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Zillow Group Idea Proposal

Zillow Group Idea Proposal
 

Research Question: Have negative realtor sentiment or competitive forces slowed down Zillow’s growth?

Report Available: Feb. 5, 2016

 

Blueshift’s initial research shows ZG still growing in popularity both among its user base and realtors. Most realtors’ love-hate relationship with ZG has not changed, and competitive pressure from NWS’ Realtor.com has risen.

 

Observations

  1. ZG’s revenues were in-line with revenue expectations but the company guided lower for the 4Q due to the exclusion of revenue from Market Leader, a unit ZG sold in late September. Agent revenues increased 25% year over year but declined quarterly throughout 2015. ZG completed its integration of Trulia and announced over 350 MLSs have signed agreements to send listings directly to ZG, up from around 300 last quarter. ZG saw a slight decline in the overall number of advertisers. The number of premier agents, realtors spending approximately $5,000 per month or more on ZG, grew by 45% in the Q3.
  2. Realtors’ relationship with ZG is still in a state of flux. Many realtors fear ZG may create its own version of the MLS or become a nationwide brokerage. Some brokerages are maintaining their efforts to control real estate information, but regardless of their ambitions, ZG possesses the technological prowess to often obtain the very information they attempt to withhold.
  3. Despite ZG’s ability to scour “controlled” real estate information, brokerages choosing to withholding listings and information from ZG remain a tall hurdle for the company. Ongoing MLS consolidation that could lead to a national MLS could also pose a threat to ZG. A new “try before you buy” (TBYB) trend and NWS’ Realtor.com advertising campaign, which claims the site offers 20% more listings than ZG, could also cool ZG’s momentum.
  4. Blueshift’s July 23, 2015, report found ZG attracting more real estate brokers’ advertising dollars due to its appeal to consumers and near-term lack of alternatives aside from NWS’ Realtor.com. Industry perception of Realtor.com had improved and realtors were becoming savvier about using targeted marketing, including on FB. In our Oct. 30. 2015 report update, real estate broker sources continued to advertise and post listings with ZG due to consumer-driven demand despite their mixed view of ZG. Brokers still voiced opposition to the lack of control they have over listing data posted on ZG. Two of our MLS sources believed Realtor.com gained market share of realtor advertising dollars throughout the year.

 

Will ZG continue to grow its premier agent base? Is Realtor.com putting any more competitive pressure on ZG? To gain insight into ZG, Blueshift will gather data and issue a market research report from independent sources in the following areas: Midsized and large real estate brokerages, and MLS executives.

 

Companies: Zillow Group (ZG), Facebook (FB), News Corp. (NWS)