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The potential takeover of OnTheMarket (OTM) by US property giant CoStar Group could finally provide a viable challenger for Rightmove, it has been claimed.
It was revealed yesterday that CoStar, owner of US portals Homes.com and Apartments.com, has made a £100m takeover bid for OTM and vowed to “aggressively” build the business and grow its market share.
CoStar Group acquired fifth place US residential rental platform Apartments.com in 2014 and grew it to the number one player in the US and has similarly grown Homes.com from a sixth place residential property portal with 6m unique visitors and turned it into the fastest growing US residential portal with more than 100m unique visitors in September 2023.
Homes.com is now the number two most trafficked residential marketplace in the US.
CoStar said it intends to invest £46.5m into sales and marketing in the first full year following the commencement of the integration of the OTM portal into its network as part of a multi-year investment programme.
That amount represents six times OTM’s current annual media spend and more than three times the annual media spend of Rightmove.
OTM said it will urge shareholders to back the bid at a vote in the fourth quarter of the year.
It may bring an end to the dreams of an agent-backed portal for the industry from online agency founder turned property commentator Russell Quirk has suggested this may actually challenge Rightmove’s dominance and force it to reconsider its fee hikes.
Writing a blog on his ProperPr website, Quirk suggested Rightmove chief executive Johan Svanstrom may have some sleepless nights ahead.
Quirk said: “If CoStar has put £100m into OnThe Market, it’s not a private equity play. It’s not to make it leaner to re-sell it. It’s to make it grow and to dominate the sector.
“It remains to be seen whether Jason Tebb, chief executive of OnTheMarket, is the person to take the portal to this next stage. He has been a capable pair of hands in re-branding the business as more industry friendly of late. But many will not see him as a ‘growth guy’ and so, as with Andy Miles and many other CoStar acquisitions’ management teams, expect him to exit at some point soon.
“When this happens and On The Market is truly grabbed by the scruff of the neck, re-branded away from its ‘Chas and Dave DNA’ and big money is injected into a proper consumer marketing strategy, you may notice the bags under Johan’s eyes becoming bigger and darker by the day.”
Rightmove’s share price fell 10% during trading yesterday, while OTM’s rose 52% as markets reacted to the deal.
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What are the benefits of this? Do agents expect monthly fees to remain low? Really? Will an additional portal benefit consumers by having to search two portals instead of one? Why are agents happy at other companies monetising their data? Are shareholding agents happy that these discussions appear to have gone on behind their backs? Do they still trust OTM?
I agree that it will make RM pull their socks up and create more competition. But beyond that I can't see the benefits? All agents need is single, aggregated portal (that they preferably own 100%) with a low monthly fee, directing traffic/leads back to their own website.
Somebody enlighten me....please....
OnTheMarket has seen their share price increase by over 50% due to the likely takeover by CoStar Group, at the same time Rightmove the darling of the London Stock Exchange has seen a 14% dip in its share price. Out of nowhere, all of a sudden it would appear that the c-suite of Rightmove will need to react to this situation, as clearly market sentiment shows that many see OnTheMarket as a plausible contender for the top spot.
Having talked to numerous agents, some small and others much larger, the clear thing that keeps coming up is allegedly how badly Rightmove treats some of its clients. This perceived indifference has definitely caused a schism, which last came to surface in 2020 when the Covid epidemic was in full swing.
In a very fickle marketplace where brand is everything, might we see a ‘Say No to Rightmove’ and ‘Say Yes to OnTheMarket’ trend emerging? Especially as the huge gulf between what each portal expects their agent clients to pay. Much will depend on how many new users OTM can drive to their site, and what value OTM can deliver to agents who are being knocked sideways by a stagnant residential housing market.
In my day job working in Property technology, I have been writing for years that Rightmove may well be the incumbent, but one day an agile business will creep up on them, offer a different business model to just being a digital classified advertising site.
Well here we are, Rightmove may well have had a 23 year free ride, but as we are seeing with numerous businesses, if you could not innovate you wither. And having a 70% profit margin, as well as increasing revenue year by year can mean only one thing, you are probably charging the end client far too much because in reality you possibly hold a monopoly type position in a marketplace.
In my opinion as an analyst, the functionality of Rightmove if you are looking to purchase or rent is extremely basic, and it may be a case that Rightmove feels that the tech savvy generation of today like to be able to search for property like mum and dad did in the 1990’s, but they would be wrong, I mean why can you not just ‘talk’ to the portal about what you want, and it matches your needs?
Well that would take investment, development and time and eat into that profit share, well maybe CoStar will force them to modernise their offering, reduce their fees as they respond to a large player looking to take market share.
And of course we have Zoopla an American owned company, where now will it fit into the UK property portal ecosystem, it has cosily been at that number two spot for a while, the brilliance of Alex Chesterman left some time ago, what now will it do to stave off spending power of the CoStar group.
Obviously, we are not there yet and it is not a done deal, but all the indicators are in place that very soon it will be, I wonder then what will be happening to the rapidly dipping Rightmove share price, watch this space.
Maybe RQ needs to fact check - see -
'New OnTheMarket owner CoStar has confirmed Jason Tebb will remain as CEO following the £100m takeover by the property data group. CoStar Group also said there will be no overall job cuts once the buyout is confirmed by OTM’s shareholders. Tebb and the other members of the senior management team at OTM will lead the portal’s drive to become the number one listings service'.
Andrew, about that fact check. I wrote the blog piece on Wednesday night, just as the news broke on Sky but hours before the CoStar comment on the CEO was published to the LSE on Thursday morning.
That said, it's naive to believe that what a company says in its initial announcement comms is what they actually do thereafter. See also politicians that have the 'full confidence of the PM' and then 'resign' a few days later ;-)
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