Editor’s note: This item is republished with permission from Global Edge Marketing Ltd. The original post can be viewed here.
When the boom years return to the overseas property market, the Internet landscape will have changed drastically. Nobody will mourn the death of the one-man-band overseas property portal. Scale always wins and history never remembers who came second.
Consolidation is inevitable and the overseas property portal market of the future will be dominated by a smaller number of larger sites and lead-generation networks. Only the biggest brands will be able to charge monthly fees, and their pricing power will be chipped away at by Google real estate as it seeks to eat their lunch.
The overseas property portal as we know it today may soon be dead. In its place, there are likely to be four groups:
- Large lead-generation networks — networks of overseas property portals that allow agents a single point of access to many portals
- Large country portals offering market access to overseas clients — examples include Rightmove.co.uk and Primelocation.com in the U.K.
- Google real estate
- A small number of French and Spanish overseas specialists
Large lead-generation networks
There are over a hundred overseas property portals. It’s a fragmented market and although there are exceptions, most of the portals are "Mom and Pop" businesses and their business models are looking increasingly shaky. Not only were they built on the assumptions of a thriving market but they rely heavily on Google — and Google is slowly turning against them:
- Google’s algorithms are becoming increasingly localized, making it more difficult to generate traffic in multiple geographic locations
- Google is beginning to bias results in favor of brands, which hurts the natural rankings of smaller businesses
- Google is itself moving into the property portal space (see below)
As the economics get tougher, smaller portals will look to sell up or outsource their entire sales and lead management operation to a network. This is already happening. Portals are collaborating and sharing both properties and leads behind the scenes. Upload to one portal and you get listed on many others and everyone takes a cut of the fee you pay.
This process should accelerate and it’s likely to result in a small number of lead networks where you can upload properties to one place and distribute to hundreds of other affiliate portals. As an agent, you’ll pay per lead or not at all. The whole process will become more transparent as smaller portals give up their sales operations and focus on generating leads for their network.
Large country portals
Large country portals are the exception. Rightmove.co.uk in the U.K. and Daft.ie in Ireland will always deliver disproportionately large audiences of potential buyers to agents, and agents will be willing to pay for it.
Market leaders tend to outsell their nearest rivals by a large margin, and leads once established and entrenched are difficult to reverse. Witness Globrix — it has arguably the best product in the U.K. and although it’s now the No. 4 player, it’s unlikely to ever get close to Rightmove in terms of traffic.
Once U.K. buyers start buying overseas property again in volume, Rightmove and a few of the other top portals, like Primelocation.com, will take a significant slice of the action. The good news for agents is that they are unlikely to be able to charge the rates they were at the height of the last overseas property boom. The large lead-generation networks and Google real estate will see to that. …CONTINUED
French and Spanish overseas property specialists
The market in France and Spain is significantly large to support dedicated country-specific overseas property specialists like Kyero.com and Internet French Property. There’s always a market for specialists, and specializing pays dividends when competing on Google and building a brand. There will be some consolidation and a few new entrants will probably lose their shirts, but this group will be around for the foreseeable future.
Again, their pricing power will take a hit, especially if a few of the smaller specialists join forces to form country-specific lead-generation networks selling cost per lead.
Google real estate
You could almost hear the cheers of agents in Australia on July 6 as Google announced its first foray into the property portal market. It seems likely Google will eventually provide state-of-the-art property search and mapping technology for many of the world’s real estate markets and offer agents free listings, undermining the pricing power of incumbent portals.
As Simon Baker points out, there are some significant hurdles before Google can make a real impact on most property portal markets. The two biggest are:
- Local density — How will Google get enough listings in any area to offer the consumer enough choice?
- Economics — How will Google maintain or increase Adwords revenue if everyone clicks on the Google real estate site?
It will take time but with Google’s brand name and distribution power, it’s highly likely they’ll achieve "critical mass" in many geographical markets. Google "Property Marbella" in the future and, assuming Google has enough property in the area, you’re likely to see a link to Google real estate at the top of the results.
The number one organic listing takes the lion’s share of the traffic, and traffic that would once have gone to portals will go to Google. As long as it can make more money from Adwords than it would otherwise have done, agents and Google win at the expense of the property portal.
For a more detailed discussion of this topic see Google versus the Property Portal.
Agents of the future will be faced with a smaller number of online marketing choices. You’ll still need someone to look after your search marketing, but lead generation should get simpler. List on Google real estate, pay per lead on a few networks, and use one or two of the dominant national portals in the buyer markets you’re targeting.
Copyright © 2009 Global Edge Marketing Ltd.
***
What’s your opinion? Leave your comments below or send a letter to the editor.
