OnTheMarket has stepped up its attack on Rightmove with a stridently-worded email to agents explaining how a drop in leads from the number one portal is down at last partly to OTM’s efforts.
It also says that OnTheMarket’s fees are, on average, about 25 per cent of those of Rightmove, while OTM’s New & Exclusive feature allows agents to “reduce your reliance on other portals.”
Separately, City investment consultancy Zeus - which advises OnTheMarket - says the portal is expecting to have 17,200 agent branches listing in three years’ time.
Projections suggest that if OTM can convert those agents who joined at a discount in the past two years into market-level fee-paying customers it will earn £388 a month on average from each agent by 2021.
This would add up to £64m revenue and profit after tax of £27.4m for the challenger portal.
Here’s the email attack on Rightmove:
Last Friday’s reporting of 2018 results shows another year in which Rightmove has generated increases in revenue, profits and profit margin primarily by hiking its Average Revenue per Advertiser by a further £83 to break through the £1,000 per month barrier for the first time.
The majority of Rightmove’s revenue – over 75% – comes from the fees which agents pay.
It has again – for the third year in a row – generated fewer leads for its property advertiser customers, down from 210 leads per advertiser per month in 2015 to 171 leads per advertiser per month in 2018 – a fall of 19%.*
This means that every £100 spent by Rightmove’s property advertiser customers generated an average of 17 leads. This is a reduction of 39% compared with 2015, when every £100 generated an average of 28 leads.
Rightmove also reported a further 10% year-on-year decline in leads in January 2019, which it attributes to “the fall in property transactions as a result of a slightly cooler housing market”.
Although NAEA Propertymark is reporting an overall downturn in buyer enquiries in January, we believe that the fall in Rightmove’s lead generation may also result from the substantial growth in leads delivered by OnTheMarket.
OnTheMarket has increased its lead generation seven times since its Admission to AIM in February 2018. Our direction of travel is clear. With 12,500 agent offices now listing at OnTheMarket, we have delivered on building our agent network, quadrupling consumer traffic to 23.5 million visits in January and importantly, we have increased our lead generation by seven times.
This is classic network effect building. More people, looking at more properties, which produces greater value for our agents. With agent backing we remain focused on delivering a genuine alternative to the market leader.
It is no surprise that the number of agents listing with Rightmove has started to decline for the first time: down 298 offices year-on-year, with the greatest reduction - 257 offices - in the second half of 2018.
We have already disrupted the duopoly of Rightmove and Zoopla and believe we are reaching a crunch point for agents. We believe there is a strong will among independent agents for OnTheMarket to succeed in delivering an alternative market-leading, agent-backed portal with sustainably fair pricing for their core listings.
Our pricing undercuts Rightmove – with fees typically one quarter of Rightmove’s - to provide agents with sustainably fair pricing for core listings, while agents remain at the heart of the property transaction on the ground as well as being majority shareholders in the business.