When Google ventured into real estate listings many of us thought it would signal the end of annual fee increases being charged by the likes of realestate.com.au and domain.com.au. I mentioned how it will eventually force these organisations to change their business models and build simpler, smarter platforms and I still do!
Despite making it clear that it will take time, some industry heavies quickly began commenting on how little effect Google was having on sites like realestate.com.au with increased share prices /revenues traffic figures. The most vigorous of these was writing on just about every single notable real estate blog (including his own) how it wasn’t making a jot of difference, I thought at the time, it was pretty short sighted from a person who should know better!
I also made it clear that it will take time for Google’s impact to occur. Only when Google Real Estate has similar volumes of listings and only when they include the searchability of these listings directly within the search engine will it begin to have an impact on the majors.
Now it seems Google is stepping it up a gear……..is this an aggressive phase for Google?
During a session at the 2010 Inman Real Estate Connect conference in New York, Sam Sebastian, Google’s director of local and business-to-business markets, was quoted as saying “We’re actively looking to acquire one to two small real estate companies a month.”
Read this again………
“We’re actively looking to acquire one to two small real estate companies a month.” This statement speaks volumes of just how important Google thinks real estate is to their overall search strategy. It tells me they really do think it is one of the most popular search markets. Many people are talking of Google purchasing the likes of Trulia, Roost and some other independent companies. Personally, I think they will buy into products that compliment and drive traffic to their search and real estate website rather than buy other search engines and portals, they will also more than likely delve into products to compliment their Andriod operating system and new phone offerings.
Life without Realestate.com.au and Domain.com.au?
One thing is for sure, in a few years the real estate landscape will be completely different. Once Google has comparable listings and if it is confident it has a faster way to search then all that needs to happen is for consumers to become aware and use the systems and things will get tough for the portals.
Realestate.com.au and Domain.com.au continue to provide a decent service to agents, however it is the control that agents are wary of – no one likes having monopolies or duopolies, it only serves the few and each and every time hurts too many businesses and stifles innovation. Google’s involvement in any major industry allows a fair price to be charged for services, forces innovation and will make companies like Realestate.com.au and Domain.com.au offer better support and services for their money.
27 Comments
Simon Baker
Peter
Great article in theory … however, having attended that session I can report that Sam Sebastian actually never said “acquire one to two small real estate companies each month”. What he actually said was “acquire one to two small companies” – ie in any industry.
You can see a full video interview on the Inman News site. (www.inman.com)
Thanks for referencing me in your article. (Its ok to use my name) I still beleive that it wont make a big difference. We discussed this issue at length at the Property Portal Watch Workshop in New York and the audience, made up of the senior managers of large sites around the world, also believed that Google wouldnt have a huge impact.
Simon Baker
Alistair Helm
Peter,
I don’t want to burst the bubble as I am sure that Google has ambitious plans for real estate that will challenge existing players both her in NZ as well as Australia, but the words spoken by Sam Sebastian from Google at the Inman conference was:
“we’re actively looking to acquire at the rate of 1 or 2 companies per month” – there was no inference or otherwise that these companies would be real estate.
When questioned as to prospect of acquiring Trulia he was tight lipped.
Naturally these comments come from the perspective of personally being at the conference – which as ever is an unmissable event.
Aryan
Futher more to simons comments it was not specfic to Australia. The ROI (including and excluding risk/reward) for australian business is the lowest in developed world. And would not even compare it with developing world’s ROI
Charlie
I was also there and heard him state as per Simon and Alistair’s recollection (it was almost a throw away line and was about all businesses in all areas and countries, so not specific to real estate/Australia). I also thought his presentation was fairly innocuous, nothing much was said and I took less notes on this presentation than any other during the conference. Despite is being the presentation many of us were most interested in, it turned out to a damp squib.
Having said that, I think Google’s impact could be greater than many believe, and like all great changes, the change will happen slowly. But no one really knows from this standpoint what that will be yet. It’s all up for grabs. Markets are dynamic, and if the history of markets tell us anything, those that dominate now are less likely to be so dominant in, say, 10 years time.
One thing that I took away from New York was that a lot of European real estate portals were like ‘rabbits in the headlights’ about the oncoming entry of Google into their markets (Google RE is launched in UK but not other European countries yet I believe?) – they may be naturally cautious, there may be nothing to worry about, but then again…
Nick
I dont know about you guys, but the traffic I observe going through Google Maps Real Estate is significant.
Craig
“We discussed this issue at length at the Property Portal Watch Workshop in New York and the audience, made up of the senior managers of large sites around the world, also believed that Google wouldnt have a huge impact.”
What would you expect them to say? It would be like going to a motor show and the Ford rep saying, “Yeah, we expect Holden to eat our lunch this year”.
Robert Simeon
Well first we heard some collective opinions that Google would never enter the Australian property markets! Another clue is the huge amounts of monies the portals pay for Google AdWords. We know on the other hand that property portal subscriptions go up not down – so it will be interesting to see if there will be a move of subscription monies from property portals over to AdWords by real estate agencies/agents.
That Google Monster is an amazing business model (not just real estate). It is however becoming more obvious that many agents/agencies with low SEO have jumped onto AdWords (and staying) just like the property portals do!
Sal Espro
As the ’87 Asian melt-down and more recent GFC should have illustrated, analysts, schamalysts depending upon the ‘hand that feeds them’, can’t mix it with ‘grass-roots’ market feedback. (You can attend all the high falutin’ talk-fests you like, guys, but at the end-of-the-day the proof will be in the pudding).
That said, I’m sure real estate agents/brokers would be more interested in responses to Nic and Robert? i.e. Are more agents uploading directly to Google (Gbase) through their ‘uploaders’, are more of them buying Adwords and what are the cancellation rates of Domain and Realestateview etc al?
(I know we’re heading down the path of, ‘make our website more powerful’, at the expense of portal spend).
All the breast,
Sal 🙂
Robert Simeon
Sal,
I am reading a fascinating book “The Return of Depression Economics and the crisis of 2008” by Paul Krugman. Published by Penguin – Krugman is the recipient of the 2008 Nobel Prize in Economics and a fascinating read.
http://www.krugmanonline.com/books/the-return-of-depression-economics-and-the-crisis-of-2008.php
Peter Ricci
I actually got the quotes from a variety of other sites, that is why I said he was ‘quoted’ as saying.
Still, I don’t see how that is too different, the guy is speaking at a real estate conference, not a dwarf throwing competition. On the one hand it is a throw away line and when pinned for a question on Trulia he is tight lipped? Interesting observations guys 🙂
So, anyone with an interest in a real estate portal, managers, owners, investors read it one way and others read it another.
Here is something to ponder…..
If Google has all the listings REA has and makes it easier and faster for the consumer to get to that information, do you then think it will have an impact?
This is 100% my point!
Sal Espro
Korrect Komrade Pete! Do you have the % of users who search Google for real estate as compared to REA in Australia? (Yes, I know they’re not independent events. However, they do show that Google is already more popular – so our agency $ should take account of this).
Katie Lance
Just to clear up any confusion, here is a link to the video of the actual interview at Connect.
http://www.inman.com/news/2010/01/20/google-rpr-and-future
Thanks for your post – hope to see you at Connect NYC!
Katie Lance
Marketing Manager, Inman News
Tatiana Mijalica
Here is the video of the Google interview:
http://www.inman.com/news/2010/01/20/google-rpr-and-future
Glenn Rogers
Bottom line is Google can have anything it wants, question is does it think it can make more money out of being the portal or charging the portals AND if it does become the portal what will Google’s other customers think ? Will they be next ?
It’s a matter of philosophy.
Apparently Googles revenue results were disappointing recently, so will they look for other revenue streams ? ie: become the portal ?
You’d have to ask yourself what Google will morph into if it goes down that path.
A little scary really.
Glenn Rogers
Speaking of Google, this is interesting.
http://www.thebull.com.au/articles_detail.php?id=8910
Glenn Rogers
I like this bit –
“The duo secured this veto power to ensure Google remained true to their values, which are summed up in the company motto: “Don’t Be Evil.”
Charlie
Agree Glenn/Peter – there are a lot of nervous portal owners around (especially the larger ones – if they weren’t nervous, why wouldn’t they upload to Google?). In the end if the consumer goes to the Google real estate search and likes it, and Google keep improving it, it may very well morph into a portal of value and power.
An industry insider told me recently that it will come down to the resources the team get within the Google hierarchy. At the moment, they apparently only have 16 people, all based in Australia, to run Google real estate globally. If they can demonstrate enough wins they may be given the required resources. [You can see Sam Sebastian in the video linked to above say that already the search volume has risen substantially due to the real estate foray]
Interesting times! Power to the people.
Nick
Glenn Rogers the talk about ‘what if Google does this’ irritates me a bit because there is no precedent.
Google for the most part has defended user’s privacy and has played fairly with existing markets.
From their actions, it seems that Google is very happy with their real estate search as it is, and they have no intention to become a portal.
Yes they are powerful, but so far they havent abused it unlike many other companies with similar power.
Glenn Rogers
Well it shouldn’t irritate you Nick ,no need to be scared of what might happen but just be aware of the possibility.
If Google were to get the right people on board they could decimate Domain and REA in seconds flat.
Google have the capacity to do this they are very smart and know what they’re doing.
Whether they do or not is another matter but I think I spelled that out previously.
I somehow doubt they would depart from their philosophy, being a search engine first and foremost.
Robert Simeon
The Google Monster is simply work in progress – although many hoped that they would stop after they rolled out Google Earth!
The simple reality is that for the vast majority it provides our online oxygen where for some it is now threatening their business longevity. Many businesses that ignored the online movement are suffering just as badly as they have lost relevance so it is just not online businesses that feel threatened.
What you don’t and wont see are businesses defending their respective positions against Google – which is what I find most interesting! So it appears for some it is all over bar the shouting.
Glenn Batten
Actually if you define a company based on what they do that generates them revenues, or profits at least, then Google is an advertising company.
Search is their primary vehicle to display their clients adverts and althought they do actually sell search appliances they dont make much profit out of the search products itself. The same goes for software and the occasional hardware they sell.
Microsoft is a Software company. Apple is a Hardware Company. Google is an Advertising Company. They all do other things.. Microsoft does hardware, Apple does software etc etc etc.. but that is where their core profits are generated from.
As to precedents of Google entering a vertical market, what about Google Finance and Google Books as two quick examples. Google Finance has been far from a success and took very little away from Yahoo Finance but Google Books is about to start digital book sales in direct opposition to Amazon and the losers will be the publishers who are stuck in the old ways of doing business. There are plenty of other vertical markets they compete in or are about to compete in as well including browsers, email, voice, and now mobile and desktop os.
Google has now released a free gps navigation solution for mobile phones that leverages their google maps and streetview technology. GPS navigation software is some of the most expensive software in the Apple and Google Marketplaces. Whilst most other software is available for $1 to $5 the GPS navigation software sells for $80 to $120. Ask TomTom, CoPilot and other companies offering GPS software for smartphones whether Google enters vertical markets and they might have an opinion!
Whatever vertical markets they enter, they don’t do so out of a pure profit motive but what appears as some genuine belief that they can offer improvements to what is currently available. The best example of this is the browser. Only two or three weeks before launching Google Chrome, Google committed financial funding to at least 2011 to Mozilla for Firefox. They then offered to share the new technologies they were working on with anybody who wanted them for the benefit of the entire web.
Google will enter the real estate search vertical if it believes it can add something for the majority of all participants and they can make a buck or two out of it.
Glenn Rogers
Robert I don’t think it’s Googles fault that some businesses are suffering because they didn’t see the web coming, so many people still just don’t understand it.
The next generation will take up the slack sooner ot later.
The only problem I see with Google is that one day they may fall into the hands of those who’s motto is not “Don’t be evil”
The owners are young enough to see it through for a while yet though.
max
As I have said all along, why do people on this forum seem excited by the prospect of the balance of power slipping into Googles hands?
Dont like monopolies or duopolies….good luck with that (Google).
Glenn Batten
Max
I think you are reading too much into it. I doubt anybody is excited over any one company holding any power whether it be an Australian corporation like REA or an International company like Google.
Most of the people on this forum are agents.. and many are keen to see somebody with enough clout and experience behind them to make effect the power balance. Any day now we are going to find out what the next round of price rises are going to be and rumours are its not going to be kind to agents.
When Myhome was first announced agents were just as hopefull that they had the ability to make a difference. Unfortunately despite the pedigree of its parents Myhome version 1 was a failure and agents were left looking for the next entrant who could bring some serious competition. That was Google. As Peter mentioned in the article many claimed they would not touch the real estate sector but they did. Not in the way many had hoped but they have made a difference already and they have made some of the players nervous whether they want to admit it or not.
Google has the ability to change the landscape radically but we are talking about a company that has so many other opportunities that there is only a small hope that they will create a vertical real estate solution. This is also a company that takes its secrecy very serious. There seems to be very very few disgruntled employees that leak anything so the best anyone can do is guess what step they make next. The only way you can figure it out is from all the non-google people they have to involve when they have to liase outside the company.
One of the worst kept secrets was their Australian launch because they had to have agreements in place with many of the real estate groups, many of of which could not help themselves but talk about it. This made it all very funny when many comments on the property Portal Watch board were adamant that Google was not releasing any real estate solution at all. At the time it was very funny watching RS troll lures through the site getting people to state their position inside 24 hours of the release so he could rub salt in the wounds later.
Now they have access to the data there is no reason whatsoever that news of any product under development would leak prior to its release.
I definitely would not want any company including Google to hold the majority of power for real estate online but (and thats a big but) you can be damn sure that IF one company was to hold that power I would certainly rather it be Google than Fairfax or REA. I personally trust them more. I like their business principles more. I like their business models more.
Nick
Well Google’s mission statement is to index the world’s information.
Their real estate search helps them accomplish that goal in the real estate field.
Its as simple as that as far as I can tell.
They dont need a portal because thats not what their core goal is.
Its actually very smart – if you want to find information then you go through Google to get it.
Advertising only comes in to the picture at that point.
Glenn Rogers
Glenn, I don’t see any justification for a price increase, when’s the last time you increased your commission ?
They increase prices simply because they can. REA and Fairfax are the only game in town…………at the moment.
Courtenay Farquharson
What interests me is the main players like REA and Fairfax shivering with fear over losing out to google, yet they continue to increase their subscriptions and maintain the same business model. What do google offer? What is their business model?
Free listings & Ads to spin revenue from that…
Look at their existing offering: Free to be on their search, free email, free voice etc etc all supplimented with Google Ads. Google has an interest to index the world’s data, property data is just a vertical in that greater plan.
With that said, i feel agents should look forward to a google takeover. One thing it would guarantee to agents is free listings (like they already do on google real estate (gbase)) and superior search. They may even move into SEO for Real Estate Listings per say.
Lastly my shameless punt: if you’re looking for free listing property, check out http://www.propati.com.au