We had a good discussion about the whole syndication flap on yesterday’s Power Hour Rountable call. Everyone agreed that the whole concept of the syndicators using our own data to attract leads they sell back to us was repugnant. However, they saw it pretty much as something we did to ourselves (we being Realtors in general). We failed to give consumers what Zillow, Trulia and others gave them, and today, that’s where consumers go to look for houses.
The group was quick to accept reality: this is the way it is today. Sellers expect to be seen on the syndication sites. If you can’t give that to them, they will likely go elsewhere. They don’t care what your syndication baggage is or how indignant you are about using your data to attract leads for other brokers. They just expect to be there. Plus there was general consensus that the aggregator sites work. At one point in the call Ken Kopcho got on his mobile phone and counted: 31 leads from Zillow!
Speaking for the group, I’d say we agreed to go full bore into mining this rich source of leads,and nobody wants to stop syndicating. However, there was agreement with what Kirk Eisele said in his comment: consumers will go wherever their needs are best met, and this is not a closed case. When someone comes along with a home search tool that out-Zillows Zillow, that’s where consumers will go. There’s no reason why that can’t be us. We own our own technology, aren’t dependent on outside vendors who have to please masses of clients, and can do whatever we want with our web presence.
Go back in time, oh, 7 years I guess. Helpusell.com had outrageous web traffic. And it excreted leads, one after the other. There was a good reason why we, at times, had better traffic than much larger organizations: we embraced IDX and used it when most of the industry was afraid to give that information to consumers. Consumers wanted to go to one website and look at all houses available for sale in the local market. Using IDX to do that gave us a big leg-up on the competition.
But of course, in time the competition leveled the playing field by dropping their hysterical resistance to giving the public free access to information and adding IDX to their own sites. We suffered a major blow when one large competitor went to our vendor and basically bought them out from under us. We went from being the darling of Internet lead creation to . . . nowhere. That’s why, today, we own our own tech. We built it, it’s not available to anyone else and it does what we want it to do.
We have an opportunity today to take back some of what we gave up to the aggregators. The shift will come when we give them everything they get from Zillow and MORE. Today? I have to run because I just got 5 new leads from my ad on Trulia.
great read James, I agree:
“…They don’t care what your syndication baggage is or how indignant you are about using your data to attract leads for other brokers. They just expect to be there…”
Adriaan, I was thinking of you when I wrote: ‘ When someone comes along with a home search tool that out-Zillows Zillow, that’s where consumers will go.’
An interesting dynamic to watch will be to to see how Zillow and Trulia attempt to create a consumer network effect. They both have smart enough people involved to recognize their vulnerability to new entrants and fragmentation. Wonder what they will do? I’m sure Facebook integration to start but what then? If a company does manage to create a network effect within the real estate buying experience watch out…
Ok, Kirk, Talk to me like I was a Five Year Old: what do you mean by a ‘network effect?’ I’m looking at a future where consumers contract for real estate services online, where marketing is fairly standardized, fees are reasonable, and qualified help is available in the offer-acceptance period and then to process the transaction through closing. Is the Network the consumer and the various professionals involved in the transaction?
A network effect is when the value of a service or tool increases with the number of users. A classic example was fax machines. The first person to own one didn’t have any value at all since no one else could receive a fax. As more and more businesses had them, they gradually became more useful and then even became required since “everyone else had one” and wanted to use it. Email was the same, and Facebook has created extreme value with it. Once “everyone” was on Facebook we all had to be there too. (Even if you thought it was ridiculous at the time.)
So, I believe that Zillow and Trulia recognize that if they can find a way to achieve a network effect within their services, they can create a value that new entrants will not be able to match and thereby create a barrier to entry for new or small players. There can be very strong “first mover” advantages in having a lead with network effects. They’ll start trying to get people invested through social media sharing (Facebook especially) but that is pretty weak. I don’t know what the angle is that will work (if any) but if someone figures it out, they will have a strengthening hold on the market over time that isn’t based on brand awareness. It will be based on real value and they will be VERY compelling as a business.
Thank you for the education. Once again I believe you understand this new digital (real estate) world better than almost everyone. And, Kirk, have you talked to Zillow about this?
Now that I understand the Network Effect, I think of Listingbook who always had trouble establishing itself with users in a new MLS. The true value emerged when they had enough users that their premium promotions became effective. Before that it was a great tool, but premium promotions was where they intended to make their money.