portal-debate1

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portal-debate1

FEATURE ARTICLE

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THE

PORTAL

LEADERS’

DEBATE

Stick or Twist?

For the last few years the

options have been quite

simple – Rightmove or

Zoopla, or both?

Now Agents’ Mutual seeks to break

what they call this duopoly accusing

the incumbents of charging agents

too much and worse, they say,

allowing new estate agency models

to be born and to thrive in the future.

We’ve interviewed the CEOs of all

three portals and present their

respective viewpoints with the aim

of assisting agents to make the right

decision come portal judgement day.

To find out more about the Property Academy and sign up for

our free four-i weekly newsletter please visit propertyacademy.co.uk

Call us on 01372 370 847

22

23


THE PORTAL LEADERS’ DEBATE

We started by

putting the issue

of rising costs, to

Nick McKittrick,

CEO of Rightmove.

Nick McKittrick:

You have to prove your value, you

are always under scrutiny to prove

your value and we are confident

we will stand up to that test.

We have a proven track record -

we have by far the largest audience

- 10 million unique visitors a

month who are coming back eight

times a month and consuming

1.3 billion pages.

Peter Knight [left] interviews Ian Springett, CEO of Agents’ Mutual

What we offer is great value for

money and most of our growth

comes from agents choosing to

spend more on our products.

Agents’ Mutual has stated that their intention is to disrupt the portal market. Supported

by several high profile agents, including Savills and Knight Frank, they report to now have

2,300 offices prepared to ditch one of the big two, Rightmove or Zoopla Property Group,

next January.

Ian Springett, CEO of Agents’ Mutual is no stranger to this market. He founded and sold

Prime Location, ironically the first portal to charge agents, and states the purpose for

launching another portal as follows: “It is not in the interests of agents for the Rightmove,

Zoopla duopoly to continue, because there is tremendous upward cost pressure and

because it is turning the agents into a commodity.”

That’s where the majority of growth

came from over the last 3-4 years

and I see that continuing to be

the case - customers choosing

the products and packages which

enable them to differentiate

themselves and get the

competitive edge.

The products have to deliver and

the customers wouldn’t choose

them if they didn’t deliver value.

Are these claims true? Is there upward cost pressure on agents’ overall marketing budget

or are the portals actually adding value? Are the portals responsible for commoditising

agents or is this an inevitability of the Internet age? Is estate agency just evolving as other

retailers and service providers have had to?

Whilst Agents’ Mutual has already captured the attention of many agents, how will they

similarly appeal to the consumer, how long will it take and how much will it cost?

You are always under scrutiny

to prove your value and we

are confident we will stand

up to that test.

Nick McKittrick, CEO of Rightmove

24

25


THE PORTAL LEADERS’ DEBATE

We also put the issue

of rising costs, to

Alex Chesterman, CEO of

Zoopla Property Group.

Alex Chesterman:

If you think about what an agent

spends today to advertise a listing,

if they’re on both us and Rightmove

they’re spending around fifty

quid on average for the life of the

listing to advertise to an enormous

audience, plus they get all the

associated data and measurability

of their return on investment.

I think the price issue really

doesn’t have any merit to it. Yes,

prices have gone up, but they’ve

gone from a zero base ten years

ago to what is still an incredibly

good value proposition today. If

you look at what an agent gets

on Zoopla Property Group and

Rightmove, it’s incredibly good

value. It’s about a tenth of the cost

of traditional media.

Also, if you look at it on a more

macro level as a percentage of

agents’ revenues, they are spending

far less on marketing and getting

far more than they ever were. For

our business, specifically, price

increases are relative to the value

we are providing. In other words,

our service has continually grown

year on year, and will continue to,

constantly becoming better value for

the agent.

Our audience has grown 37% over

the past year alone. The portal

proposition is far better today than

any other media proposition that

agents have ever had and it is only

getting better as we add more

services and our audience grows.

So I don’t think that portals being

expensive is a valid argument

from Agents’ Mutual.

If you think about it in the context

of the numbers, Rightmove’s

Alex Chesterman, CEO of Zoopla Property Group

average revenue is about £600 a

month and ours is about half that.

The average agent lists about 60

properties with us, so in our case

it’s around £5 per property per

month. Let’s just think about that -

£5 per property for the services

that we provide.

We generate almost 50 million

visits per month and have invested

hundreds of millions of pounds so

far to get to where we are today.

We provide exposure on some of

the biggest websites in the UK,

both the ones we own and the ones

that we power like The Times,

The Telegraph, all the ISPs and

the banks’ mobile apps. The value

proposition is incredible.

It’s around £5

per property

per month.

Let’s just think

about that -

£5 per property

for the services

that we provide.

Ian Springett asserts that

rather than providing value,

Rightmove and Zoopla have a

stranglehold over agents, he

says they are being conned:

Ian Springett:

They’ve been clever about the way

they’ve sold to agents. They don’t

sell “additional services” as part of a

menu. They say they’ll increase the

base listing fee less if agents buy addon

products to generate a supposed

local edge against their competitors.

In many cases it’s not clear that

agents are actually achieving any

significant competitive advantage

- they’re just paying more for a

constant stream of new products.

Agents often feel that this is a con

and I can certainly sympathise

with this view.

Alex Chesterman sees it differently:

I think the other part of the pricing

argument that’s interesting is that

there is a very clear and definable

return on investment with us.

We deliver an average of about

120 leads a month to each member

so the cost per lead with us is

very clearly measureable and we

price based on performance.

Agents’ Mutual is asking agents to

sign up at a fee that in some cases

is higher than ours for an extended

period of time for a proposition that

is unknown.

Therefore from a price or a value

proposition, how does Agents’ Mutual

fit into the mix?

We are very comfortable that the

value proposition that we provide

today is incredibly good value.

Clearly if you’re an agent operating

from a bedroom or a garage on an

industrial estate, that’s not going to

be possible.”

“The main reason why businesses like

Purplebricks are even able to enter the

market is because the two big portal

groups have welcomed them as new

sources of revenue, allowing them to

co-exist alongside their main customer

base of full-service estate and letting

agents. I see them as parasitic in that

sense. We are very clearly defined about

who we will accept as member firms,

because ultimately we think that the

Nick McKittrick also had this to say:

We’ve worked hard to build up the

trust in our brand and build up this

market leading position.

We have become one of the top 10

most popular sites in the UK, we

are now ranked alongside global

brands such as Google, eBay,

Amazon and YouTube.

When we speak to our customers

the majority say they want to

continue to advertise on Rightmove,

and their reason is that they

want to continue to offer the

unparalleled exposure to their

clients and put their clients in front

of the largest home moving

audience in the UK.

As I say, you have to prove that

you are worth the cost and

ultimately, the agents will

make the decision.

‘Is price really the issue? Switching an office from Zoopla Property Group to Agents’ Mutual

might not save a penny and at best a few thousand pounds a year if you come off Rightmove.

Many Knight Frank and Savills offices probably pay more in parking fines than they will save by

dropping both portals so what is their and your real driver for change? Is it fear, as Ian Springett

suggests, of new types of agents, that online and non high street operations will take over?’

We posed this question and also the issue of private listings to each of the CEO’s.

Ian Springett:

You know this is a bet on the future

of full-service agency really. We

are not allowing direct listings from

developers and we are certainly not

going to be allowing, not now and not

ever, Internet only, non full-service

agencies, many of which charge a fixed

fee regardless of whether or not they

find a buyer or a tenant.

One of the core parts of the

proposition is that our member agents

commit to promote our portal in

environments such as their window

displays and offices.

full-service agency model has legs as a

very local business.

I think that vendors and landlords

ultimately gain considerable comfort

and value from dealing with people

who have on-the-ground expertise,

who have a reputation locally and who

are physically present. We appreciate

that means we are not going to get

100% of the total potential market,

but that’s not our top priority. On one

level, we’re in business to defend,

support and boost the interests of

what is still the biggest sector of

the market.

26

27


THE PORTAL LEADERS’ DEBATE

28

Nick McKittrick:

We have no intention of taking private

sellers or landlords and have never

considered it. Any attempt to insinuate

otherwise is deliberately misleading.

We have rigorous vetting procedures

and set minimum standards. We turn

prospective customers down every

month. They have to be carrying out

estate/letting agency work, they have

to comply with relevant consumer

protection and industry regulations,

they have to be members of an

ombudsman scheme. We have additional

requirements of our own, around the

quality of service provided; that’s what

we are making the judgement on.

For example, we make sure we meet

the agents at their premises before

progressing membership and review

their terms of business.

We look at the way they handle

enquiries, which reflects on Rightmove

and how they vet their clients. There’s

a whole series of things we look for.

It’s not a judgement whether they have

a high street presence, a secondary

presence or an admin office, it’s about

quality service; that’s what we judge

our membership on. We do mystery

shopping so we can see how they vet

their clients, how they handle enquiries

and what is actually happening.

We trust people when they take us

through their process.

If people do slip through the net we take

it seriously and address it.

It’s not a judgement

whether they have a

high street presence,

a secondary

presence or an

admin office. It’s

about quality service.

Alex Chesterman didn’t pull any

punches when it came to the question

of taking private listings, either

directly or via the backdoor:

Alex Chesterman:

Let me answer your question on

private listings. There is a lot of

misinformation in the market,

generated by people who have a

vested interest in peddling that sort

of misinformation.

We have always very clearly stated

that we don’t take private listings and

will not take private listings, either

from private sellers or private

landlords.

We have very specific criteria about

who is able to advertise with us. In

fact, we went so far as to publish

those criteria in December. We only

accept advertising from agents

and developers.

There are clearly new agency models

appearing in the market, but that’s

a natural evolution. So you have a

variety of different agent models

and consumers will migrate towards

the services that are most suitable

to them, the type of services that

they want.

If you are a full-service agent

providing a great service and charging

a sensible fee, you have nothing to

fear from new entrants and new

models in the market.

There will be a small percentage of

consumers who want a different type

of service at a different cost. That’s

the market, but we do not and will

not accept private listings.

Never have. Never will. No interest.

It’s not our model. Our model is to be

the most effective partner for estate

agents and I mean that beyond the

pure marketing sense.

If you are Agents’ Mutual and you are

trying to appeal to the emotional side

of people you have two ways to stoke

up the rallying cry. One is over pricing,

that the portals are expensive and are

going to charge ten times more over

time and that is not only untrue, but it

is also impractical.

Our business is based on charging a

sensible fee to agents. We absolutely

want to get a sensible price for the

proposition we are providing, but not at

the expense of putting our customers

out of business and biting the hand

that feeds us which, would put us out

of business.

We are all about ensuring that we

deliver great value to our customers

and are their most effective

marketing partner.

The other rallying call is to try to

create fear in the market. So private

listings is something that, again, is not

something we have ever done or

will do.

From the consumer perspective, we

want to provide a service where the

quality of listings to our consumers

is great.

Look, if you want to get agents charged

up about the idea that Zoopla and

Rightmove are either the enemy today

or going to morph into the enemy in

the future, that’s a great rallying cry,

but there is absolutely no truth to it.

We have always

very clearly

stated that

we don’t

take private

listings

and will not

take private

listings.

0333 202 1005

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hello@moneypenny.co.uk

Why? To ensure every call

is answered – even when

their branches are closed

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29


THE PORTAL LEADERS’ DEBATE

Agents’ Mutual has defined its proposition to agents very clearly, however the key group that

determines the success of any portal is the consumer. Rightmove has invested £300 million

to date establishing the brand into the top 10 of all websites in the UK. Zoopla Property Group

has spent £200 million in a much shorter time period and has increased consumer awareness

to 80% – both portals are spending around £40 million a year currently to maintain and build

on their position. Any new competitor cannot start, from a consumer perspective, on an equal

footing; there is a huge amount of goodwill and trust already built up by the established portals.

use and functional, but there’s a trust

and deeper emotional connection there.

That’s what we’re trying to tap into.

I think it’s a bigger space than the

rational, we see this as the more

“Find your happy”

valuable space and one that can be at

the heart of Rightmove.

Ultimately it boils down to the rational and

emotional. At the highest level they are the

choices you have and beneath that there

are various ways to implement those.

I am very happy with our campaign and

we’ve had some fantastic feedback from

consumers and customers.

Indeed, both Rightmove and Zoopla Property Group are right now helping thousands of buyers,

sellers, landlords and tenants on their second or third move: these are consumers that are

used to the established portals, they have their apps on their phones and tablets, they go to

these portals first by default.

Rightmove and Zoopla Property Group have each chosen a different territory, they’ve selected

a different consumer proposition with one aiming for the emotional and the other the rational

drivers. This begs the question, how will Agents’ Mutual make their pitch?

Ian Springett was not very forthcoming on this point and wouldn’t discuss the name of the

portal, (it won’t be Agents’ Mutual at the point of launch), nor the consumer proposition in

detail, but he did make several points.

Alex Chesterman has a different view:

Alex Chesterman:

From a marketing perspective, you can

either appeal to people’s heads or to

their hearts and our vision is very clearly

that Zoopla is the place that provides

all the data and research around the

property search process. For us, it’s

about appealing to people’s heads.

“Smart”

Ian Springett:

We are not going to attempt to

replicate what Zoopla is putting

forward, because we don’t think it

is sound enough as a proposition to

consumers. There are plenty of places

where they can get data to inform

themselves about a particular area.

We think what the consumers are

after across all platforms, is a slickly

integrated, well-packaged and

presented, accurate, up-to-date, very

good, property search service. That’s

what they’re interested in, they want to

find a home.

We’ll be able to tell people who they can

expect to find on the portal, and we can

convey certain benefits - not of being

agent-owned, which will probably not be

part of the main message to consumers.

I’m not going to go public at this stage

with everything we’ll do with our

member agents, but there will be things

that the members can do for us and

give us which will allow a certain edge

to what we’re doing and it is a fact that if

we enter the market with the strategy we

have, the market will split.

Being agentowned

will

probably not

be part of the

main message to

consumers.

In our conversation with

Nick McKittrick we brought

up the new Rightmove

campaign “find your happy”

noting they’re going for the

emotional drivers of the

consumer and asked him to

explain the thinking behind it.

Nick McKittrick:

Rightmove is a site that consumers

know, love and trust when they make

life-changing decisions and it’s a place

where consumers can get confidence

when making these decisions.

We are trying to connect with the

emotional side of things and “finding my

happy” seemed to get to the heart of it.

Everyone has a different happy and we’re

saying it’s not just about being easy to

Consumers generally have an affinity to

a particular brand and for Zoopla we’ve

very deliberately gone down the road

of appealing to data-hungry, digitallysavvy

users, because one of the things

that’s changed quite materially over the

last five to ten years is the consumer

appetite for information. The modern

consumer wants to know everything

and that’s the position we occupy.

We believe that the portal(s) that win the consumers’ attention will win this battle. Online forums

such as Property Industry Eye have covered much debate about the pros and cons for agents,

but this is not the deciding issue, the home mover will determine the outcome.

When Rightmove launched, agents assisted them by directing customers to their site but now the

tables have turned - consumers go to the portals first before they go to agents. Are agents really

going to refer their customers, that have come to them from Rightmove or Zoopla Property Group

or elsewhere back to another portal and, as a consequence, to their competitors?

Agents’ Mutual has yet to show its hand, but the other portals have and are investing huge amounts

of money to capture home movers’ hearts and minds and no doubt will continue to do so, indeed

are likely to spend even more over the next year or two.

30

31


THE PORTAL LEADERS’ DEBATE

Alex Chesterman:

So how do, arguably, some of the most powerful people in property see

things panning out after Agents’ Mutual has launched?

We welcome competition and there will

always be a variety of different places

and services offering differentiated

features and there will be people loyal

to different brands. You might use

the Coke or Pepsi analogy in terms of

Rightmove or Zoopla, for example.

of the market, because they’re asking

agents to take a lot of pain to join their

service. I think if we had set out and said

you have to cancel Rightmove in order

to join us, I don’t think we would be in

the position we’re in today. Zoopla has

close to 80% national brand awareness.

their customers, vendors and landlords,

won’t stand for it and over time will

migrate to those businesses with two

arms and therefore, actually, I believe

the whole of market inventory will

remain. I think that’s what you will see

over time.

Ian Springett:

Our target is to try to get to 5,000

offices by the end of the year. Now

if we get to 5,000 offices that will be

serious for the other two portals in

the sense that they will both lose

revenue and property content. It

powers us up at the same time to

give a very serious message to the

consumer, and those 5,000 offices

will be actively promoting our portal

to their customers and applicants.

We’ve got £6m to get to market and

then we’ll be funding our portal

entirely from fee revenue of various

types, mainly listing fees. The firms

who are buying into this understand

that you cannot change the

competitive landscape in six months,

but we can continuously improve

what we’re doing over a period of

time to get to the end-game. Our

stated objective is to get to 10,000

agent offices, which is where we

think the full service sales and letting

agency market is.

Very shortly Rightmove and Zoopla

are both going to be public companies

with all the pressures of earnings

for shareholders and executive

bonuses and all that kind of thing. A

duopoly means you have two massive

media operations and 15,000 small

and medium-sized enterprises as

customers up against the two giants.

So part of our game plan is not just

to create an immediate cost saving.

Looking at it over 5 years we will not

only provide a lower cost alternative but

we will be a serious brake on the price

increases of the other two.

I would say the general vibe is that

the majority of agents would like to

leave Rightmove because they charge

excessively and they deliver their

service in quite a high-handed manner.

Being independent, the agents don’t

like being treated like that. They now

feel like slaves. In a lot of cases so far,

people are saying that they would like

to leave Rightmove, but that that has to

be stage 2.

If I think about the agency market

there’s a lot of criticism - estate agents

regularly end up at the bottom of

the popularity rankings - but I think

ultimately it’s a better model for the

consumer than the alternative models

which operate at the fringes, or the

eventual end game if the market

for property transactions were to

consolidate to a handful of large,

centralised, utilities-style businesses.

We are a mutual. I don’t have any equity

in the business, and it’s not the plan

ever to sell it off in any event, but it does

need to be driven commercially. We

just have more flexibility about what we

do with the profits: either we re-invest

them to make the business better or we

reduce the fees. So the management

team is driven by profit, and over a

period of time we have to drive profit.

The primary driver of profit for us is

going to be agent take-up and support.

This means we have to produce a really

good, effective brand proposition and

product to attract consumers and

connect them with the agents and

properties which best meet their search

criteria. We have to do all the things,

in other words, that make any other

business commercially successful. The

only difference is the agents will retain

complete control and we’re not creating

an asset for shareholder value. It’s a

service to the industry.

Nick McKittrick:

I see it as being competitive –

it has always been competitive and

I don’t anticipate any changes there.

We will always see new entrants as

we have done over the last 15 years

and as we continue to do. It comes

down to delivering the largest and

most engaged audience and

that’s what is critical in the

portal market.

There have been a lot of players in

the market that have come and gone –

Rightmove has stayed, has innovated

and remains relevant which is shown

in the size of our audience.

I see us leading the way. We have led

the way from the start and we will

continue to do that. I think it’s our

unparalleled reach. We have by far the

biggest audience and by far the most

engaged audience, so it’s the ability

to get your properties and your brand

in front of the largest home moving

audience in the UK and to be able to

deliver that for your clients.

I think it is then the volume of

enquiries that we generate - over

3.5 million enquiries for our

customers every month, which is

more than one every second.

We give agents the ability to

differentiate in front of that largest

market, to differentiate their brand

and properties and themselves to

their customers.

So it’s back to trust, Rightmove is a

place that customers and consumers

can trust. They can also be confident

that it is independent, which they say

that they also value.

Agents’ Mutual is another competitor in

quite a long line of competitors of which

there have been many. Where I think

Agents’ Mutual differs is only in the

sense of the restrictive clause that they

are proposing, which prevents people

from being on Agents’ Mutual and

both of Zoopla Property Group

or Rightmove.

That’s quite a difficult position for a few

reasons. One, I think that’s a big hurdle

and barrier for them to get to the whole

As an agent described a few weeks ago

- “Agents’ Mutual is asking me to chop

off either my left arm or my right arm

and I need both to operate my business,

Zoopla’s my left arm and Rightmove’s

my right arm. Why would I cut one of

them off?”

I think that genuinely is the case so

I think it is a big ask, because what

actually is likely to happen for those

parties who decide to accept such

restrictions on their businesses is that

We are very excited about the float and

that we have been able to provide an

opportunity for our members to have

a stake in our business and invest at a

discount, which is a great offer. We are

delighted to be able to do it.

Of course, some people will spin that

in whatever way they want, the truth is

we want to reward our customers for

being loyal members and we’ve had an

overwhelmingly positive response from

our customers to the offer.

This debate might cause more questions to be asked than answers given –

here are 10 Questions for you to consider:

The Corporates, including Countrywide,

LSL and Connells, will all stick with

Rightmove and Zoopla Property Group,

none of their inventory will appear on

Agents’ Mutual, nor will the big house

builders be allowed to advertise there –

what impact will this have?

Members of Agents’ Mutual will

not be allowed to promote their

membership of either Rightmove

or Zoopla Property Group. What

consequences might this have?

If left unchecked, will Zoopla

Property Group raise their prices by

50% to match Rightmove and then

will both portals increase prices to

unacceptable levels?

Agents’ Mutual believe that the

majority of their inventory at launch

will come from agents dropping

Zoopla Property Group, what will

this do for Rightmove’s position?

How will the consumer feel about a

portal owned by agents? How might they

react to their property not being advertised

on one or both of the established brands?

Can Agents’ Mutual succeed where

Google, the Sunday Times,

Daily Mail, Trinity Mirror, NAEA & ARLA

and many others have failed?

Is Agents’ Mutual the last stand for

the traditional agency model?

If they fail will it herald the demise

for full service agencies?

How might Google fit into the landscape?

Will there be a role for the world’s largest

search engine if the consumer cannot

conveniently access all properties

available for sale and to rent in

one location?

If Google was to re-enter the market, will

this open the door for private listings on

their platform?

If Agents’ Mutual attracts a high

percentage of agents, then will

anti-competitive legislation allow

them to restrict agents

advertising on other sites and

might this result in agents

paying three or more fees?

So,

do you

Stick or Twist?

All three leaders make their case with

passion and conviction but not all three

can be winners and agents that back

the wrong horse could end up being

losers too.

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