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What do portals really cost?

There has long been the assumption and contention in the industry that portals are expensive. This, however, is not the case.

Along with other agents my agency has been forced to pull out of advertising in the local papers because they have become so weak they are no longer effective.

We find our combined spend on Rightmove and Zoopla is nowhere near what we used to spend advertising in print. I can't believe we are alone in this situation?

Advertising on the portals has proved to be more cost effective than print. I therefore seriously question what the fuss on costs is about.

The answer I keep coming back to is power, it's all about power. I, for one, am happier dealing with the free market than an industry owned portal that supposedly has my interests at heart but is in reality controlled by my most powerful competitors.
 
Agents' Mutual was set up to disrupt the portal market and weaken the duopoly of Rightmove and Zoopla. The strategy adopted by Agents' Mutual has been to target Zoopla, in order to first take the number two portal position. Members, therefore, have been encouraged to choose Rightmove as their 'one other portal'. The plan, once Zoopla has been dispatched, is to take aim at Rightmove themselves.

At the end of the day, all that matters is audience size, not words or promises. Portals are a marketing channel and come out of an agent's marketing budget (they are also very useful sources of data and other things but that is a bonus).

No agent would advertise in a newspaper or on a TV channel with a tiny audience in favour of another newspaper or TV channel with an audience 10 times the size for the same cost unless there was a very powerful reason and a very clear objective. If it became clear that the objective was unachievable then it would be common sense to abandon the plan and think again.

Ian Springett has repeatedly said that OTM will be #2 by January 2016 – he has to say that as his job is a sales one to the industry – but clearly he is miles short as OTM's traffic/audience is less than 10% of ZPG's and around 5% of Rightmove's. Recent stats from marketing company Hitwise even indicated that OTM has yet to reach 50% of PrimeLocation’s traffic on any single day since launch.    

Springett has dismissed the Hitwise stats as inaccurate and instead released Google Analytics numbers but these simply serve to reinforce the Hitwise data which show OTM with about 4m visits per month in June versus about 45 million for ZPG.

It's worthwhile taking a look at the analyst commentary about OTM's impact on Rightmove. Below are some selected quotes which confirm that Rightmove has been strengthened by OTM.

UBS, Mark Fielding: “In our view, the launch of new entrant OnTheMarket at the start of 2015 had actually strengthened Rightmove's position, with our data indicating agent growth in recent months. This view has been supported by a strong H1 with agents +1% since the start of the year despite the OTM launch and ARPA continuing a strong positive progression, +10% YoY.”

Credit Suisse, Jo Barnet-Lamb: “Overall we believe this release unsurprisingly focuses on showing the strengthened competitive position of Rightmove from the Agents‘ Mutual fallout.”

Canaccord Genuity, Robin Savage: “OnTheMarket is having a positive effect on Rightmove; the majority of agents deciding to leave either Rightmove or Zoopla remain loyal to Rightmove, thus cementing its position as the preferred portal.”

Numis, Gareth Davies: “A strong set of H1 numbers came in ahead of our expectations. Revenues grew an impressive +16%, with operating profit and underlying EPS coming in comfortably ahead of our estimates. Rightmove's market position has continued to strengthen through the period.”

JP Morgan, Mark O'Donnell: “Monthly ARPA increased by +10% YoY (up +£69 YoY) to £740 (JPMe £720). The number of agency offices was particularly strong with an increase of +2% to 17,122 (vs. JPMe flat at16,843) so it appears that the impact of Agents Mutual is limited.”

Barclays, Andrew Ross: “OnTheMarket traffic is minimal and was down in June vs previous months.”

Agents need to remember that the cost of advertising on portals is often cheaper than more traditional means of advertising. They should bear this in mind when choosing which portals to opt for.

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    Hi Simon, You say "I, for one, am happier dealing with the free market than an industry owned portal that supposedly has my interests at heart but is in reality controlled by my most powerful competitors."
    That being the case then why do you continue to advertise with Zoopla, who are part owned by your ‘most powerful’ competitors being the major corporates? Those companies no doubt benefit from heavily reduced rates that give them a competitive edge over you and all the other independents?

  • Simon Shinerock

    Part owned is not owned Paul and Zoopla don't compel me to advertise with them, I negotiate with them on my terms and since they came up I could play them off against Rightmove.

    Now OTM has weakened Zoopla, a ludicrous strategy, I am dreading my Rightmove visit. Equally Paul, if you are questioning why I would support Zoopla given they are part owned by competititors, notwithstanding my point of view, if you don't like that idea you must hate the fully owned OTM option.

    I tried to make this piece fact based because there is so much trumpet blowing going on in relation to OTM's latest figures and I felt that the situation needed to be put into perspective.

    However my real beef with OTM is that it is has adopted what I consider to be an unpalatable business model, one which may well end up causing the agents who have joined endless trouble if the regulators eventually share my point of view.

    In my world two wrongs don't make a right and whatever you think of Zoopla they were and are offering their members value on a take it or leave it basis.

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    “Part owned is not owned Paul and Zoopla don't compel me to advertise with them”…But nor am I compeled to advertise with OTM it’s a choice just is advertising with Z or RM.
    “I negotiate with them on my terms and since they came up I could play them off against Rightmove.” But for me this is an issue as you with your 10+ branches have better negotiating power than me as a one branch independent or a 3 branch company, also what if certain companies get preferential treatment?! I would personally prefer a more transparent pricing structure where we all know where we stand.

    “Now OTM has weakened Zoopla, a ludicrous strategy, I am dreading my Rightmove visit." It has only weakened Z’s ability to raise fees which is surely a good thing. In any case if RM are not concerned about OTM then why send out a survey asking numerous questions about OTM and hardly any of Z.
    “Equally Paul, if you are questioning why I would support Zoopla given they are part owned by competititors, notwithstanding my point of view, if you don't like that idea you must hate the fully owned OTM option.” No because I don’t share your view for the reasons already stated, I know exactly how much the other agents are paying whereas for all I know Countrywide, Connells or Choices could be on Zoopla for £5 per month per branch, if so well done to those companies but it's not really fair for the likes of me. I prefer transparency and a model that better serves my interests and those of my clients, currently OTM ticks far more boxes than Zoopla or RM ever will.

  • Simon Shinerock

    Yes Paul, whereas you don't know if you are being overcharged by Zoopla and Rightmove you are certain you are with OTM. Equally, assuming you signed up with OTM for five years, you no longer have any choice about who you deal with, that has been determined for you by an unproven business you see as your champion.

    However, when you speak of fairness you clearly are not talking about fairness to online agents, or fairness to new entrants to the portal market, or fairness to your clients.

    Actually your version if fairness seems more to do with favouritism. What you are really saying is that you want to be the one getting the sweet heart deal, no one else, he does that make you better than them?

    What is the name for a group of businesses that get together to try to control a market for their own benefit? Oh yes, it's a cartel isn't it and there are good reasons that we as a society frown in cartels and cartel like behaviour.

    The way I see it OTM is as Bart Simpson said when asked to give an example of a paradox, 'dammed if they do and damned if they don't'. I think you need to consider if your perception of the power of collective bargaining is actually something that can be morally justified. I don't think it can be, any more than you can morally justify the continued sake of cigarettes. Some things are wrong and legal, others are wrong and legal but they are still wrong

    That said Paul, I appreciate your contribution and the fact that you are prepared to stand up for your decision is to be respected

  • Simon Shinerock

    Hastily written, a lot of errors, time to get that editing upgrade!

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