Realestate.com.au has had a stellar year by any standards and continues its growth both here in Australia and overseas announcing a net profit of 15.06 million up from 8.2 million the previous year.
But where can it continue growth? Its’ overseas markets are an obvious area to grow with most of them losing money or breaking even, however Australia is where most of its profits are generated.
No matter how many many people dislike the site and some of REA’s subscription plans it still continues to be the ‘must have place’ to advertise residential sales and lease listings.
Competition from Domain.com.au should get stronger in the coming year with its Rural Press acquisition and integration but do not expect this to lower subscription prices at all. Aside from Domain REA have no real competition and as I have said many times it will take the behemoth Google to make a difference in the long term here.
I think subscription prices are about right now and I would not like to see them increase even further. I would really like REA to find their growth elsewhere. REA must really be appreciate what real estate agents in Australia have given them. It affords REA the revenue to grow overseas and hopefully they will understand this and keep subscription prices about the same for the coming years. I will not hold my breath on that one. After all REA is a listed company and its shareholders would be demanding double digit growth well into the future. Growth will also come from private agencies across Australia leaving franchises and branching out on their own (private agencies would pay more per annum). I would like to get some figures on this but it seems to be an ever increasing trend from my experience.
I look forward to the new site coming soon (I hope so) but really for REA it is steady as she goes. You can read the full article here from the Age.
12 Comments
Andrew
peter, firstly i would like to say what a great site you have here. i came across it late last week, and have constanly been checking it ever since for new stories and any responses that have been put up to mine or anyone elses questions.
in regards to your article above, you say “I look forward to the new site coming soon (I hope so) but really for REA it is steady as she goes” – are you refering to a new site of REA’s or a new site coming from a competitor??
you obvisouly have far more experience in this field than me (and im very keen on learning), so is the overall message in your article above that you think REA will continue to be profitable both here in Aust and overseas in the coming years, or are your thoughts that their growth profile is limited and they may struggle in years to come?
thanks,
andrew.
Peter Ricci
Hi Andrew and welcome.
I am referring to REA’s new look website. I think REA’s profits will be good in the short term, but as I have mentioned in previous articles I think the subscription cost per agent basis has no legs once the big boys play (Google MSN and Yahoo)
Google would never charge agents for their listings as they make an amazing amount (just as REA does) on 3rd party advertising.
So long term wise REA will end up being a free service for basic type listings and it will have no choice in this matter.
This is of course my opinion and I have been known to be wrong about 1000 times in my 40 years, which works out to be about once every 15 days 🙂
Andrew
thanks Peter.
you touched on the fact that you think REA’s subscription costs per agent wont work out, and that the free service of a Google or Yahoo would eventually outperform REA. this is only my opinion (and im wrong at least 15 times a day!!) but wouldnt the cost of listing the property online ultimately be paid for by the seller, not necessarily the agent? therefore, from an agents point of view, they would be more inclined to list the property on the website that will have the most views by potential customers, and not necessarly the website which offers the cheapest listing?? in the end, for a prperty that cost for example $500,000 would an agent really be concerned about a $15 listing fee that will potentially give them access to 90% of the market?? and at present, that site is REA??
not to sure if my thinking is correct in terms of who pays for the listing fees (the agent or the seller?) or whether the listing fees for agents is a major concern or not?
any thoughts??
Stellabella
Glad Peter started off this topic, because it finally gave me a reason to post!
I can’t quite agree that listing fees for online media are “about right.” With online out-performing print, the pricing is completely at odds with the results being generated by online vs print. It’s like charging $50 a litre for mixer and $2 a litre for the alcohol.
In all likelihood (and I could be wrong, but rarely am) consumers will continue to value the service factor that online classifieds provide: intuitive navigation and seach functionality; save features, calculators, etc.
Secondly, it would appear that Google are growing dependency on their non-core products, like maps, which may eventually develop into a revenue stream in one way or another.
And lastly, as Andrew correctly states, what agent is going to promote a free, yet under-performing medium when he can make a commission on paid media placements?
Mark
Not all REA business make a motza.
Although not widely publicized – they own 60% of a lead generation service for agents – homeguru.
According to the financial that came out (page 40) homeguru lost $431,473 to the end of June 07.
Link to Aug 20 audited financials.
http://investor.rea-group.com/irm/content/newreports.html
It doesn
Paul Krayven
Personally I think those lead generation tools are a waste of money and they should vanish off the face of the earth until someone comes up with a decent proven tool. I’m approached almost weekly by some new lead generation tool that will revolutionise our business. Yeah sure, if I haven’t heard of it how will buyers?
Adam
I quote Andrew…
“therefore, from an agents point of view, they would be more inclined to list the property on the website that will have the most views by potential customers, and not necessarly the website which offers the cheapest listing??
Agreed… but how long did it take Google to become the NO.1 Search engine ? They want to own the Worlds information and how you view it. If they have their minds set on this, and their money committed………. they will win.
I cannot wait !
🙂
Elizabeth
Good morning,
Adam, what you just stated interests me.
“They want to own the worlds information and how you view it”
Very interesting.
From conversations here, I was lead to believe that Googles focus was based on Search. However if they now want to own the information, as in owning my listings data, then this changes things a little.
E
Patrick
Hi all,
Pete, i love your blog and beleive it is the best real estate international forum.
Google will have Free content, but it does not mean they will have the right formula to succeed or get the agents to follow them.
First, i see a major problem between owning a search engine that works marketing OTHER real estate portals, and wanting to compete with them. if they do real estate, will they still fairly rank MY real estate website?
Second, a free website is to my point of view ranked as a less serious one. real estate is a serious business and subject. Don’t degradate it and compare it to any other cheap product.
third, I want to taget a selecti
Peter
Hi Patrick and thanks for your comments.
I doubt Google would ever use their powers to promote their products above others. Their whole company is based on trust. Without that everyone would ditch them – including myself. They would however have an intricate knowledge of how to make their sites rank well.
As for FREE being degrading, I also doubt this is the case as so many Internet models are free and built around other revenue models, just like the Google Search Engine, free to list, free to use!
Glad to see you here and please keep contributing.
Robert Simeon
First and foremost the successful real estate businesses rank their own website(s) ahead of all property portals for delivering results. In recent years there has been an enormous transition to database mining which is linked back to the individual agents websites. The property portals are simply back-up.
Secondly, if everybody already uses Google as their preferred search engine one would think that searching for real estate is simply a natural progression. They seem to have a successful habit of getting these things correct ie earth, mapping etc !!
Just because REA and Domain got it right eight or so years ago does not mean that in years to come their respective business models could become out dated and irrelevant to the wider consumer.
Google keep referring to their search engines which are the online encyclopedia of today. What remains to be seen is how Google can propel search over portal which simply comes down to navigation and speed. Their Google alerts are outstanding which is probably the clue !!
Graeme
REA has sewen up the W.A and possible the Australian market, however the great thing about free enterprise is that it will always pull back the peaks and level the playing field in some way or another over time. Go Go google maybe it will realy be FREE enterprise.
Graeme