http://osteriapulcinella.co.uk/menu_item/mixed-vegetables/ In a followup article to the Front Page Project Rebellion article, Ben Hurley from the Australian Financial Review has published a new story on an ongoing investigation by the ACCC into the activities of RealEstate.com.au and to a lesser extent Domain.com.au.
Questions directed at some of Australia’s leading real estate groups have seemed to focus on excessive price rises (see 1,2, 3 and 4) of realestate.com.au and the effectiveness of competition in the real estate online classified space.
Simon Baker, the ex CEO and substantial shareholder in REA has made some interesting comments on this blog recently regarding realestate.com.au prices :
If the franchise groups were serious about competing with realestate.com.au or at least providing a competitive offering, wouldnt they first start internally and attempt to organise group buying of REA subscriptions for their franchisees?
Imagine if all Ray White or LJ Hooker offices got together and negotiated as one for their REA subscriptions (and additional products). I think they would get a better price.
the most likely innovation will be suburb based pricing where there is significant differentiation between suburbs in the price paid.
and the most suprising comment from Simon was his take on add on products
The more interesting question is why do people have to buy the premium products? Do they really add value?
Does anybody else find that a little strange?
With all state Real Estate Institutes and the REIA meeting in Perth during the week strategies were again discussed to create a national industry run portal. David Airey commented on this blog prior to the meeting :
“Sadly the REIA ailed to gain national support from most state institutes to launch or run a national industry owned portal. That’s a sad indictment of the politics that used to exist and allowed the commercial sites to grow around our industry at our expense.”
“I’m on the record on many occasions criticising REI’s for this intransigence and for not listening to members.”
But the current momentum in the industry may have changed some minds as all indications are that this roadblock may finally be pulled down and our REI’s finally taking a role that many members thought they would never see and that is the operation of a national industry controlled portal. But taking on the might of REA would not be easy and one of the strategies being discussed is using the REI’s to feed to the commercial portals with delay of say 3 or 7 days. This would allow REI portals at a state and national level to promote something like “Find it first on xyz.com.au”.
As this plays out behind closed doors the campaign to withhold sold data from realestate.com.au is gaining some serious momentum and reports from small and large national real estate groups and portal pushers continue to roll in.
One side effect of withholding sold data from the likes of REA is that data companies like RPData who has paid substantially for this information feed from REA. RPData and other similar companies provide essential data services back to agents but also provide market analysis and review consumed by the nations media. With a strong national portal in place it’s expected that RPData will move to establish arrangements direct with the institutes bypassing REA entirely.
Another thing Ben Hurley has reported on today is the presents and gifts that Realestate.com.au is showering on their biggest spending clients. With the real estate market slowdown agents have looked to reduce discretionary spending. REA have used things like dinner at high end restaurants, State of Origin games, Business Class flights and even brand new iPads to secure the relationship. I personally have heard of a sales team being flown interstate to watch the AFL when discussions of reducing their yearly spend was raised.
Realestate.com.au has over 10,000 real estate agents throughout Australia and whilst many agents spend around $1,000 a month there are offices who spend 10, 20 and even 30 times that amount which is primarily funded by Vendor Paid Advertising (VPA). Realestate.com.au’s campaign to increase the share of wallet has been right around the country but it has been particularly successful in Melbourne where they have less competition from Domain and high dollar auction campaigns are popular . As an example the Premier Property option offered by realestate.com.au can cost an owner well over $2,000 per month.
Many in the industry showed increasing concern towards REA’s motives when a video surfaced showing their intention to market direct to buyers and sellers. Check out the video yourself, particularly from 9 min 30sec of this video.
In response Greg Ellis issued a written response which seemed to contradict itself from paragraph to paragraph. Why his response was not circulated widely by email is unknown but it might have something to do with the fact its easier to watch the video by clicking on the link if it was sent by email. I doubt to many would have typed in that long url.
In the letter he claimed that it was incorrectly reported that he wanted to cut agents out of the loop but then went on to state:
The development of site functionality that allows prospective buyers and sellers to access or claim property information that can be accessed by agents so they can cost effectively identify a new pool of leads.
I am sure I am not the only one that reads this sans spin to be that they are going to escalate their use of agents sold data, listing data and valuer general data to provide additional products to buyers and sellers direct and then sell those leads to agents…. as “cost effectively ” as realestate.com.au can do of course!
In an interesting side note REA reps have now started to sit down with salespeople and sellers in their homes to pitch $2000 a month Premier Property and other options in the marketplace. This appears to be very similar to the Redfin Portal in the US who have a team of salespeople on the ground in capital cities. The primary difference is that Redfin salespeople also present property and take a cut in the commission, something REA have repeatedly claimed they will not do.
REA’s dealings with the ACCC lately has not been good and has seen the scrapping of the Private Listing Policy which finally allows private sellers easy access to list on realestate.com.au.
The drought of sold data would certainly have some sort of effect on future revenue streams and to a certain extent current products but a successful ACCC action and a industry controlled competitor together would provide bad news for Australia’s largest and most successful real estate portal.
It’s going to be a very interesting few months as this all plays out but if it was bad news for REA it’s terrible timing for newcomer Onthehouse. A strong industry portal is not going to be good news for them. Their original investor document and subsequent prospectus highlighted the monetisation of client agents data.
The underwriter (and partial owner) took it a step further in their report when they stated :
“Low integration risk, with ongoing data feeds. PortPlus and Console databases are ready to be “plugged in” into OTH’s database. In addition, both businesses do not sell their software – they license it to each customer on a rolling basis. As such, they retain ownership and control over the software and its intellectual property. With the appropriate terms and conditions in place with clients, each business is licensed to access and upload the content that is captured by the software”
Customers of Portplus and Console are already questioning when the terms and conditions are going to change and just where their data is going to end up. I expect their competition will start to raise the issue and use this against them when pitching for business. Even though the float was over subscribed, in their first month of trading the shares dropped to as low as 60c which must be a huge concern for the original operators of Portplus and Console who are restricted in selling many of their shares for quite some time.
Certainly, the “Noise” is getting louder by the day! Join in and tell us what you think about the latest developments.
http://evalfor.com/b-madrids-photographer-marathon-01 Originally posted at the : Business2 Blog. Please visit Business2 to read all comments to the original article.