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TODAY'S OTHER NEWS

Rightmove - can it remain profitable in the long term?

As if to prove there are two ways to interpret every figure, a new analysis of Rightmove’s recent trading statement suggests that the portal is not, after all, doing as well as some believe.

Mike DelPrete, the international property digital analyst, says last week’s figures from Rightmove - which showed increases in numbers of agency members and double-digit percentage rises for revenue and operating profit - had a downside too.

The slowing growth in revenue revealed by the portal is part of what DelPrete calls “the Rightmove dilemma" - that is, relatively few other ways exist for the portal to attract more income because it has not diversified in the way that, for example, ZPG had before its takeover by a US equity firm. 

DelPrete says Rightmove’s narrower business strategy has served it well for the past decade “but ... is beginning to show limitations.”

He insists that Rightmove’s annual revenue growth of 9.7 per cent is its lowest for some years, and the first time it has dipped below 10 per cent.

“Because Rightmove has not diversified its revenue streams, revenue growth is almost entirely driven by Average Revenue Per Advertiser growth (how much it is able to charge its customers). This number, too, is dropping” says DelPrete, who is referring to ARPA growth at 8.3 per cent. 

“Once again, this is the lowest number in years. Rightmove can only raise its prices so much” he adds.

DelPrete emphasises that Rightmove remains “an incredibly strong business, with nearly-impregnable network effects that will likely protect its core business for years.”

But he insists that its dilemma is growth - where does it go from here?

“Rightmove is bumping up against the glass ceiling of price rises; growth is slowing. Slowing revenue growth is leading to tighter cost control, which could inhibit its ability to invest for the future. Rightmove has not diversified its revenue streams. Nothing new is taking up the slack in the revenue slowdown. It has been promoting new premium features and new products for over a year, but they are not stopping the decline in growth” he insists.

He concludes his analysis of the figures by advising rival portals to acknowledge there is a limit to how much revenue can be extracted from customers each year, and that additional premium products and services take more effort to build, and are valued less by customers.

Poll: Will Rightmove need to diversify in the long-term?

PLACE YOUR VOTE BELOW

  • icon

    Yes. Rightmove will need to diversify. But having captured all the property searches in the country it will be easy for them to pivot to become an online estate agent and basically wipe out most of the high cost high street industry.

  • icon

    The fees rightmove charges Agents is scandalous- why are all agents just accepting this?

    No Agents = No Houses = No Business

    If they become Agents So be it -

  • Nigel Adams

    Rightmove cost per quality lead is still much better than any other source. They would destroy their business model if they "became an online agent" so this will never happen. Agents need to stop complaining and differentiate on service, which will be the new battlefield in our industry. Why? because it is the thing that customer's actually want.

  • icon

    No - Rightmove will dwindle because of they are playing into the 25 year rule trap where they will last about 25 yrs from creation. In order to diversify they will have to heavily invest which will mean reduced profits or hugely increased fees - neither of which is easy for them in their cruising position.... you watch - 7 years left and counting. I predict that OTM could well be the biggest, despite Simon's hate for them - and his 100% wrong predictions so far.

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