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Zillow Idea Proposal

Zillow Idea Proposal
 

Are Zillow’s gains in average revenue per account sustainable?

 

Report Available: September 22, 2016

 

Blueshift’s ongoing research shows Zillow continuing to be the go-to site for real estate buyers, renters, and sellers. The average revenue per account rose 43% year to year. However, the headcount of agent advertisers has been flat or even declining slightly and it remains to be seen how this will affect Z’s ARPA gains.

 

Observations

  1. Z’s second quarter produced several records including an all-time high number of unique visitors with 171 million in May and revenues of $208.4 million. Quarterly results were mixed compared to expectations with Z missing on EPS while beating on revenues.
  2. In other positive developments for the company, Z settled its legal challenges with com, the National Association of Realtors, and three other related entities. Z’s Dotloop added 1,000 new brokerage partners and surpassed $1 Trillion in transactions. Z acquired Bridge Interactive Group a real estate back office software platform that helps broker and MLS address listings management. The Miami Association of Realtors agreed to make its data available on Z’s Retsly.
  3. Z’s average revenue per account increased to $536, but the number of advertisers remained flat compared to Q1 at 91,184. Z’s focus on Premier Agents that spend over $5,000 per month is delivering, as it represents 73% of total ad dollars spent and 68% in advertiser count. Turnover in this advertising segment is limited.
  4. Z continues to maintain its position as the most popular real estate website according to eBizMBA’s August 2016 ranking. Three Zillow brands were in the top 15 with Zillow ranked #1, Trulia #2 and HotPads at #10. Competitor Yahoo Homes was #3, Realtor.com #4 and Redfin #5.
  5. Blueshift’s May 3 report found that sentiment by real estate agents was shifting in Z’s favor and the company’s growth was not likely to be slowed over the next six to 12 months. These findings were in contrast to our Feb. 5 report update which found that the high ROI provided to real estate agents using social media platforms for branding and marketing of homes was causing them to take their eyes off of Z. Despite this, buyers and sellers still viewed Z as the go-to website and expected to find their property listed and/or to shop for their new home on the site. In our Oct. 30. 2015, report update, real estate broker sources continued to advertise and post listings with Z due to consumer-driven demand despite their mixed view of Z. Brokers still voiced opposition to the lack of control they have over listing data posted on Z. Two of our MLS sources believed Realtor.com gained market share of realtor advertising dollars throughout the year. Our July 23, 2015, report found Z attracting more real estate brokers’ advertising dollars due to its appeal to consumers and near-term lack of alternatives aside from Realtor.com. Industry perception of Realtor.com had improved and realtors were becoming savvier about using targeted marketing, including on FB.

 

Is Z’s ARPA sustainable given that the number of agent advertisers has stagnated? What is the current quality of Z’s leads and is it improving? What are trends with agent spend ROI? Does Z have pricing power?  Do agents view Z as a partner and lead generator? What are the current real estate website competitive dynamics? Are social media sites/apps pulling any meaningful business from Z? Does Z still dominate with buyers/sellers or is the growth of alternatives cutting into Z’s stranglehold on the market? To answer these and other questions, Blueshift will gather data and issue a market research report from Real estate professionals and MLS executives.

 

Companies: Zillow (Z), Facebook (FB), News Corp. (NWS), Yahoo! (YHOO)

 

Research Begins: September 5, 2016