Smarter Agent throws arrow at Zillow and others

by Victor Lund on January 7, 2012

Smarter AgentBrad Bloomberg of Smarter Agent is a fighter, and I like that. He takes a position and battles from his corner of the ring. Today, he released a blog post on their company website goes nose to nose with Zillow, Trulia and REALTOR.com. Given that his company is suing them all for patent infringement (another story) – they will never be friends anyway. But this new war is one about his view of listing syndication.

Post Title :

Listing Aggregators like Zillow, Trulia and Realtor.com can Erode the Value of your Business.

The money quote:

……(syndication) “devalues the business of.. a broker-owner.”

I started to write an absurdly long response to the post – and thought it better to put them all here. These are my thoughts on syndication strategy today. They change all the time based upon the broker client we are advising – but this is the gut check response.

Syndication is a topic I think about every day, and the more I think about it, the more conflicted I become. Here are a couple of syndication strategies that I believe will emerge in 2012.

Trend: The Mega Brokers will try to stop syndication – some will succeed, others will fold to the pressure.

If a broker blows away everyone online like Edina or Shorewest – and others like many of the other Home Services firms, some of the big Real Living brokerages, independents like Howard Hanna, – syndication only puts gas in a competitors’ car. A narrow group of companies fit this profile, so this is not likely to be a high impact trend in terms of broker numbers, but it will have a major impact on active listing counts.

Pulling from syndication is a strategic opportunity that is only available to the mega brokers. This strategy is very hard. The broker’s customer is the consumer and the agent – and those customers want syndication. Brokers must provide good evidence that business is better without syndication. If the broker site is not bigger than the syndication sites in terms of consumer traffic, this is a hard argument to make. (By the way – before syndication, only Realtor.com  and Franchise sites had more traffic than broker websites.)

We have clients that spend $1M+ per site per year for featured listings. It is a big check – but the measured ROI is there. We have not seen a single broker who has not had a positive ROI on enhancing listings if done correctly.

Depending on the broker’s strategy, brokers that enhance listings with Trulia, Zillow, Homes.com, Homefinder, and REALTOR.com are all doing very well. If you do not enhance – it is ridiculous to bother with syndication – giving your data away is not worth the anemic response rates of “free listings.”

Trend – Brokers will PICK A HORSE or TWO.

At the cost of $1 per listing per month, the broker cannot buy all the horses on the track. They may be able to pick 1 or 2, but 3, 4, or 5 is not financially possible. If you pick a horse or two, I think that it is important for the horse to win. A big broker who consolidates their online marketing budget and syndication with one  or two partners, they must to pull listings from their partner’s competitor. So if you pick site A, your success will increase if the other sites do not display your listings (By the way, this is not a possible strategy if the Franchisor is syndicating your listings – which frustrates some brokers).

This strategy works well for big brokers with 20% market share who manage their syndication. If you pull down 20% of the listings from a site – consumers figure it out quickly. We have watched third party websites drop significantly in traffic as a result of tests we have done.

Consumers learn quickly when they cannot get information about a listing they know to be active in a neighborhood – and they migrate to the site with the best data. With all due respect to my friend Saul Klein – I do not agree that distribution trumps destination. I believe that brokers should pick a few sites, concentrate their efforts, and hope like hell that they choose the right partner (pay attention – things change fast). LakeHomes.com will not be a big lead generator for brokerages in West Virginia – so why send the data there? (West Virginia does not have any natural lakes). To be clear – both Listhub, Point2, and Real Estate Digital’s reDataVault all do an excellent job of listing syndication and are all great companies. My point here is that the behavior of hitting the “select all” button and sending your listings to every syndication channel is irresponsible. Stop That!

Trend – Small brokers must syndicate and should advertise too.

I am beginning to think that small brokers will die if they do not syndicate. I even wonder if it makes sense for them to have anything more than a template broker website. If a broker with 10 -50 listings stops syndicating – who cares (unless it is a niche like Chase International in Lake Tahoe). For them, lead generation is all about the reputation of the company, their agents, and the yard sign. Their site is unlikely to rank in the top 20 websites in their area for share of voice. Online marketing is all about volume. If you are out of the top 10, you have failed. Your website becomes a client servicing tool – not a lead generation tool.

Trend – Brokers will control more advertising.

Agents will understand that their broker’s buying power is stronger than theirs. The minimum agent program price on one third party site that I looked at was $39 for 10 featured listings. Contrast that with broker pricing of $1 per listing per month ($10 for 10 listings). Agents should be very selective when buying directly (see sidebar below).

Summary: When you syndicate, do it carefully and with a purpose. Read the terms of use. Make sure you educate your agents about the effectiveness of the strategy. Measure results.

Sidebar: If a broker only sends data to a site or two, and enhances listings there – a path is created to solid lead generation for the company; creates a great recruiting tool; and, makes a great listing tool. By not syndicating to more than a couple of sites, the strategy also gives the agent an ability to do some differentiation marketing. For example: If a broker enhances at REALTOR.com and Zillow, and not to Trulia – the agents working for that brokerage can differentiate themselves by buying Trulia Pro for $39 per month without the broker competing with them. That makes sense to me.

Footnote: If you are a broker in Houston where HAR.com has 50% of all consumer traffic – you definitely do not need to syndicate. See the “putting gas in the competitors’ car argument above.

About WAV Group: If your brokerage is re-thinking its online marketing plan and strategy – Give us a call. We would love to help.

disclaimer – nearly every company mentioned in this post is either a current or past WAV Group or RE Technology client.

Other articles on the topic of Listing Syndication – click here for the list.

 

{ 3 comments… read them below or add one }

Stefanie Hostetter January 7, 2012 at 11:53 am

Hi Victor,
Thanks for the interesting article. I’ve been thinking about these aspects of listing syndication for quite some time now, too. You’ve given me even more to think about. I have to do some research on the syndication programs that actually are useful in Canada…and different areas of Canada at that. We are solicited on a daily basis by RE websites trying to sell us space, etc. and it’s almost overwhelming trying to figure out which ones to try/enhance listings, which ones to suggest to our agents, etc. and which ones to ignore completely. Do you have any suggestions? Thanks!

Reply

Victor Lund January 8, 2012 at 10:53 am

Canada is very differnet than the United States – but not sure for how long. I would say that many brokerages have divergent views on Canadian data policy.

FSBO websites are doing very well in the market that we studied for a project (Montreal). Since our review, the Quebec MLS and REALTOR Associations have launched centris.ca – an MLS consumer facing website. The site has been live for a little more than a year now, and is doing an excellent job of removing the barrier that some third party websites create between the agent and the consumer. They are driving consumers and leads as a member benefit – a popular US trend. Check out http://mlscloud.com for a list of US MLS websites.

Canadian REALTORS can thank the Association of REALTORS and the Franchise organizations for their leadership role in insuring consumer protection and privacy of housing information – or they can complain about it.

Like all things, nothing is perfect. Many Canadian REALTORS have a difficult time getting the breadth of technology services that we have access to in America. Everything is a trade-off.

Reply

Brad Blumberg January 12, 2012 at 5:20 am

Hi, its Brad. I’m not throwing arrows, I’m just asking the community if the emperor aggregators really have clothes on.

After listening more to this aggregator debate I still need a few answers, and thanks Victor for the analysis that market leading brokers may have less to gain than others. Other I get your point about those currently getting good ROI. But the ROI I think still has to be measered by the loss in value against the value of the broker-owners firm by loosing local first access to consumers, not just straight lead gen to sales ROI.

My general feeling is that franchisors and market leading brokers should not send listings to aggregator sites. But I do see the need for brokers and agents that can’t market their OWN brand effectively to use aggregators more heavily.

Here are some reasons in my opinion:

86% of movers move within the same city or county, according to the 2010 United State Census! So taking dollars that could be going into YOUR local web sites, or buying a competitor or training your agents makes sense to me instead of helping Zillow with your listings or marketing dollars. As Zillow said, they usually have among the most traffic in most local markets. Brokers and franchisors, how did you let that happen! Focus on being the best brand in YOUR county, and national leads will find you, you don’t need to spend dollars on Zillow, Trulia or Realtor.com to make that happen.

Again, in the end, I think building the brands of aggregators have taken value from the broker-owner. Not the agents that work for that broker, but the person who owns the firm. The value is in your local brand, the value is what you would be able to sell your business for. One of the most beat up industries (brands), are fighting back. In the Jan 12 2012 Wall Street Journal, competing hotel brands have created their own new national site to drive leads directly to their websites.

While I buy a lot of Spenser’s at Zillow argument how great Zillow is, I think the real estate industry, especially those with the talent that have built great realty brands in their regions, should carefully consider where they put their listing and marketing dollars.

I mean if Zillow and Trulia and Realtor.com saw just 15% of their listings disappear because brands like Edina pull their inventory, then consumers will look to the best local brands with great web and mobile sites, with ALL the listings, to get their information.

Trulia and Zillow like to say this is a “consumer issue” but whether a consumer gets their info direct from brokers or from aggregators, I don’t see the difference. What I do see is that currently, the aggregators have thought more about building their consumer experience, and brokers have made decisions the ROI is better on aggregator sites than doing it themselves?

But do you think Steve Jobs would have let Microsoft control a part of the way he got customers, just because he knew consumer would end up using his iPhone? NO. He wanted to control the consumer experience end to end! So do most great brands.

Reply

Leave a Comment

Previous post:

Next post: