There was an interesting article just published in Editor and Publisher Magazine. (HT to Jon and Jennifer Karlen for sending me this via email this morning) It describes the new real estate advertising deal between 282 newspapers and Zillow.
Rather than offer my opinion(s) on this up front, I’d like to have Bloodhound Blog Readers take the time to read it and offer THEIR take in the comments section….here’s your chance to analyze today’s real estate news! (grin).
Let me ask some questions to get the party started!
Will this change SIGNIFICANTLY change the fortunes for either Zillow or the 282 papers? Will this add the local traffic that they are starving for? Which entity will get the “better end of the stick” in this deal? Is it really REALTORS vs everyone else in the battle for eyeballs? Will it be a saving move for both entities as they push for more traffic? OR is it rearranging deck chairs on the Titanic?
Bonus research question: Is your location impacted by this deal?
Ok, folks…if you have been longing to throw your views out there for a while and have not done so, here’s your chance!
What say you? ( I will offer my opinion in the comments section after the conversation’s in full gear!)
Ryan Ward says:
Honestly, zillow bores me. Sorry I don’t have something more insightful than that, but, it is the truth.
It doesn’t matter how many people see them, read them or use them if the majority of consumers ultimately figure out that they are actually a player who is in reality “in the way” of what they (the consumer) is actually trying to do.
Since they are in fact “in the way” of a consumer, not actually helping (I know, I know, sure they help :-), I’m just not sure the “who” they help is actually the correct audience (consumers)).
Since the value they could bring to the consumer would only work if the information they had was of higher quality, I don’t think it matters how many people ultimately see them or where they find them, be it print or online.
There is a limited supply of “the next dumbest people” to pitch the advertising idea to before the money dries up.
Ulitmately, the product itself will determine whether or not the product makes it and their product is terribly and perhaps fatally flawed.
The fortune of the papers is in the hands of the papers. Zillow cannot save them.
Zillow got the better end because they need the cash to convince others that they are worth it and they can point to their “deal” as proof that they really are worth it as a tool to get more of the same from other advertising sources.
*Bonus Answer – No. Zillow has little impact in my market.
September 8, 2008 — 6:31 am
David G from Zillow.com says:
Eric –
Hardly starving, Zillow is growing (all metrics.) According to Hitwise, Zillow is the 3rd largest site in the real estate category.
Newspapers are the major traditional real estate media play. The internet is the future. Combining the two is a no-brainer and should smooth the transition for advertisers. Online real estate is an incredibly fragmented market (both nationally and locally.) And that is why partnerships are important to success in real estate media.
I obviously have a different perspective to yours. From where I sit, the battle for eyeballs is between Realtors that have realized the power of partnering with new media and those that haven’t.
September 8, 2008 — 8:20 am
Ryan Ward says:
Quote: “the battle for eyeballs is between Realtors that have realized the power of partnering with new media and those that haven’t.”
I disagree.
The battle is between those who have the best and most accurate information – which can be found on websites like mine and companies like zillow and trulia who really just wedge themselves in the way without offering anything better. Not only not better, but in reality, worse. Essentially they are forcing themselves to “get in the way” of a transaction without actually bringing real value to the table.
Perceived value yes. True value…no way.
September 8, 2008 — 8:26 am
Eric Blackwell says:
Hey David;
I really want to just let the discussion develop without my input for now, but I did want to add two things into the mix.
First, I did not say that Zillow was starving. I think that they are struggling for revenue growth, though. It is very difficult to get another round of investment $$$ without a track record of REVENUE as opposed to a story line on how you’re going to try and get one… This is, in my opinion an attempt to do that via the newspapers.
24% year over year traffic growth, while impressive in many other businesses is not as appealling as one would hope for when looking for more capital.
Will it work? That was my question to the BHB readers. Will it bring more eyeballs? (and hence advertising revenues from home related services and products sellers?)
Please note that I did not offer an opinion…
Secondly, I DO think that Zillow got the better end of this deal. (ack! I had to insert my opinion!)
I will write more later on the subject, but I think a LOT of people take really long looks at the REALTORS’ revenue model.
Sometimes I enjoy looking at some of our “online partners'” revenue model and seeing how it impacts our business as well. I think it is useful.
September 8, 2008 — 8:46 am
David G from Zillow.com says:
Eric –
You did say starving. If you really didn’t intend to offer an opinion you may want to change your title.
September 8, 2008 — 8:51 am
Eric Blackwell says:
Ummm…David…honestly…my title says struggling. I chose that word carefully. That is because you (ZILLOW) IMO NEED more local traffic to fund any online growth. Trulia just got a BIG round of funding and you have not. I am not sure where I missed the mark here.
Again (honest to goodness), the only place that I used the word starving was in reference to traffic and THAT was used correctly because online advertisers are demanding MORE traffic and MORE results as they get more web savvy.
I honestly want an open discussion about Zillow’s revenue model. Simple as that. REALTORs have their revenue model examined DAILY. I am not sure what is inappropriate about looking at the online folks we partner with in terms of their revenue model and viability.
Again, I DO think that you are getting the better of the newspapers you are partnering with on this deal. No doubt about it in my mind. My question is, will it (partnering more closely with 282 papers) bring enough local traffic to generate the needed revenue?
September 8, 2008 — 9:11 am
Eric Blackwell says:
David- Please suggest for me an appropriate title. You know me and you know I try to be fair.
September 8, 2008 — 9:14 am
Louis Cammarosano says:
Eric How about you change the title to
“Zillow leads online ad revolution with Cutting Edge Deal with Newspaper Behemoths!”
September 8, 2008 — 9:19 am
David G from Zillow.com says:
Eric –
This is silly. Quoting you, your post says “… local traffic that they are *starving* for.” Do you see that now? If you consider your title fair and neutral, OK fine, but that’s certainly not how it reads to me.
September 8, 2008 — 9:25 am
Bob in San Diego says:
Eric – David and Louis are dead on with the title. That is hardly not expressing an opinion.
You also said,
It isn’t correct with regard to Zillow as their local traffic is up.
David also nails it here:
The ONLY reason some in the real estate industry have an issue with Zillow, Trulia, et al is because in the past, the real estate agent saw the advertising vendor as just that – a vendor selling exposure. The paradigm shift that has occurred with the Internet is that it gave each of us the ability to be our own publisher and advertising medium. It doesn’t get anymore fragmented than that.
When I went online in 1998, it was to be my own publisher with the ability to market on my own medium. I did this because in San Diego, more than half of the top 10 Pru agents in the country were in San Diego, and two had a monthly print budget in excess of $20k. Being my own online entity allowed me to level the playing field for pennies.
Now everyone has the ability to be their own publisher, and some are better at it than others, so to them, Zillow and Co are competitors, not needed vendors.
To answer some of your questions:
1) “Will this change SIGNIFICANTLY change the fortunes for either Zillow or the 282 papers?”
No. It is merely part of the ongoing evolution that has been occurring since the first newspaper took in advertising dollars (anyone know who that was?).
2) “Will this add the local traffic that they are starving for?”
I think the “they” is newspapers. For newspapers, yes.
3) “Which entity will get the “better end of the stick” in this deal?”
This deal creates a symbiotic relationship. There is no better end of the stick.
4) “Is it really REALTORS vs everyone else in the battle for eyeballs?”
That depends on how you use it. I have always considered my online presence to be like the Mississippi River. I want all streams and rivers to lead to me. If I can get the eyeballs on Zillow that are looking for San Diego to eventually see me, then it doesn’t matter.
5) “Will it be a saving move for both entities as they push for more traffic? OR is it rearranging deck chairs on the Titanic?”
“Saving” infers an inevitable doom unless something happens. I don’t see this as anything other than one aspect of moving forward.
The print media will consolidate, they’ll cut deals, and they’ll speed up their learning curve, but they wont die. There will be fewer and the evolution will continue, from where they started with papyrus, to monks with quills, to employing gutenberg’s new fangled invention and the subsequent improvements to the press, to electronic and paperless.
I think the Titanic reference is wishful thinking, but also laughable.
6)“Bonus research question: Is your location impacted by this deal?”
If you mean will it cost me business? No. It will probably help.
September 8, 2008 — 10:33 am
Bob in San Diego says:
@David – many local papers have feeds from the local MLS and have the active inventory online. Will a local paper that’s part of the consortium push that inventory to Zillow?
September 8, 2008 — 10:36 am
Dave Barnes says:
As a consumer, I don’t want to see nor have any need for real-estate ADVERTISING.
Access to a database that has EVERY property for sale and the ability to search that database easily is what I want.
I can not imagine every looking at a real-estate advert. What is the point?
Ads for services, maybe. But, not for property.
I think the local newspapers are doomed and I subscribe to and receive 3 every day.
I think Zillow sucks because the data are crap. All I have to do is examine my local neighborhood and I see market values that are way off reality. If I see crap for my neighborhood, how can I trust the data for other neighborhoods.
September 8, 2008 — 10:37 am
Thomas Johnson says:
If an agent is not zestifarming, he should begin now as Zillow will be ever more relevant.
September 8, 2008 — 11:06 am
Eric Blackwell says:
OK-
@Bob(and David)- I acknowledged and explained my use of the word “starve” in my comment above. I also acknowledged that Zillow has a 24% year over year growth in traffic.
IMO- National growing online real estate sites (if they are ONLY going to use a revenue model and not charge REALTORS or become REALTORS) NEED to increase their traffic levels far MORE than that to impress an increasingly tough market for raising capital. I think they NEED that local traffic to accomplish their mission. Trulia has made a huge SEO effort and has increased traffic significantly in that regard.
In that sense I see this as a GOOD strategic short term move on the part of Zillow. I think the local papers are doing well with regard to traffic. (read: I disagree with you there, Bob) I think they simply have too much overhead and are bleeding cash due to their printing costs. I think on that basis, they will not be good at maintaining their online presence as well as many think/
That is why I think this will be a short term thing. I think it will be a useful strategy for Zillow in the short run. And I think zillow will get the better end of the deal because they will get more eyeballs on their stuff than they will provide to the papers. And according to the press I have read, the revenue will be split. No deal IMO is ever 100% symbiotic. Some are synergistic and I don’t think this one is that, either.
@Dave Barnes – I am not trying to make this a referendum on Zillow’s content. This is about them increasing the level of advertising participation with online newspapers and how it will impact their future. Period.
@David G- In deference to you, I have altered the title to something that expresses more clearly what I mean to ask…hope that helps.
With all that said, will the traffic that they derive from the deal (along with the revenue split from the ads), be enough to get a new round of VC funding or ?? I don’t think so… I think that will be VERY tough in today’s market.
Thoughts?
September 8, 2008 — 11:16 am
Louis Cammarosano says:
The original headline was:
“Struggling Zillow + Failing Newspapers = ???” vs
“Zillow increases advertising relationship with failing Newspapers…will this help either party?”
How about removing the “failing” from the newspaper categorization?
to
“Zillow increases advertising relationship with Newspapers…will this help either party? ”
The question is still the same. How relevant can the combined parties be in selling ads around home valuations, dueling digs and listings.
September 8, 2008 — 11:23 am
Bob in San Diego says:
But it isn’t just about that. It will depend on content. If more consumers see the content as crap, then it will impact traffic and eyeballs. It is always about the content and no one knows this better than Zillow and their media partners.
I would expect that in the future Zillow will display more than just ads from their publishing partners. I know I would cut a deal with news publishers in a heartbeat for access to their fresh, local content.
September 8, 2008 — 11:30 am
Louis Cammarosano says:
“I know I would cut a deal with news publishers in a heartbeat for access to their fresh, local content.”
Bob on a separate note, can’t that be done? Don’t content providers syndicate news feeds and share ad revenue with third parties?
September 8, 2008 — 11:32 am
Bob in San Diego says:
@Louis – yes. But they don’t need me. I’m too small. What they are doing here is offering blogs to local businesses and getting free content.
If my reach was more regional and capable of expanding their reach, then I suspect my phone would ring.
Zillow expands their reach. It makes sense.
I agree that this is THE question. I believe the answer has to do with how my question to David is answered:
After thinking about it, it would make sense to just push the paid real estate advertising to Zillow.
September 8, 2008 — 11:43 am
Louis Cammarosano says:
Bob
Perhaps you hit on a business model for the newspapers-aggregate the hundreds of thousands of blogs and make it easy for them to op in to news feeds and to share revenue.
September 8, 2008 — 11:46 am
Eric Blackwell says:
@Bob and Louis- They already do that for national news feeds…and they pay you to put the content on your site…
It would seem to me that it gets a little more problematic the more local it is.
September 8, 2008 — 12:08 pm
Stephanie Edwards-Musa says:
I think it is amusing that the conversation is more along what the title should be. LOL.
It’s true that newspaper advert is going away. Real Estate sections just get smaller and smaller every month. Who will this help the most?
My guess is that eventually the online real estate adverts for the newspapers will be run with Zillow? win, win. Zillow IMO has come along way since they first started and have made some interesting and at first glance good decisions recently.
Honestly, I wish our local MLS site offered some of the stuff that Zillow does.
If the deal is simply to advertise in the newspaper, I think the newspaper has the better end of the deal. Don’t see that driving traffic the way they would think. Still, I think there is more to the story.
September 8, 2008 — 12:17 pm
David G from Zillow.com says:
Hi Bob,
Today’s announcement relates to a large advertising network advertising for reaching real estate consumers but there are also technology and content aspects to these partnerships. Later this year, Zillow will begin to power the online real estate sections of our newspaper partners’ websites. And listing content is already pushed to Zillow via newspapers that are selling featured listings on the site.
Furthermore, any local paper that is licensed to syndicate listings could do so today via the Zillow listing feed program. There are a few small newspapers that have seen this as an opportunity to add value to their advertisers and are syndicating listings via feeds but that’s not strictly the focus of the agreement announced today.
Hope that that addresses your question.
September 8, 2008 — 1:04 pm
Stephanie Edwards-Musa says:
Bingo!
September 8, 2008 — 1:18 pm
Bob in San Diego says:
Confirmed what I thought.
Questions:
what happens to the Zestifarming?
Now that you can get the same listing from multiple sources, which source will get priority?
September 8, 2008 — 2:33 pm
Bob in San Diego says:
Where can I get a list of these papers?
September 8, 2008 — 3:00 pm
Dave Barnes says:
@David G (Zillow weenie)
“Later this year, Zillow will begin to power the online real estate sections of our newspaper partners’ websites. And listing content is already pushed to Zillow via newspapers that are selling featured listings on the site.”
No! No!
No one is going to visit local newspapers’ websites. My daughter (age 23) will only visit some nationally recognized website (think Google) when she is ready to buy a house. She doesn’t even know the names of the local papers in Denver in spite of living here her entire life.
Prospective home buyers want data and the ability to narrow the selection.
No adverts.
Do I need a freaking 2×4 to hit you on the head about that?
No adverts. Just data.
Your job is to figure out how to make money from the database WITHOUT adverts.
September 8, 2008 — 9:04 pm
louis cammarosano says:
@dave barnes
Homegain real estate products feature real
Estate professional in an advertising free environment
Not only do we believe is this better for the real estate professional, but it’s also suited us well driving us profits for a half a decade
We’ve also helped pit real estate professionals sell
More than ten thousand homes in the past couple of
Years
We happily cede the ad market to our competitors
September 8, 2008 — 9:43 pm
Eric Blackwell says:
@Dave-
#1- Calling someone a “weenie” is inappropriate IMO. There is no need for that.
#2- Zillow has LONG ago announced that they are an advertising model.
I think taking a look into the following facts ARE appropriate:
1) Their “burn rate” (according to Venture Beat 11/07) for labor alone was right at 3 times the size of Trulia’s. Since the time of this writing, to my knowledge they have not cut back their hiring. (Help me out there, David…please–can you tell me if the head count has climbed from 155 vs Trulia’s 47?), By my (admittedly rough and dirty calculations) that would give them a PAYROLL burn rate alone of $9MM-$12MM and their last round of funding was a $30 MM tranche 12 months ago as far as I know… Again, please correct me if I am wrong. Can they sustain this burn rate? With a 24% growth in traffic? I dunno…
2) Zillow would need to haul in a TREMENDOUS amount of cash to recoup their investors money and this in an increasingly TOUGH online advertising market.
3) Doing this advertising model may well only be a small drop in this bucket if they are relying on the cash from this deal to push them out of the deep red.
Those facts combined with the failing nature of the folks that they are tightening relations with causes me to ask the question…will this help either party?
It is NOT meant as a slam on Zillow. They ARE online advertisers. I have NO beef with that. The market will decide how much ad content it is willing to put up with, not me. While I think the market has a low tolerance for it, they will decide.
David (Barnes), in my humble opinion, this is about the questions I have just laid out and not about ad hominem attacks on David G. I have always respected him and have always admired the fact that he was/is willing to discuss things in a conversational way.
Just my .02
September 9, 2008 — 4:49 am
Louis Cammarosano says:
Eric
Online advertising, of course can and does work. You are correct however, it requires millions of page visits and views a day and a sold out inventory of ads.
We have some experience with selling ads at HomeGain. When we launched our instant homevaluation back in 1999 we ran ads around it.
http://blog.homegain.com/homegain-cries-flattery-zillow
We received millions of visitors but in 2000 we took down our original instant homevaluation tool because (among other reasons)it was not making money.
Granted Zillow has stuck with the concept longer and has added listings, dueling digs,mortgage market place, real estate information and q/a.
Indeed its not a slam on Zillow to say they have a tough road ahead of them as their business is reliant on garnering more and more eyeballs and increasing the quality of visitors and getting advertisers to pay more.
Partnering with the newspapers is a smart move as they still are a viable distribution channel. I don’t think its the complete solution, but its another alliance to help them try to sell more ads.
September 9, 2008 — 6:42 am
Dave Barnes says:
@Eric
“Weenie – A person possessing significant technical expertise, without some of the theatrical connotations of “geek”. ” or “a dork, a dweeb. Not necessarily a bad thing. ” cf. UrbanDictionary
,dave
September 9, 2008 — 8:35 am