By using this website, you agree to our use of cookies to enhance your experience.
award award
award award


Rightmove may have to extract more revenue from agents, claims analyst

One of the leading PropTech analysts says Rightmove’s huge success means that it has two difficult choices ahead if it is to retain its huge revenue - either diversify, or find a justification for extracting more money from its estate agent customer base.

Mike DelPrete, the former head of strategy at the property portal Trade Me in New Zealand and now a leading international real estate consultant, has issued a briefing note to the industry about Rightmove following its annual trading statement for 2017.

DelPrete notes that Rightmove is, in his words, “the most efficient property portal in the world in terms of profit margins” - they are steady at around 76 per cent according to the portal’s own figures.

But DelPrete warns that this cannot continue forever without action from Rightmove.

His justification for saying this is some warning signs he has spotted - firstly that revenue growth - at 11 per cent - is slowing and is now the lowest percentage in six years. “There's still growth in the business, but it's a big deal for a business you could predictably count on to deliver 15 per cent revenue growth each year” he says.

Secondly, for the first time ever, ZPG’s total revenues have topped Rightmove. “This is a direct result of Zoopla's revenue diversification strategy and aggressive acquisition activity in the space” says DelPrete. 

The analyst says this has, of course, come at a considerable price to ZPG - it has spent over £500m on acquisitions - but DelPrete says this was sensible given that it was never going to beat Rightmove on listings alone.

“Zoopla is generating around 75 per cent of its revenues from these acquisitions and non-listing business lines” he notes.

Then he concludes by saying that as Rightmove’s objectives are clearly to optimise profit, to continue doing so will require a choice.

“The pressure is on. There are two ways for Rightmove to increase revenues: diversify, or extract more money from its customers - agents” he says.

DelPrete suggests that Rightmove is unlikely to diversify because that requires a heavy investment and lower profit margins (ZPG is at 39 per cent whereas. Rightmove is 76 per cent) so this “flies in the face of the current margin optimization strategy.”

Instead he gives this forecast: “The more likely path forward is extracting more revenue from existing customers. Rightmove will need to provide more value while avoiding upsetting agents by excessively raising fees. It's possible, but there is little margin for error. Rightmove's strategy to date has put it in a position where its strategic options are limited.”

  • icon

    Rightmove are already upsetting agents by excessively raising fees!

    Another increase is due of over 10%.

    With the competition from online agents meaning lower fees from sales, any increase from Rightmove is crippling for smaller agents. It is getting to the point where we will have to seriously consider dropping Rightmove and looking at the alternatives!

  • icon

    They did the same with me.
    They are not worried if you leave.
    They wanted another £200 A month from me.
    1 office paying 18K a year.

  • Alan Mauchan

    We're mostly lettings and had a spell of few changeovers at the end of 2017 so very little listed on Rightmove. Asked for a reduction - no chance. Took a deep breath and dropped them. Doing fine now with Zoopla, Lettingweb and just signed up with OTM. Obviously less enquiries, but enough and of a decent calibre

  • icon

    Seriously thinking of just binning RM and going to OTM.


Please login to comment

Zero Deposit Zero Deposit Zero Deposit
sign up