Realogy, the world's largest real estate franchisor, is taking a sudden, aggressive stance in online marketing. They're getting into the listings marketing game in a much bigger way than promoting brand websites that feature only same-brand listings.
The corporation has struck a deal with Google and Trulia to provide them with over 500,000 listings from its 320,000 franchisee members. This represents a considerable shift in power to franchise brands as dealmakers over MLSs; it's a shot across the bow of newspapers, too.
"This agreement marks one of the largest distributions of property listings to a major search engine at one time, offering complimentary exposure to that offered by the MLS and newspaper classified advertising," says a Trulia spokesperson.
The franchise brand leader umbrellas Century 21, Coldwell Banker, ERA, Sotheby's and corporation-held franchise brand NRT and wants to increase value to broker franchisees by putting their listings in the most heavily viewed real estate portals. Realogy brands are involved in as many as one-third of real estate transactions nationwide.
There are just two provisos -- the portals have to be broker-friendly and they have to have traffic. That is, the portal has no intention of getting into the real estate business to compete with brokers for referrals, listings, or other brokerage services, and they must have considerable consumer traffic. For example, more than 58 percent of all Internet searches on "real estate" and related terms are conducted on GoogleTM and its search partner sites, while over 375 million unique global users conduct searches on Google.com each month, says the company.
Trulia.com, says Smith, is one of the fastest-growing sites in the real estate category, reporting 25 percent month-over-month growth over the last six months. The Trulia site refers over two million buyer visits to external listing sites each month and seventy percent of Trulia users surveyed indicated that they were looking to buy a home in the next 12 months. In a pilot study with Trulia in 2006, Realogy reports that 15 percent of ERA.com's search engine traffic originated from the Trulia.com site. Currently, Realogy's brand websites receive over one million visitors a week.
"We view Google and Trulia as advertising venues, not as disintermediation plays," says cool-as-a-cucumber Richard Smith, CEO of Realogy Corporation, in the process of going private.
Smith explains that Realogy has done an extensive pilot study of traffic partners, and so far, Google and Trulia pass the stringent requirements of the corporation.
"They all say they are the next great model for real estate, but you and I both know that's not the case," says Smith. "We piloted both Google and Trulia, and we are watching them. We are comfortable with them as distribution venues. They're based in marketing and advertising, and they have the traffic. They are gaining traction. Google and Trulia both have a way to go, and we will help position them."
Google and Trulia's deal doesn't come cheaply. It's not just about outsmarting the referral sites. "One advantage is we can command certain contractual obligations that are unique to us because of our size and scale," says Smith, "but through our pilot we learned a lot, what works and what doesn't, and protections are built into the contracts."
What those protections are Smith won't say, but it's certain that leads will go to the brokers who own the listings without interference and without referral fees, lead generation fees or other "tariffs."
And this is just the beginning. "We think there are other steps that could be very beneficial to our franchisees and NRT," demurs Smith. "Our goal is to be not so broad that the listings are watered down, but we need to be where the consumer is. Google has worked hard to meet our needs, and Trulia is a pure play and well-positioned to give traffic results, and there are one or two others ... we are well-positioned for quite some time, this will bring us up to speed."
One or two others? Hungry Zillow jumps to mind, but what about those "commissions must come down" statements and Make Me Move buttons designed to grow the For-sale-by-owner market?
"We know Rich Barton (Zillow's co-founder) well, and the media has not paid attention to his business model," says Smith. "Whether we do anything with him depends on how effective his estimates are. He's not on a blacklist, because we don't think he wants to become a broker. It's about traditional marketing. It's about the newspapers. They're losing share of advertising and moving to Web-based marketing. Right now we spend 30 percent of our marketing budget on the Web and someday that will be 50 percent."
Continues Smith. "In the meantime, if FSBO's are Rich's ultimate goal, that's death. FSBOs were about 19 percent of the market in the early '90s and now they're down to 12 percent throughout the strongest housing market in history. FSBOs will always have a place, just like some like to be their own handymen and others like to hire a contractor, but it's a shrinking market. If that's the case, I would not invest in his company. He's made some big mistakes, and he knows it. This industry is not forgiving, and when you make stupid comments, they don't go away. I still hear about when Paul Allen, Microsoft's co-founder, was going to disintermediate everyone in the real estate industry, and no one ever trusted them, and look what happened. Zillow was told they made a huge strategic mistake, but I think he sees that."
That said, the announced distributed listing strategy follows an intense study of the advantages of the broad distribution of Realtogy's listing inventory, says the company. "This serves as a milestone in our strategy to maximize the advantages of the Web for the benefit of our franchisees, our operating company and our customers," says Smith.
"For the buyer, viewing listings online is just part of the equation," adds Alex Perriello, president and chief executive officer of the Realogy Franchise Group. "From the Google and Trulia Web sites, consumers will be linked to the brand sites where they can learn more about individual properties, communities and the home buying process. Home sellers will naturally benefit from the additional marketing exposure for their properties."
