realestate.com.au has been accused of offering old-fashioned kickbacks to agents who sign long-term advertising contracts. The big question is whether the portal’s actions are illegal, or just disreputable.
Crikey! has done the best job of covering the scandal. Here’s an excerpt:
“The text of a so-called ‘premiere package’ offer from last month, marked ‘commercial in confidence’ and obtained by Crikey, shows how a leading agent was offered the cash to run ‘training’, co-branded marketing material and other ‘collaborate initiatives’ if it sealed an agreement with the market leader.
“The document shows REA’s offer of a ‘First Annual Incentive Trip!’ — or travel junket — if the agent agrees to ink the two-year tie-up. The text of the attached contract appears to permit Leader to directly contact vendors to bend their ear if they elect to book ads with a rival competitor.
“Last Monday night, a group of inner-suburban agents had met to discuss a deal offering a six-figure sum by REA Group to sign a two-year deal which not been offered to the other agents. The agents rejected the entreaty, fearful the non-participants’ rate would be jacked up.”
Kickbacks are unethical in the real estate business and –depending on how you define them– illegal. They are a throwback to the bad old days when the industry and media had lower standards of professionalism.
The current scandal erupted in Melbourne, where it is illegal for estate agents to accept cash that they don’t pass on to their clients.
I think the leadership at realestate.com.au is smart enough not to have offered agents a plan that breaks the letter of the law. They failed, however, to realise that their position makes them a lightning rod for criticism. Even tactics that other players commonly employ will be used by realestate.com.au’s critics to cause an uproar if they smell bad enough.
The company’s biggest critic in this episode is a competitor, Metro Media CEO Antony Catalano, who reports say has plenty of experience doing the exact same thing.
Again, from Crikey!:
“Catalano, in his previous role as Fairfax advertising director, had designed a ‘Real Estate Marketing Alliance’ — or a so-called ‘rebate in drag’ — to keep advertisers loyal.
“That arrangement involved a fee-for-service set-up in which agents were paid to promote The Age and Domain on ‘Sold’ signs, in-house publications, and Age clocks attached to shopfronts. At the time, it was suggested that Fairfax paid well over the odds for the ads and the difference may have been pocketed by agents. It was technically legal because the benefit did not relate directly to vendor spend.
“In 2010, Catalano defended the arrangement: ‘As far as I am concerned I developed a program which in the company’s opinion was legal and as far as I’m concerned, as the person responsible for it at the time, I went to great lengths to ensure it was managed within the strict guidelines that were set.'”
Change the name and the date, and that comment isn’t too different from those coming out of the mouth this week of realestate.com.au CEO Greg Ellis.