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CoStar Group’s Apartments.com Idea Proposal (CSGP)

CoStar Group’s Apartments.com Idea Proposal (CSGP)
 

Can Apartments.com maintain its dominance in the ILS market despite a low barrier to entry and fierce competition?

Report Available:August30, 2017

 

Blueshift’s initial research found Apartments.com continuing to lead the internet listing service (ILS) industry in site visits in all the major markets. The apartment marketing platform also continues to generate impressive revenue numbers with Q2’s bookings providing 24% year-to-year growth. Despite this success, there is some question whether CSGP can continue to fend off increasing competition in the ILS market that has a low barrier to entry.

 

Observations

  1. CSGP had a very strong Q2 that beat Wall Street expectations. Company revenue was up 15% backed by 24% growth from Apartments.com and strong sales bookings. The solid quarter prompted management to increase full-year guidance. CSGP also commented on its new Global Research Center in Richmond, VA having grown to over 600 professionals.
  2. According to Hitwise, the Apartments.com network was No.1 in visits in 96% of the top 210 U.S. local markets in June 2017 when compared to Apartment Guide, rent.com, and ForRent. This includes being No.1 in New York, Los Angeles, Chicago, Philadelphia, Houston, San Francisco, and Washington, D.C. According to comScore, Apartments.com has been No.1 in visits for 28 months and No.1 in unique visitors for two years. In the second quarter of this year, visits and unique visitor traffic reached all-time high for Apartments.com.
  3. For the fourth straight year, CSGP has been named to Forbes’ World’s Most Innovative Growth Companies list for 2017. CSGP was also honored by Forbes as No.16 on the Forbes Fast Tech 25 list, which recognizes technology companies with the highest three-year sales averages. CSGP has averaged 29% sales growth in that period.
  4. Despite the Forbes awards, a July 28 opinion article in Forbes suggests that CSGP is overvalued with slowing organic growth and an acquisition strategy that is creating margin volatility. It questions future growth for CSGP because of market saturation, noting concerns about long-term growth opportunities for apartment listing services because of the industry’s low barrier to entry.
  5. Blueshift’s Nov. 22, 2016 report found com a top-performing ILS and an important part of a multifaceted marketing plan. CSGP’s investment in and overhaul of Apartments.com produced a strong, market-leading product offering superior apartment search features and a robust presentation of content. The site is equal to or better than RentPath and Z in the production of online traffic, leads, and lease conversion rates. Apartments.com spending was expected to increase in the fourth quarter and into 2017 for four of five sources listed in the top-50 apartment management companies.

 

How are property managers that use Apartments.com satisfied with lead flow and quality? What are their feelings about ROI? What other online apartment search sites do they use? How do those compare to Apartments.com in lead quantity and quality? Which platform has the best ROI? Will property managers increase, decrease or keep their online ad spending the same? Are there any new ILS providers that could challenge Apartments.com? To gain insight into CSGP’s Apartments.com and their competitors, Blueshift will gather data and issue a market research report from independent sources in the following areas: Large/midsize/small property managers and owners, Competitors, and Industry specialists.

 

Companies: CoStar Group (CSGP), Zillow (Z), Facebook (FB), News Corp. (NWS)

 

Research Begins: August 14, 2017