Zoopla could approach sellers and landlords and allow them to advertise directly on the site for a “fair, but high” price, a commentator has argued.
Simon Baker, who is behind the global online publication Property Portal Watch, said that this strategy could be deployed by Zoopla if it loses listings to OnTheMarket.
He said on his site yesterday that consumers could be offered the chance to advertise directly on Zoopla or go to their agent to get it cheaper.
Baker said: “Clearly this would put pressure on the agents to justify to their customers why they are not advertising on Zoopla – especially when the cost per listing is so small and the commission for the sale is relatively large.”
He said this approach would have to be backed up by a marketing campaign along the lines of: Is your listing on Zoopla? Only £x per month or ask your agent for a better deal.
Baker goes on: “They could even target the vendors of those agents who have not renewed directly through a good old fashioned direct mail campaign as the addresses are known!”
He said that Zoopla is run by a smart operator in Alex Chesterman who will not lie down “and let someone else eat their lunch”.
He also points out that Zoopla has significant funds of £31m in cash plus strong monthly cashflow.
Baker said: “If they are losing agents, then clearly it has to do something to get the listings back.”
One strategy, he says, would be for Zoopla to discount. But long term, this would simply dampen revenue streams and impact on the share price.
Going to vendors and landlords direct would, he argues, be a more preferable approach – and a means of getting listings up and agents back, should that be needed.
Baker concludes that there is a lot to lose by doing nothing and letting OnTheMarket through the door. “Time will tell – however, don’t ever underestimate a portal under attack.”
His blog is here
Comments (61)
Is it me – or is this "portal guru" racking up more column inches on EYE etc than Judith Chalmers' Air Miles total in the last month or so?
PeeBee … do you have a problem with healthy debate?
Oh, no, Mr Baker – FAR from it. I'm looking forward to the day when 'healthy debate' returns to these shores, instead of the incessant demotion of our profession to nothing more than a vehicle to list a property on this- or that website. You, Sir, are punting your thoughts around on a blog – nothing more. You seem to want to bid for a place in The Guinness Book of World Records for the number of 'ifs', 'coulds' and 'possibles' crammed onto a single A4 sheet – and are simply adding oil onto a fire that frankly we as an industry shouldn't want to have burning.
@Simon….."The payment would be made to Zoopla. If the agent with the mandate does not advertise on Zoopla yet the home seller wants to advertise on Zoopla, then why cant the home seller advertise on Zoopla?" Thanks for clarifying. As another poster has said there are a number of flaws to the idea, it is simply far too complicated and impractical to ask the seller to pay Zoopla £40 and then Zoopla to pass the leads to an agent for a whole number of reasons. Do you think this is the last and only solution open to Zoopla?
Point is Zoopla becomes an irrelevance, there are some hugely successful agents that aren't on it now, one of them Romans, we talk about feature listings etc on RM basically being extras that agents buy because their competitors have them? Well Z has been an extra that agents chose because their competitors are on it, just not for much longer. The term disruption gets banded about a bit here, nothing looks set to disrupt the market more than http://www.onthemarket.com – Jonnie
Its a good point Jonnie – I believe Z only exists as an add on, nobody sees it as their "Portal of choice" but is that not worry with OTM that all it is doing is replacing Z?
how would opening up to property owners help Zoopla exactly?
I don t think that what represents less than 0.5% of the property market would help them replace the colossal loss they are about to incur. Sorry guys but if you re looking for a solution, I think you re going to have to be a bit more creative than that.
There is no viable solution for Zoopla.
hot property, this is not about private sellers but home owners contributing to the marketing of their own property. No one said go direct and not use and agent for the transaction – just that Zoopla could allow home owners, already using an agent, to advertise directly on their site and generate leads for an agent.
“.. or go to their agent to get it cheaper.” Then we just say “Sorry, but we can’t get you a better deal than that. Next!” There’s no pressure – we’re on either Z or RM but not both. “Alex Chesterman won’t lie down “and let someone else eat their lunch”. Mmmm he’d better start cooking his own lunch then. “Strong monthly cashflow” .. how strong that monthly cash flow will be after 26th January remains to be seen. I personally don’t have a problem with either Z or RM letting owners advertise on their site – but doesn’t that just make them an online estate agent with all the rules which go with being an estate agent. Is there any indication they WANT to be bothered by the rules and regulations?
In my opinion the service of all websites will improve as the competition grows.
Like the big six energy providers they are competing for clients and reducing their prices. Although it is not consumer friendly to search on many websites, agents can not afford to be on all the websites and charge reasonable fees.
There is a misunderstanding here. If a home owner engages an agent and that agent doesnt advertise on Zoopla, then why cant the home owner, at their own cost, choose to advertise on Zoopla? That doesnt make Zoopla an estate agent any more than a home owner promoting the sale of their own home on facebook to their thousands of friends. This is the future at work …
If Z take instructions from a homeowner .. and the homeowner pays their fees, then in my book that makes Z an online agent. They are selling a property for Mr & Mrs X. Facebook is different, because Facebooks job isn't mainly to advertise properties.
Not only that buts whats to stop some agents with big budgets paying for vendors to be listed on Z as well as RM and OTM in the form of an upfront fee. This will break rules of AM and guessing the member expelled and back to listing on RM and Z
I wonder how far they have thought about the rule. Imagine an agent saying to a vendor that they can not advertise their home somewhere. It is the home seller's home and not the agent's. The industry is there to service the home seller.
Most individuals do not want to market their house themselves which is why they appoint an estate agent. From time to time you get vendors adding a listing on gumtree but nothing comes of it and even if they did find a buyer if you mention court action if they don't want to pay a fee they usually back down. However these cases are few and far between.
Taff, if i place an advertisement in the paper does that make the paper an "agent"? Of course not. I think this is a stretch … if i am selling my house i want to get it advertised as far and as wide as possible … to get the best price possible. I dont care (as the home seller) about who owns the portals and the fees being paid etc …
Bottom line … this is an industry issue and not a home seller issue. However, without home sellers, there is no industry!
No, because a newspaper is exempt. The legal definition says: "You will be engaging in estate agency work if, in the course of business and acting on instructions from a third party who wishes to either buy or sell property, you do either (or both) of the following:
1. Things .. with a view to, effecting the introduction to your client, of someone who either wishes to buy or sell property;
2. Things after such an introduction has been made by you to secure the sale or purchase of the property.
The law also only requires you to do things for the purpose of, or with a view to introducing your client to a buyer or seller in order for you to be acting as an estate agent. It is not necessary for you to actually introduce your client to a buyer or seller in order to fall within the legal definition of estate agency work.
Exemption:
If you are merely 'publishing advertisements or disseminating information' then you will not be acting as an estate agent.
This article starts with……. "allow them to advertise directly on the site for a “fair, but high” price"……..This would be a ridiculous route for Zoopla……Why on earth would someone pay a "fair, but high" price to advertise direct on Zoopla when the could get on RM and Zoopla for £69 via someone like the online agent mypropertyadvert.internet ???? And this is the thoughts of a portal Guru!!!!
Wilko – what is a fair but high price to you? The high part is in reference to what an agent pays for the same advertising spot. Suppose it costs and agent roughly GBP 20 to advertise a property and a home seller (who is also using an agent that doesnt advertise on Zoopla) could advertise on Zoopla for GBP 40 by paying with a credit card. Where is the harm here?
Zoopla has always been the lesser portal – Cheap, tacky and unreliable information. Its the first one to drop as agents sign up to On the Market. At some point they were going to allow private listings anyway. Will only lower the quality again with poor inaccurate listings. Who cares what they do – Any decent agent with foresight will be on or signing up to On The Market ASAP!
I have dropped RM and i can not see yet why OTM will be a big thing.
We have been with Z for 6/7 years now and received better service than from RM.
Good luck with that in 2015 when 100's of 1000's of property comes off Zoopla!
SSPM – funnily enough this will work in your favour in the short term. Consumers do not know what the full market is and therefore as long as there is the perception of a strong market coverage on Zoopla, consumers will still go there. They generated millions of leads last year. If there are less agents advertising but a similar number of visitors (and this can happen for all the sceptics out there), then you will actually get more leads. Food for thought!
Just the reason I committed to a 6 month contract with Z, Short term I expect to reap the rewards.
Hang on, fewer properties by fewer agents on Zoopla but those remaining agents will get more leads – how does that work? Or are you talking about leads for valuations?
They are not going to go down the route of private listings. The immediate consequence would be that they would lose 100% of their advertisers both traditional and online only and replace it with what: 18000 possible advertisers paying what £50 for an advert, thats a whopping £900,000 per annum. Plus thats assuming they pull in ALL of the private advertisers……..Its not happening!
Such an action will only '****-off' long suffering Agents even more. The house value algorithm has been a thorn as it acts against local Agents who know values, letting in direct selling will be the death of Zoopla
Mudplugger, at no point did the article talk about direct selling (ie cutting the agent out of the commission stream). Instead it talks about allowing a home seller, who is using an agent that doesnt advertiser on Zoopla, to actually advertise on Zoopla – at the home seller's own cost. Why would an agent care about this?
Simon Baker
Hi Simon, Thanks for taking the time to explain the article. I see where you are coming from but I think there are a couple of fatal flaws. If the purchaser comes from Z after the vendor has paid for this listing would they not have been seen to get the effective offer and under the Foxtons ruling not have to pay the agent a fee? or are you suggesting all clicks are sent to the agent? this then would be in breach of OTM's one other portal rule?
Why cant the leads go to the agent or to the home seller who passes it onto the agent? Also, why would a lead from Zoopla being passed to the agent be a breach of the OTM one other portal rule if the agent didnt advertise there? What if the lead came from facebook (say)?
If the leads went to the agent they are breaking the "other portal rule" as effectively they are advertising on another portal. If the lead went direct to the vendor then they have effectively "found" the buyer and as such do not need to pay the agents fee as per the Foxtons ruling (circa 2010 by memory). I think Facebook is an interesting one as I feel there is a lot of scope on social media. My opinion is at present OTM do not mind if you are on a couple of smaller portals / sites but if they grow then they will enforce the rule to protect themselves. Facebook is a fantastic example though, imagine allocating a £500 per month budget to all local, social individuals who can then share……..
Yet another non biast Agents mutual article from propertyeye, NOT… And people misreading it. At no points does it say any portal is actually doing this, RM or Z. It's a wonder no one trusts the industry.
You still hanging on to your Zoopla shares 1stTimeBuyer?
No surprise there then – apart from the fact that it goes against every brief they have probably ever given to the Stock Market! But when a Z is in a corner??? It has been long discussed amongst agents as to when this would happen. Why would Rightmove not do the same when they get the same sort of threat in 18 months time. We just must keep remembering that these (relatively new) companies are only in business because we agents pay their wages and provide all their stock. What a lovely business model, especially when you can make 70% profit on the back of those agent suppliers.
Whats happening in 18 months time with Rightmove?
Paul H, if you think a 2% OL share means only 2% of sellers would sell OL or direct you are in for one big shock. No OL EA advertises on mainstream TV and because of that 98% of sellers simply don't know the option exists. As soon as an OL EA advertises on mainstream TV that % will start to change dramatically.
PurpleBricks do.
Anybody who uses TV to advertise a product that people "buy" maybe three times in a lifetime is quite simply throwing money away.
The cost just doesn't scale up.
"As soon as OL EA advertise in TV"….they already do and are you telling me that Zoopla will turn themselves into an estate agent whilst at the same time not lowering their fees to existing agents and gain a market share. This blog from the property guru is the first real confirmation from the tech industry that Zoopla are dead in the water.
I've never seen one ad for Purplebricks or any other OL EA. And I've never heard one potential or existing client mention it either.
You may not have heard but in my area of Hampshire they advertise, not so much now but they kicked off with local advertising on TV and Radio. Also Russell Qs gang did an advert but I think it was only on the Sky TV channels.
I had heard PB was getting established in Hamphire, most notably in Portsmouth, any truth to this?
Yes PB are getting established in Portsmouth and to a lesser degree in Southampton. Their business plan involved a ground zero of the Meridian area, concentrating on tv, radio and online advertising and canvassing. Capital radio was heavily used as well. They were very flexible about the payments for the initial advertisers and now have some successes to build upon. An easy market has flattered them so understimate them at your peril. From my experience of trying to build a portfolio for my pension, the local High Street agents are not doing a good enough job to keep them out!
@ P-Daddy (not purple I trust!) interesting comments looks like you have some inside knowledge. I was intrigued by your comment of "From my experience of trying to build a portfolio for my pension, the local High Street agents are not doing a good enough job to keep them out!" what should, in your opinion the agents be doing there?
Paul – once again i will respond to your comments. Firstly, i dont believe Zoopla are dead in the water. In fact i believe that market pressure will come to bear on the agents who choose not to use Zoopla and they will resign within 6 – 12 months. The reality is that estate agents are intermediaries between the seller and the buyer (like a stock broker). Their role is to get the best price possible for the seller. If the seller wants to be on Zoopla and the agent says "no", eventually the seller will go to an agent that does use Zoopla or if the property is not moving, the seller will put pressure on the agent and they will try Zoopla again. It is just a matter of time. Remember, this is not the first time anywhere in the world this has happened …
Simon Baker
@Harree "As soon as an OL EA advertises on mainstream TV that % will start to change dramatically."……And how much do you think sustained TV advertising campaign costs?"…..There is no way that the level of investment required for this could ever be repaid by the charges that online agents make……Last time I checked, investors want a return on their investments! You really ought to think more before making sweeping statements that can't be backed up.
It is an absolute certainty that Z will have a battle plan to regain revenue that does not solely rely on increasing fees to remaining agents. AM are kicking a Gorilla and if Z are aggressive in their reaction whether it be taking direct listings, anti-OTM direct mail or other tactics designed to 'disrupt' OTM then AM and its agents can hardly complain. Don't kick out if you aren't prepared to be kicked even harder back.
Scroll to the top of this page …… Now look at the right hand side ……. This is how Z will make MILLIONS – Just email Eye and ask them their rate card now times that by 10 and you will have Z's price. And yes in 18 – 24 months they will no doubt add direct to market listings to the public BUT this is a direct result of AM – As I have said time and again careful what you wish for.
This is precisely what you would expect to hear from a tech guy who clearly does not understand our industry. The consumer do not want to sell direct, selling a property is a personal service which is clearly demonstrated by the fact that only 2% of the market is currently occupied through online agents…there is no market for it on the scale suggested by this Portal Guru. As he has said Zoopla cannot get into a race to the bottom on fees so the only other option is to go direct. It's game over for Zoopla.
Paul H – thanks for the comment.
I am the "tech guy" who wrote the article. A bit of back ground, i have been in the online real estate industry for nearly 15 years. I am the former CEO / MD of the REA Group in Australia (who once owned propertyfinder in the UK), i have chaired the iProperty Group in SE Asia, and have invested in numerous portals. I do understand what the end customer, the home seller wants. I also understand what the industry wants. On closer read of the article above and the original article, you will see that i am NOT proposing cutting out the agent from the transaction, instead i am suggesting that Zoopla could, if it wanted (and no different for dozens of other sites) go direct to the home seller and say advertise your home on us. This would be in conjunction with the marketing being done by the agent as well as part of their mandate. Isnt the objective to maximise the price the seller gets for the property?
Simon Baker.
Thanks for coming on to face the gauntlet Simon. I was basing my comments on the following part of your blog…"Another, more preferable approach could be to offer the ability to vendors (and land lords) to advertise their homes directly on Zoopla for a fair, but high, fee.”…Perhaps you can state further what precisely you mean when you say ‘Directly’ as I took it as you insinuating approaching the customer direct and asking them to advertise their property on Zoopla’direct’? But you are now suggesting….”go direct to the home seller and say advertise your home on us. This would be in conjunction with the marketing being done by the agent as well as part of their mandate.”…Can you possibly explain further how this would work?
Paul H – at no point did the article mention cutting out the agent from the transaction. That is a slant the industry loves to put on these views as it clearly plays into preconceived fears. In reality, why would an agent care if the home owner contributes to the advertising budget by paying to be on Zoopla themselves? Remember, at the core of any mandate is to get the best price possible for the home seller. I am a long way from being convinced that coming off Zoopla achieves this outcome and i am also a long way from being convinced that OTM will generate anywhere near as much traffic as Zoopla. So how is coming off Zoopla in the home sellers' best interest?
Sbaker…Just so I have understood correctly and based on your other comments below, you are suggesting…"Suppose it costs and agent roughly GBP 20 to advertise a property and a home seller (who is also using an agent that doesnt advertise on Zoopla) could advertise on Zoopla for GBP 40 by paying with a credit card." Can you confirm who the payment of £40 is paid to, the agent or Zoopla?
The payment would be made to Zoopla. If the agent with the mandate does not advertise on Zoopla yet the home seller wants to advertise on Zoopla, then why cant the home seller advertise on Zoopla?
Precisely why the market needs to act now. This threat will only get stronger. Zoopla has to grow or it dies. 'Stay with us or we will compete with you' – if that's the tack they take- cannot be tolerated.
And here is another clear reason to walk away from The Duopoly!…… this strategy from Zoopla demonstrates why we must walk away from the Duopoly Organ Grinders who so clearly treat their members as Performing Property Monkees! Goodbye Duopoly!….. Hello Agents Mutual!!
Hats off to GPL this morning! An agent committed to OTM and pulling off both R and Z. Well done, if only others would follow.
Oh my! Thank god I decided not to go down the Internet ONLY route. I do think we should stop calling these little people internet agents and refer to them as Internet Only agents. We are all internet agents and much, much more.
Ah, here you go again… Politicians answer, reading an article as one thing and converting into something else. Please show all your fellow readers where it stats that Zoopla are actually going to do this??? Nop, struggling are we, keep looking… Can't find it, strange that. It's not possible that this was just an individual in no way tied to Z or RM who is having a random guess?
Very fair. I agree I did change the subject but the facts remain the same. Z and RM WILL go down the private sale market if they lose all the agents. They cannot survive without stock – well let's hope not anyway.