Rightmove’s growth rate is at an all-time low, despite what some consider to be an unbeatable lead amongst portals in the UK.
That’s the view of Mike DelPrete, former head of strategy at a New Zealand portal and a long-standing analyst of estate agencies in the UK and the US.
In a new analysis he says the primary driver for Rightmove - accounting for 72 per cent of its revenue - is its core agency listing service. “The growth rate of this business has dipped to four per cent, less than half of last year, and the lowest rate in years” says DelPrete.
He continues: “Rightmove has saturated the UK market. Every estate agent that could possibly be a customer, generally is. Therefore, the only way to increase revenues in the agency listing business is by raising prices.”
However, the analyst warns that Rightmove’s ability to raise prices is diminishing, and the key performance indicator for portals - average revenue per advertiser growth or ARPA - is falling annually.
DelPrete, an expert in US portals and agents as well as those in the UK, says the American site Zillow underwent a similar slowdown in its core lead generation business.
The analyst says the logical next move for such a business is to find new revenue streams, and in Zillow’s case it launched an iBuyer operation, home loans and other initiatives. “In the face of growth headwinds, Zillow acted decisively to diversify.”
However, he insists Rightmove has not done this - perhaps because it is in such a dominant position with a huge profit margin of 74 per cent on revenues and may be beyond the reach of other portals in the UK.
“But as a public company, it naturally faces pressure to grow -- and that growth has steadily slowed over a number of years” says DelPrete.
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The phase of "growth at any cost" is going to start to fade rapidly in a post coronavirus era.
Until one of the big global portals proves a diversification strategy that doesnt burn $xm a month, RMs strategy is spot on.
If DelPrat is your go-to guy for comment on UK portals, I feel sorry for you.
Their revenue will fall in the next year due to Covid and Agents throwing in the towel; having been beaten by poor sales market, legislation, RM price rises, tenant fee bans etc; RM branch count will be down in a year. They should scale back costs for efficiency and just concentrate on their core business - listing houses.
Interesting comment J Blackmore - listing houses - core model of Rightmove. Listing property is core model of residential agency - and instead of agents charging Rightmove for the raw material they need to sustain their model - the listings - agents have to pay Rightmove.
Maybe this is the solution - agents need to say to Rightmove, my monthly payment is £x to list on your site, but without the fruits of my labour the instructions that I generate every day from my work as an agent, which is supported by my daily burn of capital to support this enterprise - there would be no Rightmove.
As without stock the buyers would not frequent the portal, like bees in search of honey. So you charge me £x to list and I charge you £x + y for letting you have housing stock to list which draws in buyers.
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