An interview with Ian Springett and property portal ‘On The Market’:
I wanted to send over some questions to On The Market – a UK property portal that have grown in between two giants of the industry (Rightmove & Zoopla) and seem to be making a positive reach both across the industry via adopters of their service and out to consumers using their website / app in order to search for property. I interviewed Ian Springett, their Chief Executive Officer:
Is the current increased popularity of OnTheMarket simply a protest vote against the continued price rising from Rightmove or should agents seriously look in to adopting OnTheMarket?
The implementation of our strategy for a market-leading, agent-backed portal has rapidly accelerated since OnTheMarket plc was admitted to the AIM market of the London Stock Exchange in February last year.
Our business model is about bringing about a realignment in the portals market where ownership of the portal is in the hands of the thousands of agents who use it. Our pricing undercuts Rightmove to provide the agents with sustainably fair pricing for their core listings, while they remain at the heart of the property transaction on the ground as well as being majority shareholders in the business.
Due to a muted housing market and the imminent up-front ban on lettings fees for tenants, there is significant pressure on agents to reduce their costs. One of the biggest costs for agents is online marketing in general, and portal spend in particular. Up until now, agents have lived with the pricing imposed by Rightmove and Zoopla, but we believe we are now coming to a crunch point. Rightmove’s monthly tariff is, in some cases, in excess of what agents are paying for their office rent. The double-digit annual price increases will be painful to small businesses and agents are increasingly considering their options.
OnTheMarket is a strategic cost reduction opportunity for thousands and thousands of agents. Our listing fees are typically one quarter of Rightmove’s charges – it currently has a 75% profit margin – so there is scope to build a profitable business for shareholders while retaining fair pricing for agents and a first-class search experience for property-hunters.
Agents are increasingly aware that they have – with their property content and with the ever-increasing charges they have paid – facilitated the growth of Rightmove to a point where it had a market capitalisation of £5.1billion (Bloomberg) in May 2019. ZPG was acquired by Silver Lake last year for £2.2 billion.
In March, Rightmove’s latest annual results showed a decline in agent offices to 17,328 – a reduction of 2% since the beginning of 2018. Analysts have since noted their ‘concern’ around this with some suggesting they expect the decline to continue. Meanwhile, the results showed another year in which Rightmove generated increases in revenue, profits and profit margin by hiking its Average Revenue per Advertiser by a further £83 to break through the £1,000 per month barrier for the first time. But for every £100 spent by Rightmove’s property advertiser customers, it generated an average of 17 leads. This is a reduction of 39% compared with 2015, when every £100 generated an average of 28 leads.
Portals are reliant on agents not just for their revenue but also for the content that draws consumers to them. Over time, there has been a separation in where the value of these businesses is created and where the ownership of the portals lies.
The more agents support OnTheMarket, and the sooner they support it, the faster we will grow to the benefit of agent shareholders and customers, property-seekers and external shareholders alike.
Have you got some latest figures to share with us? I am looking at mobile app downloads, monthly searches and properties listed that shows it is exciting times ahead for OnTheMarket.
We are seeing momentum in the volume of traffic and leads we are producing. On 9 April 2019 we announced that, as at 8 April 2019, the portal had over one million people using its property alert service. And in January 2019, OnTheMarket delivered more than 7 times as many phone and email leads and 4 times the number of visits to its portal compared with February 2018, the month of the Company’s admission to AIM. The portal’s traffic in January exceeded 23.5 million visits**, a new monthly record.
As at 31 January 2019, OnTheMarket.com displayed over 600,000 UK residential property listings. The Company’s UK property stock is already over 80% of Zoopla’s and approximately 60% of Rightmove’s1. This increase in coverage reflects the sustained rapid growth in the number of estate and lettings agent branches contracted to list at OnTheMarket.com since Admission. As at 31 January 2019, OnTheMarket announced it had over 12,500 contracted branches compared with 5,500 in February 2018.
** Visits comprise individual sessions on OnTheMarket.com’s web based portal or mobile applications by users for the period indicated as measured by Google Analytics. Data for leads generated is reported from the Company’s operating systems.
For any new agency starting up, what are the key reasons to run with OnTheMarket?
OnTheMarket.com is already established as one of the three market-leading UK residential property portals in terms of traffic. Since our IPO, we have already proved that we have expanded our network of listing agents.
More property-seekers are using OnTheMarket.com and viewing more properties - many of which are listed with us on a “New & exclusive” basis – which is a recipe for generating more value to agents. That value is not just in the direct advertising return we provide but also in creating much-needed competition in a market previously dominated by just two large portal groups.
We launched a new national TV campaign in September, which highlights the thousands of new properties we display every month 24 hours or more before they are on Rightmove or Zoopla. We have also ramped-up our expenditure on digital marketing and have run high impact poster advertising.
Support for OnTheMarket among agents is not just about leads and costs, there is the ownership structure to consider. We have more shares we can issue to engage agents as part of the broadening ownership group. Wide agent ownership and support as continuing shareholders in OnTheMarket remain essential to the portal’s future success and, we believe can provide a unique competitive advantage within the UK property portals market.
OnTheMarket.com is an industry price disruptor and was created to inject competition into the property portals landscape, reducing the pricing power of what had been “a two-player market” (Morgan Stanley analyst report, October 2013), with Rightmove and Zoopla felt to be charging increasingly high fees to agents. Our strategy respects the central role of the agent at the heart of the property transaction while maintaining fair and sustainable listing prices.
OnTheMarket aims to put portal ownership into the hands of agents who use it, to undercut Rightmove’s 75% profit margin, to deliver an exceptional user experience for consumers and of course to generate shareholder value. For agents, there is the opportunity to sign into a five year deal with OnTheMarket which fixes the tariff for the first two years with a maximum increase of 5% a year for the following 3 years.
We have heard from some agents that they have been impressed by the proportion of “unique” leads which OnTheMarket provides. Robert Scott-Lee from estate agent Chancellors said: “Our analysis shows that approximately two-thirds of the email leads are from a new, discrete audience of property-seekers rather than duplicating those from other portals. The leads tend to be of high quality from qualified and serious people actively in the market and ready to move.”
Realistically, should agencies adopt an OnTheMarket plus one other platform system or can OnTheMarket stand alone and offer just the same quality exposure – I am assuming that Rightmove plus one other is still firmly in the mind set for many?
We know that serious property-seekers follow the properties and that where agents put their properties will determine how the competitor landscape pans out.
There are many agents who have chosen to list with OnTheMarket as their only portal. Many agents have told us that they now receive more leads from OnTheMarket than they do from Rightmove and importantly, these leads are said to be of quality, meaning they are from ready-to-go applicants who are serious about moving.
We know that many agents are paying more to Rightmove in fees than they are for their office rent and while they face ‘decision time’ as they try to reduce their costs, we believe the value provided by each portal will become even more important.