Why Old School Real Estate Brands are Losing to New Web 2.0 Innovators
Posted on August 13th, 2008by Joe Hall in Guest Posts, SEO
The following is a Guest Post from Joe Hall.
The internet is changing the real estate industry on a daily basis. And, not surprisingly, it’s the Web 2.0 innovators that are leading the revolution. Of course this isn’t the first time that new media gurus have redefined an industry. However, this time around old school brands are being left in the dust, while innovative startups are reaping all the benefits.
New evidence is starting to come to light that Web 2.0 sites like Zillow.com and Trulia.com are gaining more traction and market share then nationally franchised brand named sites. To get a better understanding of why these sites are doing so well, lets take a look at four sites in particular. On the Web 2.0 side we are going to discuss Trulia.com and Zillow.com on the brand name side we will take a look at RE/MAX and Century 21.
Zillow is a Web 2.0 web site that provides its visitors with tools and information on the real estate industry along with general real estate search. Founded by the same folks that brought us Expedia.com. It garnered much attention when they briefly snagged Vanessa Fox from the ranks of Google a little over a year ago. However, its not the people alone that has made Zillow a popular place for consumers. Zillow has successfully combined social networking and a wiki style portal with up to date real estate listings and market information. Zillow’s “Discussions” is a forum where consumers can engage with other consumers and real estate professionals on a wide variety of real estate topics. This type of engagement is popular in real estate because it gives the consumer the ability to gather information while keeping a comfortable level of anonymity. For most home buyers anonymity is extremely important in the early stages of real estate search. Social engagement is not the only thing that Zillow is succeeding at. Zillow’s “Real Estate Guide” is a wiki style information portal that is chalk full of articles for all areas of real estate. Offering a resource like this gives Zillow market authenticity and makes content ripe for linkbait. But the truly ingenious aspects of adding a wiki is that all the content is free. While Zillow’s users benefit from collectively creating this content, Zillow reaps the benefits of free original content that is constantly fresh.
Zillow is not the only Web 2.0 company trying to make a go at real estate. Trulia.com combines real estate search with social engagement tools as well. Trulia Voices is an area where homebuyers can ask questions about a specific area or topic. Real estate professionals that specialize in that area then have the ability to respond. This once again is another example of social engagement that is extremely popular. One thing that Trulia has got going that Zillow seems not to have mastered yet, is a very polished understanding of SEO. Trulia is ranking pretty well for highly competitive real estate search terms. While their SEO tactics are extremely aggressive to say the least, in my opinion they do provide engaging content that warrants relevant rankings. And it appears that others are taking notice. Just last month Trulia secured another $15 million in venture capital, that’s comparable to the $15 million that power house startup Twitter landed at the end of April.
We already know that RE/MAX is dominating in the area of brand recognition in web search volume. So its no surprise that remax.com is ranking as the top name brand real estate site. Century 21 comes in second and in the same token is placed as the second most visited name brand real estate site. However both sites are still falling short of these Web 2.0 wonders. Why? You ask? Well in my opinion the two big reasons that these sites aren’t doing as well, is their complete lack of social engagement and their limited understanding/dedication to SEO.
Take a look at remax.com. Here we see a typical real estate search tool. However, when one performs a search they are redirected off their site to a locally owned franchise site. This is great for the local franchise but it means that remax.com has significantly less control over their brand, because each locally owned brokerage depends on a different 3rd party developer for web services. The result is that remax.com’s search tool provides some times unreliable ambiguous results. As for social engagement, the only thing that comes remotely close is a directory of sales associates’ contact information. It appears from my view that the biggest thing RE/MAX has going for it on the internet is name recognition.
Century21.com has put much more time into their search tool. They have been successful at integrating mapping features via Microsoft’s Virtual Earth. And it is safe to assume that their index of listings is significantly larger because they combine all of the listings under their parent company Realogy, who also owns Coldwell Banker, ERA, and Sotheby’s. However, once again they have absolutely no social engagement features besides their directory of sales associates.
So, we have seen that social engagement can be very powerful when it comes to real estate sites. Then, one might ask, why isn’t big name brands like Century 21 and RE/MAX integrating social elements into their systems? Maybe they don’t think they need to. Century 21 for example syndicates all of it’s listing data to a handful of different sites, such as Trulia, Zillow, Yahoo Real Estate, Google Housing Search, and others. With this method Century 21 is letting these sites do all the marketing for them. However, at the same time, this method does little to enable their sales associates to build relationships with homebuyers.
In my opinion to build a strong base of support on the internet that will transfer into offline growth, brand name real estate companies such as RE/MAX and Cenury 21 need to integrate social elements into their preexisting systems that allow for the homebuyer to establish a relationship with their sales associates. Otherwise these companies run the risk of being passed over by a market of consumers that are becoming increasingly more social online.
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August 13th, 2008 at 5:13 am
I agree that Zillow and Trulia hit a lot of the right consumer-facing buttons with their social engagement tools (and Trulia’s SEO) but at the end of the day, their biggest problem is monetization. The current free-listing-advertising-revenue model equates to a low profit margin. Compare the US to Australia where the Zillow/Trulia equivalents are lucky to have an agent subscriber model (that’s right, real estate agents in Oz pay _monthly fees_ to list).
That’s not to say social engagement and SEO are not potential game changers, but the number one complaint we get regarding real estate websites is ‘not enough listings’ and until Trulia and Zillow surpass realtor.com’s listings, the web 2.0 darlings will be playing second fiddle in terms of users.
However, when even the market leaders MOVE (owners of realtor.com) report a Q4 $5.3M loss, how long will Trulia and Zillow investors need to wait to recoup their $33M and $87M investment?
Regarding Hitwise/Compete/Quantcast real estate rankins: There’s the usual caveat on ranking methodologies. Compete uses toolbar data along with ISP/panel data so even with normalization I would assume Compete favors web 2.0 darlings like Zillow/Trulia.
Meanwhile, Hitwise collects ISP data only which means it misses out on a very significant real estate consumer - the cubicle employee who browses at work on the company’s web connection. This skews Hitwise data towards home owners.
Just for comparison’s sake, Compete shows ~3M visitors for Zillow while internally Zillow tracks 5M visitors via Sitecatalyst.
Wow, turned out to be a bit of rant but that’s my 2c on Trulia/Zillow (albeit from an Australian real estate marketer’s POV)
August 13th, 2008 at 9:22 am
In the US market realtor.com will always dominate Zillow and Trulia in the game of listing inventory. This is because they are the only ones that have complete access to all the listings. As for Trulia and Zillow’s business model they are doing some very interesting things with localized ad models.
August 13th, 2008 at 10:25 am
Is there a reluctance for a traditional brand like remax to get into 2.0? Maybe because perhaps there is a fear to give up control of a piece their site for the social and user created content that Trulia enjoys??
There are regulatory constraints that slow down big fellas like remax or c 21 to do anything that could end in a suit. And part of the nature of 2.0 is giving up control of your site. Zillow or Trulia do not have the legal scrutiny that say a traditional brokerage or a remax does. Online this is a huge advantage.
August 13th, 2008 at 1:29 pm
@tim — Ya know, I think you are probably right. There are allot of regulatory constraints that the name brand companies are legally bound by. Especially, with concern to Equal Housing initiatives. I wonder if there has been any case studies regarding legal liabilities incurred from brands developing social networks… That would be interesting.
August 13th, 2008 at 1:55 pm
Great post! As an SEO in the real estate industry I can definitely tell you that Trulia does an incredible job at dominating a lot of the search terms that many of our clients used to rank #1 for. Their rise to the top was indeed quick and aggressive, and it seems as though their place at the top is pretty locked in. I think sites like Trulia are not only going to change the industry, but also how realtors do business. The realtors and real estate companies who use sites like Trulia to reach out to their market are going to clearly reign supreme over those who don’t.
August 13th, 2008 at 8:17 pm
I think the Remax/Century21s of the world will fare even worse as more agents/brokers realize they need to establish their own brands on the Internet. If you can become the voice of your local real estate community you stand a very good chance of getting search rankings since by its nature real estate is a localized search.
I think you’re spot on regarding Trulia/Zillow success being predicated on the social interaction elements. Trulia is definitely on top of their SEO game and has no qualms taking advantage of unknowing agents. Those search rankings will probably in time push them ahead of Zillow in traffic over time despite Zillow’s better social elements. That said I think Shor makes excellent points regarding their ability to monetize. Great stuff all around, hope you do a follow post in the future.
August 14th, 2008 at 9:45 am
Interesting post. It seems like the majority of Zillow’s success today comes from their popularization of the zestimate rather than their dip into Web 2.0 type community features, although that was likely just the starting point of a larger site strategy.
August 14th, 2008 at 10:12 am
Honestly, Ed the Zestimate has been proven many times over to be rather inaccurate. I will admit that it does tend to be a great promotional gimmick, but I think most at this point have abandoned it and instead are using Zillow’s amazing social elements.
August 14th, 2008 at 12:42 pm
You sign an exclusive with Remax or Century21 to sell your home. Someone posts on the site that your home is shabby, overpriced, or anything negative. As the seller, how likely are you to relist with your broker, when your contract expires? That’s the sticky situation brokerages face when opening up to user generated content. The business models are completely different. Furthermore, most of the content from Zillow and Trulia come from brokerage websites or MLSs. Most of the time you need to click through to see more property listings. So in essence, the brokerages are benefiting from the zillow/trulias - even if they outrank them on the SERPs. Zillow can legally list FSBO properties, whereas brokerages cannot. Apples to Oranges.
August 14th, 2008 at 2:59 pm
@steve raynor <>
They can list them. Why can’t they?
Its a good idea to get permission of course.
I think the point is that if they list anything they take on legal load of responsibility that does not affect anyone else without a license. It seems like an absurd irony. Online the license can actually hurt their marketing.
August 14th, 2008 at 4:24 pm
Does anyone else find this ‘new evidence’ underwhelming?
I don’t mean to pee in anyone’s Cheerios, but it’s kind of a joke that anyone would make any conclusions based solely on data from Quantcast, GT, and Compete.
I’m not saying you’re wrong (I think you are, but that’s another matter), but I am saying, you really should be making a better case than this if you’re going to write a blog post about it.
August 14th, 2008 at 4:53 pm
Hello Jason, thank you for your comment. I will admit that you are not the first person to be critical of my analysis. In fact right before I wrote this piece I wrote one that caused a bit of concern regarding how I crunch the numbers. Because of this I plan on writing a post soon on my blog discussing my method and why I think it works. However, to give you a quick over view of how I work: I like to do what I call “relative analysis”. With this method I like to take numbers that are taken from several different sources spanning a variety of metrics, and then look for relative trends. In this case my analysis clearly shows that Zillow and Trulia are both doing better that RE/MAX and Century 21. I will admit that yes, each source sites different numbers (sometimes for the same metrics), however, from a relative view point it is clear, that all sources show Trulia and Zillow are doing better.
After writing my last post (the one I have linked to above) a representative from Hitwise contacted me, and supplied me with their July real estate report. Once again it showed that when relying on one set of figures and ignoring a relative analysis you are setting your self up for skewed results. If you think there is another set of data that I should be looking at, or if you think I am missing something else please let me know. I am always looking for ways to improve my analysis.
August 15th, 2008 at 12:28 pm
John -
I think I have a pretty good handle on your method, I just find it underwhelming. The relative analysis here is nothing more than cherry picking data that supports a conclusion that you’ve already drawn.
Based on your logic, I can claim I can perform brain surgery simply because I talked to three people about the procedure, whether those three people know where the brain is or not.
August 15th, 2008 at 12:57 pm
Jason, thank you for your *cough* close attention *cough* to my method. BTW, my name is Joe which is spelled J-O-E not J-O-H-N. I am not debating the accuracy of the data. In fact I have already stated that the fundamental concept of relative analysis is to draw conclusions from different subsets of information that all show the same results, its called broadening your sample size. Once again, if you have a method that you think works better, or if you have any data that you think is more reliable then please share it with us. I know that everyone here including myself would benefit from new ways to understand traffic data.
August 19th, 2008 at 2:22 pm
You can be as snarky as you want dude, it doesn’t change the fact that you can’t say with any certainty how accurate any of your data sources are. What you’re doing is not expanding your sample size, you’re just cherry picking data that supports your conclusion.
You want a better method? Try the one that involves using reliable, accurate data.
August 19th, 2008 at 2:36 pm
@Jason, Can you give me a source that is more reliable and accurate?
August 20th, 2008 at 8:17 am
Out with the Old, In with the New!!!
August 21st, 2008 at 7:05 am
Thank God so much for Trulia and Zillow, xml syndication, oh yeah! And once these sites have that social recognition, like you say, selling and buying homes will get that much easier without these large companies.
August 22nd, 2008 at 9:45 am
I want to emphasize that both Trulia and Zillow would not exist with out old school brands like RE/MAX and Century 21. In fact both Trulia and Zillow’s business models depends largely on a symbiotic relationship.
August 22nd, 2008 at 1:22 pm
Joe you are absolutely correct.
These listings in their “classifieds” section is uploaded directly or on the behalf of the Realtors whom have created the listings. The legal responsibilities fall squarely upon the Realtor community. It seems the aggragates enjoy somewhat of a distance from that responsibility. Therefore, for this reason and others the ags will not be replacing the industry anytime soon.
@Innovign :
The rss feeds or listings are on the backs and if sold benefit “these large companies”.
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