The Real Challenge for rightmove.co.uk
October 6, 2008 by Simon Baker
You just have to spend 10 - 20 min surfing the UK property blog sites to see comments like this “The agents in our area have started talking about withdrawing from rightmove as a whole and going to the free sites, such as globrix, mouseprice, nestoria etc, as rightmove seem to be unwilling to acknowledge the climate and drop their prices. The only way we can encourage rightmove to drop their prices is to work together.”
On the surface this doesnt look good for rightmove.co.uk. The problem is exacerbated in January when a reported 50 percent of rightmove.co.uk’s agents have their annual contracts come up or renewal. In a recent Telegraph article, Ed Williams, the Managing Director of rightmove was quoted as saying “We are now in a situation where about 50pc of our customers have a January 1 price and the rest are staggered through the year“.
If the speculation is true, rightmove.co.uk could lose 2,700 more agencies.
However i think this is, at most, fear mongering by people in the industry in the hope that rightmove.co.uk panics and drops its prices. This unlikely to happen and perhaps at best, it will put pressure on them not to raise prices too much (if at all).
The reality is that what agents (and people in general) fear more than paying too much for something is they fear missing out on something. Therefore as long as rightmove.co.uk has the most visits, and therefore the most leads, an agents will continue to pay to be on the site. Coming off the site just means that a competitive agency who stays on the site will get more leads - not a smart business decision.
The unknown factor is the irrationality of customers. There will always be people who do something that is irrational. If this is the case, some agents will switch away from rightmove.co.uk to other sites in the hope that they can save a few pounds. This is an opportunity for the propertyfinder.com and findaproperty.co.uk’s of the world who can ramp up their marketing efforts for Janaury in the hope of encouraging agents to switch from rightmove.co.uk.
The challenge for rightmove.co.uk will be to ramp up appropriately for massive renewals in January. They should look at how they can get people onto 2 or even 3 year ageements and therefore lock in revenues for a period longer than a year. They will also need to undertake a charm offensive to ensure that those irrational agents dont switch.
The full year results for rightmove.co.uk will make for interesting reading.
- Are Things Bad for Rightmove?
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Times are tough in the UK market at the moment and it seems to me that the best value creating play would be a merger of rightmove and propertyfinder and therefore increase the gap between rightmove and the rest...
- 75% of Agents NOT Will Leave rightmove.co.uk
An Estate Agency Today story claims that 75% of agents are threatening to quit rightmove. The article stated "an astonishing 75.7% of agents who participated in the Estate Agent Today poll say they will not be renewing their annual subscriptions...
- Rightmove Releasing Results This Week, What Will They Hold? (Updated)
(Updated 27 August 2008) On Friday 29th August, Rightmove will be releasing its interim results - ie its half year results for the CY 2008. Over the last 12 months, the Rightmove share price has more than halved from a 52 week high...
- NAEA Launching propertylive.co.uk, What is All the Fuss About?
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Estate agents can leave to the free portals (e.g. the likes of mouseprice, nestoria etc.) in the knowledge that they are making sound business decisions. The article’s argument that it is unwise is flawed.
The article makes the dangerous mistake of misunderstanding buyer behaviour. When searching for a property to buy, house buyers do not use only one portal. The typical house hunter spends over four months looking for their ideal property and is likely to try out on every portal they come across.
House buyer searching behaviour cannot be compared with the online search behaviour of people looking for cinema listings for example. If you want cinema times you want to spend at most 1 minute looking online, and you will be content to stick with google. When you look for property on the other hand you will not buy a property simply because it was the only one in the area listed on Rightmove, your choice is dictated by the property you are looking for, not the portal you are using. No amount of portal exposure will sell someone a property they do not want to buy. Buyers will seek out their ideal property across many portals - if they cannot find the property they want on one, they will look at the others. It is for this reason estate agents can safely withdraw from rightmove and place their content on all the free portals. Web guru’s talk about how “Content is King”, the web traffic will follow the content - we estate agents have the (listings) content - we have the power to dethrone rightmove by pulling our properties and placing them elsewhere. If a single agent lists his properties on the free portal instead of rightmove, the property buyers in the market place WILL find the listings. The the internet offers ‘frictionless’ switching - it takes five seconds to go from one portal to the next. Buyer leads are not dumb leads - you do not get them simply because you are on the site, you get them because of the property you have on market and buyers will seek them out, because nobody takes buying a home lightly.
In my opinion if Rightmove stays in the lead in terms of users they will be fine. Yes, some agents will quit or go out of business and they may have to offer discounts to others, there will be pressure on revenue (it is a recession after all), but sellers want to see their property on the number one site. If however RM allows DMGT or News (PF+Globrix) or (much less likely) someone like PropertyLive to claim the lead - or even just to shorten the lead to the point that RM can no longer claim to be dominant - they will be in real trouble. The next year will be a defining one for RM; can they find creative and affordable strategies to keep agents happy and keep the lead in users? It’s lonely at the front of the pack with the peleton chasing you.
Finally some sensible comment on this issue.
I’ve also read a lot about people boycotting RM in favour of the free sites which is ridiculous. You would always want to be included in the free sites, that’s a no brainer, and you’ll pay for listing on sites based on the volume of leads they generate. At the moment, this is Rightmove, Findaproperty, PropertyFinder and Primelocation (in that order).
The sites aren’t free because marketing is very expensive. I’d expect 50% of the running costs of the major portals to go on various marketing activities.
Globrix is still an unproven business model. They need to invest enough in marketing (at enourmous loss) until they have built up enough market share to generate sufficient revenues from advertising. This is not an easy thing to do and it remains to be seen how long they are prepared to keep sinking money into Globrix.
The Property Live portal may stand a better chance as it can leverage free marketing from the agents but it is still likely to take many years before it will be significant if at all.
In these turbulent times it is a shame that more of us (Estates Agents) are not concentrating on what really works instead of what is going off the bottom line.
Marketing is a spend we all have (that’s what we are paid for after all..)and we would all like to get rid of any costs we can do without.
If we have to spend money though, where is our money spent best??
Where the buyers are?????
I reckon so..
I’m inclined to agree with Chris above. I think agents should remember, too, that we’ve been here before as far as free listings are concerned. Righmove didn’t charge when it launched and neither did the now defunct asserta. In fact, at one point FindaProperty.com was the only portal charging and everyone said they were mad.
For a little historical persepctive, here’s a quote from Anne Spakcmann in FT (2001):
“When property portals started several years ago, they charged agents to list on their sites. That changed with the launch of Asserta. Backed with Pounds 40m of funding, the site, owned by the insurance giant, CGNU,offered agents a free stake in the company and free lisings until July 2002. It then spent its money on an intensive marketing campaign, in an effort to secure first place in the market.”
Sound familiar?!Globrix, as far as I can see, haven’t found a business model that will really subsidises agent listings, and I find it hard to beleive that they won’t charge once they have market share.
The best bet for agents, of course, is to use the sites that deliver the genuinely productive results for them.