Protect yourself from the fall-out Agents’ Mutual will create

Crowded market
I’ll never again make the mistake of thinking that all large, dominant companies are sleepy

“I’ll never again make the mistake of thinking that all large, dominant companies are sleepy,” said Sir Richard Branson after his audacious attempt to break the duopoly of Coca-Cola and Pepsi Co ended in failure when [tooltip text=”Virgin Cola was a carbonated cola soft drink produced by Silver Spring and part of the Virgin Group. It was launched in 1994. (From Wikipedia, the free encyclopedia)” url=”http://en.wikipedia.org/wiki/Virgin_Cola”]Virgin Cola[/tooltip] disappeared from UK supermarket shelves in August 2009.

OnTheMarket.com
We will be OnTheMarket in January 2015

Fast-forward 64 months and this is why the chances of OnTheMarket.com – the brave new entry into the property portals market that is due to launch in January – achieving its stated aims of “creating the very best property search experience for consumers and the most effective advertising medium for their clients’ properties while delivering this at prices well below those being charged by Zoopla and RightMove” are non-existent to negligible.

That high? Yes. When Branson launched Virgin Cola in 1994 he had no experience of the soft drinks trade but quickly achieved a 50% share of the UK market.

Unlike Branson, the brains behind Agents’ Mutual – the company that owns OnTheMarket – have a wealth of property market knowledge. It is led by PrimeLocation founder Ian Springett and includes property heavyweights Savills, Knight Frank, Strutt & Parker, Chesterton Humberts, Douglas & Gordon and Glentree Estates.

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UK Estate Agents
OnTheMarket.com website will be the first portal fully owned by agents

Fully owned by agents

When launching Agents’ Mutual earlier this year, Springett – who has been joined by fellow PrimeLocation founder Trevor Abrahmsoh on the new venture’s board – explained: “We have been conscious of pent-up dissatisfaction among agents about the cost of listing on the two main portals, and so we are trying to coordinate a response from members of the property industry.”

“Our site will be the first portal fully owned by agents, since the sale of PrimeLocation, and it will become a serious competitor to the sites already in existence,” he added.

However, Nelly Berova, CEO of Art Division – a marketing agency that specialises in promoting the digital assets of small to medium-sized estate agents in London ­– warns: “Since the rise of RightMove and Zoopla, many estate agents have become over-reliant on the power of the property portals. The entry of Agents’ Mutual into this market should serve to remind smaller estate agents that relying on a third party to market your portfolio of properties is a dangerous game that plays directly into the hands of the large property brands.”

What will happen to your digital marketing strategy if the portal you choose to list your properties on ends up a loser in the three-way battle for market dominance? It will be in ruins – unless you take steps to protect yourself from the fall-out produced by this digital battleground and take back control of your website,” warns Nelly Berova.

Nelly Berova’s concerns are not without foundation. Things are looking good for Agents’ Mutual. OnTheMarket is on target to reach its recruitment target of 5,000 agents by launch, which has led analyst led Credit Suisse to comment: “We conclude that Agents’ Mutual’s membership is growing, the risks are real and will impact RightMove and Zoopla 2015 numbers.”

Agents’ Mutual has been able to achieve its impressive number of sign-ups despite implementing a divide-and-rule strategy. It stipulates its members can only advertise on one other portal, forcing them to make a choice between Zoopla and RightMove.

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Crowded market
I’ll never again make the mistake of thinking that all large, dominant companies are sleepy

Challenging the status quo

Springett explains the thinking behind this move by saying the constraints are necessary to give the new portal a chance of taking on the two established companies.

“We’re actually adding to competition,” he adds. “It’s less that we’re excluding people and more that we’re only catering for a particular segment of the market – full-service, office-based estate and lettings agents. These are the traditional style of agent that most people still use.”

While the loss of 5,000 agents might impact the two big-name portals, it should be remembered there are about 36,170 estate agent offices in the UK. This means that OnTheMove will come into life with just 14% of estate agents on board, not enough to inflict a mortal blow on Zoopla or RightMove or even give them a bloody nose.

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CCPayment
Agents’ Mutual plans to initially charge £400 per estate agency office for listings for the first five-year period

Going for growth

It has been reported that Agents’ Mutual plans to initially charge £400 per estate agency office for listings for the first five-year period in order to raise the initial funds needed to repay investors and finance a future brand awareness campaign. The plan is to charge agents a reduced listing price of about £250 each from 2020.

But this does not impress Credit Suisse, which after comparing Agents’ Mutual’s pot of £9.4m in 2014 and £22m next year with RightMove’s and Zoopla’s annual spend of between £42m and £46m commented: “Funding for Agents’ Mutual may be insufficient.”

While a cut-price listing will certainly appeal, it is difficult to see how Agents’ Mutual will grow further. Estate agents will be reluctant to drop Zoopla or RightMove because they will want to be listed on the sites containing the most properties and consequently generating most traffic.

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Three-way battle
When OnTheMarket goes live in January, it will create ripples in the market.

Three-way battle

When OnTheMarket goes live in January, it will create ripples in the market. Springett and his business partners have invested too much money and effort to let it fail immediately. In fact, they have taken steps to prevent the challenger portal being bought out by the dominant brands it is coming up against by making it 100% agent-controlled.

Each firm that has invested in Agents’ Mutual has an equal interest and voting right, irrespective of firm size. That means 90% of members would have to vote in favour of a takeover for it to go through.

But success, if any, will not be achieved overnight. What will happen with immediate effect is the end of the cosy duopoly that RightMove and Zoopla have enjoyed since the latter’s owner bought PrimeLocation in January 2006.

And this should be of concern to all estate agents. As battle rages to gain market share many skirmishes will take place. Each side in the three-way conflict will unleash bigger and better firepower.

When Richard Branson was launching Virgin Cola in the US, he drove a tank through Times Square in New York in an effort to generate publicity. It’s unlikely Agents’ Mutual, RightMove or Zoopla will use military hardware to win the property portal war, but what is the best way to protect your property business from the fall-out Agents’ Mutual is sure to create?

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Take Control over your Marketing
Cats take control in bizarre Pizza Hut marketing campaign

Take control of your website

In an article on Property Division’s sister site Art Division, Nelly Berova advises property marketers to harness the power of their own websites. When property marketers place an over-reliance on third-party sites to promote their portfolio of properties, this prevents them using their own online assets as the foundation stone of their digital marketing strategy, she says.

 

For  information about Art Division’s services click here

 

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