The head of Boomin has attacked Rightmove for the fees it currently charges agents, the likelihood of higher fees to come, and yet the low levels of investment it puts back into helping the agency industry.
Michael Bruce, founder and group chief executive of Boomin, made the attack following the release of Rightmove’s latest performance figures.
These showed that in the first six months of 2021 Rightmove’s average revenue per advertiser - the amount agents pay - was up 63 per cent on last year to a record £1,163 per month. This was 11 per cent higher than the 2019 figure, well before the arrival of the pandemic which damaged last year’s market.
In addition, revenue for the period grew 58 per cent year-on-year and more realistically was four per cent above the comparable period of 2019. Operating profit was six per cent up on 2019.
While City observers felt the Rightmove figures were good news for its shareholders, Michael Bruce felt they were rough justice for agents.
In an exclusive interview with Estate Agent Today Bruce said: “Rightmove continue to take much of their profits from agents. Their whole strategy is to continue to increase what they charge agents … Over the next two or three years agents could be paying another 60 per cent on what they’re paying today.
“Their capital expenditure was down 80 per cent to less than 0.5 per cent of the [first half of the year] profits so in terms of what they’re actually investing … it’s a paltry sum in terms of what they’re actually earning and passing back to shareholders.
“The two leading directors’ salaries outstrip the meagre level of investment they make.”
Bruce says in the long term his own rival operation may supplant Rightmove, while in the short term is may encourage the number one portal to at least be more responsive to agents.
“Anything that Boomin does to see them invest more heavily, help to see them being kinder to agents in terms of what they’re charging and the relationship they have … will be so much better for them.”
An additional 130 branches joined Rightmove in the first half of 2021, taking the total to 16,052 - so why do agents stick with the portal, in Bruce’s opinion?
“No one single thing will disrupt Rightmove. Agents need to be confident there is a credible alternative - we’re very early in our journey and we believe we will become that in time.
“…With the greatest respect to Zoopla and OnTheMarket they are just replicas of Rightmove and are not offering consumers anything material different than a classified advertising space. The reality is, all of these businesses come out of classified advertising - that’s their DNA.”
Meanwhile Rightmove itself says its strong performance in the first half of 2021 will be replicated over the rest of the year.
In a statement to shareholders Rightmove says: “Given the momentum in the first half, our catch-up investment in people following the recruitment pause in 2020 continues apace. While continuing lockdowns made recruiting more difficult than normal in the first half, we have now been able to increase the rate of recruitment – particularly in product development and sales.
“… With a strong pipeline of product delivery planned for the second half, a culture of continuous innovation and a commitment to continue to make home moving more digital for our customers and consumers, the Board is confident in delivering its expectations for the full year and beyond.”
The number one portal is pinning much of its hopes on a mix of new product development aimed at the lettings sector and continued growth for its Optimiser 2020 bolt-on package - some 16 per cent of its member agents now use this, up from nine per cent last year.
“The strong take-up of our premium Optimiser 2020 package shows agents’ continued belief in the Rightmove platform, as they invest in our digital products and innovative algorithms to help them to identify more opportunities to succeed” says the portal.