM.
What disappoints me now is the direction that OTM have possibly been forced into due to this initial lack of support.
We need competition in the market place to keep Z & RM in check to ensure the premiums do quickly increase whilst agents consider new ways of attracting Sellers and Landlords.
Posted this the other day, but a little late in the day to be seen;
Here’s a novel idea…….what about if OTM put most of the £25m marketing budget behind ‘intelligent marketing’, extolling the virtues of Full Service estate agency and why vendors should use this route to obtain the very best sale price and level of service driven by results (not pay whether you sell or not).
If this subsequently generated lots of new business for member agents then surely they would all be very happy, they would all push OTM in their local marketing, and many current non members would be attracted to join.
OTM would gain lots more publicity and new members…..win, win, win all round.
Or will OTM just use the budget to market themselves, with a view of increasing the share price as much as possible?
If OTM want lots and lots of ideas towards Intelligent Marketing they know who to contact 😉
How the apple has fallen so far from the tree!
The prospect of the saviour that was AM becoming more hated by its founder agents than the Rightmove beast it was supposed to defeat must be alarming to many.
Shane on you.
As Ewan McGregor said in Debenhams Christmas Ad….. “Who knows”
Horse. Dead. Flogging. Time to move on.