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The Future of Property Portals

By Dan Johnson

When the leaders of an industry get together, everyone tends to think a lot about strategic direction, as well as spending a considerable amount of time developing new relationships and strengthening old alliances. This was very much the case at the Property Portal Watch Workshop in San Francisco, where the heads of around 30 leading internet property businesses from around the world met to dissect, discuss, and dispute the state of the market. So what were the key issues that were discussed?

What do users really want from a property portal?
Bigger is not always better when it comes to the size of the property database. The relevance of the listings to the search of the customer is more important than absolute numbers, while the speed and accessibility of the search tools are extremely important when it comes to turning first time visitors into loyal users. Portals that are designed with too heavy a focus on Search Engine Optimisation almost always suffer in terms of usability.

Is Google a friend, foe or frenemy?
Although not its number 1 priority, Google is getting increasingly serious about the real estate sector. The combination of Google Maps, Google Local and Google Base means that many portals now regard the search goliath as a genuine long-term threat to their business. However, Google faces an awkward dilemma, as any attempts to push its own (free) listings services could have serious ramifications for its ability to monetize search results through Adwords. Even if it finds the right formula, agents and developers will need to remember that portals will always be valuable in terms of generating leads, as Google will only create clicks and traffic to your website, which still needs to convert these visitors into leads.

Which online business models work best?
Most property businesses have one of two different mindsets when it comes to advertising performance and are looking either for lead generation efficiency or brand visibility. Historically, the focus has been on winning instructions from vendors, so strong branding has been important.

However, the recession has driven down budgets, so there is an increasing focus on achieving better marketing ROI, which is making it harder for the mid-ranking portals to justify high monthly charges that sometimes generate little or no return for the advertiser. At the same time, more companies are prepared to try cost per lead advertising as it represents a lower risk alternative, but without a high lead volume, it is difficult for portals to sustain this model.

Free to list websites are currently the darlings of the estate agent world, but there are question marks as to how sustainable these models are in the long term; nothing is ever free, there is always a cost...

How can leaders exploit their market position?
A dominant incumbent enjoys a significant level of power and is able to dictate terms to its customer base quite aggressively. To a point, it is able to force up prices, impact budgets and starve competitors of revenue. With market share also comes market intelligence and the leader enjoys a greater awareness of the trends affecting customers than any other participant.

What does the future look like?
The modern world is always changing fast and the current economic situation has accelerated some of these changes. Print media have been ailing for some time, but the recession has sounded the death knell for many magazines and other paper publications. To survive, publishers need large economies of scale and a multimedia strategy.

Banks and governments could become an important customer group. With a strong global swing towards repossessions and government ownership of banks, these two sets of institutions now own a lot of property...

The portal industry is not at all developed in emerging markets. Even in techno-friendly Brazil, only 25% of the property listings currently online are listed with one of the domestic portals. 85% of all property on the market is not listed on the internet at all. These markets therefore represent a huge untapped potential.

For all its popularity, mobile doesn't really drive a lot of business. Of those portals that have chosen to focus on this digital distribution platform, the average seems to be around 1% of total visitors accessing their services via a handheld device. Generating a positive return on investment in the short term therefore appears to be difficult.

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