Onthemarket.com - triumph or disaster?

Monday January 26 2015 was not like any other as far as the property portals were concerned. After much debate and discussion, the brand new, estate agent owned, OnTheMarket.com was launched. And, as a result of its highly controversial rules of engagement, it looks certain to cause a seismic shift in the status quo.

The crucial caveat for agents wishing to list on this ‘not for profit’ property portal, is that they may only use one other portal and that means either Rightmove or Zoopla, or both, are going to get a bloody nose. Before we examine the pros and cons of this divisive policy, it’s worth travelling back in time 15 years to explore the very beginnings of the two major rivals in the property portal space.

Rightmove started life back in 2000. It was founded by a group of agents wishing to leverage the power of the Internet for themselves and their colleagues. Countrywide, Connells, Halifax and the Royal and Sun Alliance joined forces to create the listings site that would take centre stage as searching for property online came of age. Initially agents were able to list their properties free of charge and the portal soon established itself as UK number one.

Two years later, and possibly somewhat surprised by how successful the enterprise had become, the shareholders were able to monetise their prize possession and they started charging agents for listings and allowing new homes developers to advertise their developments too. In 2006 Rightmove went public and, as their traffic and market share has grown and their allegiance to the industry diminished, they seem to have adopted the approach of ‘you need us more than we need you’, a marketing strategy that many older and wiser brands have dropped in recent times as they recognised that markets have a habit of re-balancing themselves and when customers are able to choose, it pays to be the brand of choice.

Unsurprisingly, Rightmove leveraged their dominant market position and the cost of listings and other advertising products stopped being a negotiation and became more of a like it or lump it style, inflation busting, annual price diktat. So, it came as no surprise that the market started praying for a viable alternative; someone who could offer a meaningful alternative, genuinely competitive to the extent that price would also become a factor in their offer.

There were a few pretenders. Even Google flirted with the idea of getting involved in property causing the market to hold its breath for a few months. If the behemoth that is the world’s number one search engine truly turned its attention to the market it would surely sweep all before it. But for some reason Google chose to focus on other things – intelligent glasses and driverless cars to name but two!

Other contenders offered only scant resistance, two of the more successful, Smart New Homes and PrimeLocation (founded and sold on by Ian Springett, the CEO of OnTheMarket.com) were both acquired by Zoopla as they prepared for their floatation in 2014. There is also a whole raft of ‘self-service’ property websites such as emoov.co.uk and tepilo.com, Sarah Beeny’s venture into online property marketing. While they list on Rightmove and Zoopla, these guys won’t be allowed to advertise with OnTheMarket.com who have specifically stated their support for the ‘traditional’ estate agent. In a Daily Telegraph interview last year, Ian Springett pulled no punches. He called online agents parasitic and “a bit of a con”. In the same interview he also characterised Rightmove as being a “monster” in terms of coverage and profits.

So, will it succeed?

Opinions vary as to how many estate agents have signed up to the new website and have dropped one of the ‘Big Two’ in the process. The likely number is between four and five thousand and, of these, informed opinion suggests that around 80% have opted to drop Zoopla rather than Rightmove, although the figures change fairly dramatically in London and the South East where Zoopla is at its strongest.

That’s going to hurt, Zoopla more than Rightmove, but, in my opinion, the consumer most of all. It strikes me OnTheMarket.com is much more about saving estate agents money rather than improving choice and service for the seller.

It’s no secret that the Agents’ Mutual master plan was to break the duopoly of the Big Two but I believe they are playing a dangerous game. They need to achieve critical mass very quickly indeed otherwise they offer a competitive advantage to those agents that chose not to sign up. Imagine if you plan to instruct an agent in London and you can choose between an OnTheMarket and Rightmove agent and one that has both Rightmove and Zoopla at his disposal, I know where my money would go. My guess is that they’ll struggle to secure more than 50% of the 16,000 or so UK agents and if they don’t sign more than 6 or 7,000 within the next 12 months they may well be forced to rethink the ‘only one other portal’ clause. More to the point, consumers can no longer ensure that their properties feature on all of the major portals – unless they appoint more than one agent of course.

Trying to manipulate the market can seem like a good idea at the planning stage but it can come back to haunt you. In the end, the consumer, oblivious of all the politics and motives, will decide. My advice to the Agents’ Mutual would be to reconsider the rules. Allow the new site to establish itself on its merits. If they did, I think they’d enjoy a much wider take up and far greater potential. In a filmed interview last November Ian Springett characterised OnTheMarket as a ‘sustainable low cost alternative’, but for who, the sellers or the agents? And, in much the same way as Rightmove, that started life with equally lofty ideals, if it does take off in major way will the lure of a pay day for its partners see it end up as a plc?

And how about the websites themselves? In terms of their appeal, it’s tough to choose between the three really, change the colours and it’s tricky to spot the difference at first glance. The new site does look clean and uncluttered, as it proudly boasts, “No irritating ads, no unnecessary information, no spam mail and no nonsense”, however they clearly have some technical issues, the same property frequently appearing three or four times on the same page. Hopefully they’re on it. But it’s tough to see Rightmove being knocked off the top spot anytime soon. While Zoopla are as likely to offer you a cheap video, life insurance or give you a meaningless valuation of your student let in Ashby De La Zouch as they are to lead you to your next property, Rightmove is more focused. Despite the transition of recent years, their property roots are still evident and they tend to come out on top in our User Testing. The entrepreneurial nature of likeable Zoopla founder Alex Chesterman is embedded in the DNA of his site and they simply can’t resist the temptation of an audience of potential consumers. It might be a good income earner for them but it’s a big drawback as far as the purity of the brand is concerned.

How about market share I hear you ask? I ran a quick test, in my hometown of Wimborne, Dorset, Rightmove weighed in with180 listings dwarfing Zoopla’s 57 which had already been fallen behind OnTheMarket’s 81 (including several multi entries). But try Ealing in West London and it’s a very different story indeed. Rightmove and Zoopla are way out in front with 672 and 585 properties respectively while OnTheMarket is a distant third with just 108 listings*. Early days I know but indicative of the sort of regional swings we can expect.

In my view the market has space for three significant players. Certainly Rightmove has had it its own way for far too long and another genuine, UK wide competitor can only be healthy. Even Ryanair eventually conceded that having customers that like you is probably a worthwhile objective but Zoopla on its own is clearly not enough to give Rightmove a reality check. But I don’t hold with any sort of restrictive practice, in my experience it’s a risky strategy that relies on all sorts of other factors. This story has got a long way to run yet and don’t be surprised to see one or all of the major players making some significant changes before we see the back of 2015. In the end it will be the consumer who decides.

*Searches were carried out at 10.30pm on Tuesday 27th January 2015

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