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TODAY'S OTHER NEWS

Boomin blasts Rightmove as bleak, broken and bloated

An open letter from Boomin chief executive Michael Bruce shows how fierce the competition is going to be in the portal field in the months and years to come.

Just hours before Rightmove delivers its annual figures for 2020, Bruce has slammed the number one portal as overpriced, lazy and treating its agent customers as cash cows.

You can see the latest Rightmove figures here, while below we reproduce Bruce’s open letter in its entirety.

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“Today Rightmove announces its financial results for 2020. Shareholders will doubtless be delighted by the return to business as usual message, after an unprecedented Covid related first half dent in their upward only profits record which has run unbroken since at least 2007. 

“The bad news of price hikes has been delivered to agents in good time for Rightmove to tally up the growth, turn it into tens of millions of pounds and announce it today to the excitement of investors. Meanwhile Rightmove’s estate agent customers are fighting on two fronts, facing the end of the stamp duty holiday and the resumption of double digit annual hikes in portal costs. 

Lack of competition = Market failure 

“The property portal market has been broken for the last decade, lacking meaningful competition. Rightmove is an example of market failure. By its own admission Rightmove has a market share approaching 90 per cent. Impressive? The consequences for now and into the future are anything but. 

“Rightmove pockets some 75p in profit for every pound it takes from agents – this is a higher profit margin than any other company in the FTSE 100 Index of the UK’s leading companies. The best run agents in the country in a good year would be happy with a margin in the teens. 

“And Rightmove’s profits don’t reflect the housing market. Between 2008 and 2019 the volume of annual housing transactions has fallen 27 per cent - while their average estate agent customer has been hit with fee hikes totalling some 350 per cent. 

“It’s not as if the money is getting pumped back into the service. Since 2010 Rightmove has made £1.3 billion in profits and invested just £14m in capital expenditure. I can think of no large company, operating in a competitive market, that could survive and thrive on investing a paltry £1m per year or one per cent of profits. 

“Real technology companies continue to innovate, investing in their platform and infrastructure to improve customer experience. By way of example Ocado and ASOS invest over £100m per year in their technology. In contrast Rightmove pays its two executive directors more than it spends on capex. 

2024 - an unsustainable future 

“Without a change in the market dynamics, without the injection of fresh and meaningful competition, the status quo is likely to continue indefinitely. For the majority of agents, this is likely to mean the continuation of annual, double digit price hikes. 

“Based on the average annual fee hike of the last ten years, agents could be paying some 60 per cent more than their recently increased prices by 2024. On the same methodology Rightmove would be coining in some £385m in annual profits. Unrealistic? Scaremongering? Well consider that in 2010 

“Rightmove’s average revenue per advertiser ARPA per month was £379 and their profits £57m. By 2019 this had increased to average agent fees of £1,088 per month and profits spiked nearly fourfold to £220m. 

“Being very successful and highly profitable is justifiable when you are creating the very best innovation for agents and visitors to the site. I just don’t see how things have advanced. Rightmove quotes record traffic of 4.1m a day but actually there are less than 10,000 sales and lettings transactions a day in the UK. Increases in traffic and increases in leads has not improved the overall experience, the quality of introductions or increased overall transaction numbers for agents. 

Choose a happier future 

“The bleak future I paint above is not a given it is a choice. Agents need to make a choice to embrace new competition if they are to secure a future, better than their past. It is not that the property market hasn’t had its fair share of ambitious young start-ups looking to take on Goliath. Rather it is that the barriers to success are so high in this industry that start-ups have lacked the marketing and technology armoury that is necessary to turn the tide. 

“Portals also need to play their part. All portals should embrace a new model of transparency and fairness and evolve their models from upward only pricing. Continuous innovation and fair competition are essential for any properly functioning market and for the good of the estate agency industry that we all serve. 

“We should all give a commitment to avoid unfair, inequitable pricing and the giving of financial incentives to restrict competition for the few and agree to do what is in the best interests of all agents and consumers. 

“We are doing our bit. For the last two years we have been building a world class team of 160 technology and marketing experts with the mission to bring real competition, into the property portal space for the first time, underpinned with the values of transparency and fair pricing. 

“Boomin will launch shortly, embracing the latest technology to deliver a completely new, more powerful search experience with a host of new features and a broader product offering that looks to build relationships between agents and customers that lasts far beyond the property transaction itself. This will be supported by a marketing budget that will establish Boomin as a household name in near record time. 

“2021 will be a defining year for the industry and will determine the competitive landscape for the next ten years. I urge everyone to get on board and reset the balance of power in the industry between portals and agents. 

“Michael Bruce
Executive Chairman and Founder of Boomin”

  • Murray Lee

    Isn’t this what we Say no to Rightmove campaigners said all along from last year?
    At least we cost them some £49M during the discount period. 1 battle won. Just not the war. I can only say that so far we have not missed being on RM and have saved ££££s. It’s time for the cavalry to come to agents aid, and show them that RM is not the only circus in town (nor the cheapest!) I believe Michael Bruce and Boomin are the cavalry!

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    Murray, how can I say this politely... When hell freezes over!

     
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    Disagree, These are NOT the ones to "come to the agent's aid" Guessing you were not affected by commisery so don't feel or understand the pain and anger experienced by others.

     
  • Simon Bradbury

    It's great to see such healthy competition and real choice for estate agents in the portal market. I'm also really impressed that Murray Lee appears to have not missed being on Rightmove.
    That said, I still believe that agents definitely benefit from being on Rightmove as 80% + ( that's just a guess ) of UK agents continue to use them and, I assume, see real value in their proposition.

    Algarve  Investor

    Rightmove's biggest attraction and draw is its brand awareness. Everyone in the UK - even those with not an ounce of interest in property or buying/selling/letting/renting a house - will know what Rightmove is. The same goes for Zoopla, to a slightly lesser extent.

    OTM has never been able to break through in the same way in the last five years. Purplebricks, to be fair to the Bruce brothers, did manage that public breakthrough, but I somehow doubt Boomin will no matter how much money they chuck at it.

    They're better off concentrating on Agents Together, which seems to be going great guns and answers an actual need in the industry.

     
  • maurice  kilbride

    Michael Bruce’s letter highlights the eye watering profiteering Rightmove achieves at Agents expense, whilst investing precious little in the technology. The problem is that RM have firmly entrenched themselves in the public mind, due to the lack of credible competition over the years and contrary to what Simon Bradbury says above, I am not sure agents see real value in their proposition, but rather are petrified of the consequences of not being on RM in their market place.
    Not that it would ever happen, but if agents came of RM in huge numbers, RM wouldn’t have a product and the public would soon go elsewhere in the thirst for property!
    I really hope Boomin becomes a genuine challenger in the portal space, although I fear because of the ownership it may not attract sufficient support from agents and without sufficient stock, I wonder how the public will perceive the portal.
    Interesting times ahead!

    Simon Bradbury

    HI Maurice - They are fair points and you may be correct but I take a different view. I am judging estate agents not by what they SAY but what they actually DO and the overwhelming number of estate agents still use Rightmove and therefore I assume see value... even if that value is, as you say, because they " ...are petrified of the consequences of not being on RM."
    Significant numbers of agents also use the additional products on Rightmove too - something that they are certainly no compelled to do.

     
  • Michael Riley

    One thing that Rightmove do have in their favour is a live site.

    Mark Walmsley

    That is hilarious Michael

     
    Algarve  Investor

    Not to mention more than 20 years of history and, whether you like it or not, plenty of success.

    According to research, Boomin can't even get half of agents on board before it's even launched.

    It can't be judged properly until it's properly launched, but we still have no idea when that'll be.

     
  • Andrew Stanton CEO Proptech-PR    Proptech Real Estate Influencer

    And so it begins.

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    Pot calling the Kettle one thinks. Laughable attempt trying to fool agents into thinking the Bruces are on their side... hilarious guys..

  • Algarve  Investor

    'Boomin will launch shortly' will still be appearing in press releases in February 2022, won't it?

    This seems to be the most tortuous, long-drawn out launch this side of Crossrail.

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    Whilst it's great to see competition which will no doubt drive down prices and drive up functionality, I'd rather not go back to the agression of the early Online Agent days when the Bruce's and other hangers on were openly criticising the high street (the very people they now say they want to help) in order to generate headlines.
    Yes, rightmove make money, good for them I say. If Boomin wants to use other people’s money to take them down a peg or two then I wish them all the best, but I for one will not be signing up to another bloody portal any time soon, irrespective of how much cash they throw at the marketing campaign or how much it’s not going to cost me, especially one which will apparently be looking through my valuations diary.
    It’s surprising how many agents seem to have remarkably short memories, one assumes on the basis of "the enemy of my enemy is my friend", but then that proverb usually never works out that well in the end.

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    "It’s surprising how many agents seem to have remarkably short memories"

    Agree it is. As someone else said, it is akin to someone returning to an abusive relationship on the promise they are going to change. No thanks, once bitten and all that!

     
  • Trevor Cooper

    I've never thought much of any professional who slings sticks and stones at the opposition.

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    To paraphrase James Carville; “It’s the data, stupid”!

    Purplebricks sits on hod loads of data but built a platform that was so poor they still can’t do anything with it. After his train set was taken away by the board, he went away to sulk and think, he’s now realised that he can do better and get other agents to give him all of their data for free.

    Clive Humby (a British mathematician) said back in 2006, “data is the new oil”. Clive Humby also set up Tesco’s Clubcard.

    With Boomin, Michael has created a Clubcard for agents and customers where they give Boomin all of their data - for free. Great idea… For Boomin!

    Google “data is the new oil”, there’s great article from The Economist in 2017 and one from Wired in 2014.

    The same CIO that built the atrocious Purplebricks platform, is building Boomin; it will be built as a minimal viable proposition, it will not be good tech.

    Your most valuable asset is your database, please don’t give it away for free.

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    I still don't understand why they went down this path. The worst thing they did was go public that it was their (bruce) venture. I wouldn't touch it with a bargepole for that very reason and will be advising every one of my clients why. I see it/them for exactly what it is and disagree about Agents Together, that was a marketing ploy to try and win agents over. Some fools rushed in (the normal group of attention seeking wannabe influencers that push stuff on us on a daily basis) and basically sold their souls. If they really wanted to support agents with mental health, there were numerous other more established and respected charities they could have chosen.

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