News Ltd seem to have reached an agreement with FPC Courier Group to purchase a very popular (with agents) Sydney Newspaper Group FPC Michael Hannan, Group Managing Director, The Federal Publishing Company, today announced the company had reached an agreement with News Limited to acquire its community media business including all of the Inner Sydney Titles.
This is a positive for REA as more than likely branding for REA will be splashed across these titles by mid year and should give REA a great boost in Inner Sydney. This in turn should raise the brand – although I think nearly everyone knows REA in major eastern capitals.
As I have said, I don’t know why anyone would buy a newspaper group these days, but if you have a few billion lying around why not, it gets boring after a while just counting cash.
It does not seem that Homehound is a part of this so it will be interesting to see what happens there.
25 Comments
Robert Simeon
Without a shadow of a doubt this sale identifies one of the strangest business principles in newspaper advertising that Australia has ever seen. Where before has one seen a newspaper sign up agents on a contract whereby agents must guarantee where they agree that 75% of the agency spend must be with their company FPC.
It never happened North of the bridge as agents would never agree to such an agreement as it is NOT in the best intersts of their vendors. Media is about freedom of speech, not restrictive agent contracts.
May the new owners allow the agents freedom to explore new markets and keep traditional markets on their toes.
Good luck to the Cumberland Newspaper Group – north of the bridge they are a great company to deal with.
I am sure that many Eastern Suburbs agents will join in celebrating this sale.
Tom S
The Fin reported today that REINSW is preparing a revamp of realestate.world.com.au, while FPC, Century 21, Raine & Horne, Ray White and LJ are working on a relaunch of homehound.
This seems to add up as the major franchisors did not end up taking any equity in myhome except for Elders.
PBL media have spent $10 mill on developing the site and another $7 mill on marketing, to generate 176,000 UBs during March 1-18 which is pretty disasterous for them.
Again, this is terrific for the IT industry but wont change the landscape of the realestate portals that most people use. Although Domain will have to spend hard to maintain there current market share.
Glenn
I thought the latest thing with a billion or two just lying around was to invest in gambling and casino interests!
Damien McDonald
Just to clarify a comment left by Tom S about REINSW preparing a revamp of realestaeworld.com.au.
realestateworld.com.au is a brand new website which will be released in the next 4 to 6 weeks. It has been pupose designed by the real estate industry and is by no means a revamp of any existing site.
max
“realestateworld.com.au is a brand new website which will be released in the next 4 to 6 weeks. It has been pupose designed by the real estate industry and is by no means a revamp of any existing site”
Good luck with that…
It always strikes me as funny how we all say, “private sellers dont do as good job selling their properties as we could as agents” yet for some reason some of us think we could do as good job as news, farfax etc when it comes to the internet….
Remeber a year or two ago when propertypage was changed to homehound? remember the radio ads etc that did nothing but lift the browser numbers in REA and Domain..?
Get over it ladies and gents.. Industry sites simply dont and never will do that much…
Peter
Max, this is the Internet and anyone can play! I am all for anyone having a crack at the market and the more choices for agents the better.
Can anyone do Classifieds better than news and Fairfax? Jobs? Seek, Yes the big boys may end up buying them, but they all challenged and were successful.
I have passed judgement on the MyHome release, but I do not think they are finished, not by a long shot. I will wait and see what EAC bring out before I put them to pasture.
As for the industry sites, I am as sceptical as anyone!
Robert Simeon
Peter,
If you look at the recent movements in the Sydney markets I am of the opinion that online has met a somewhat fork in their roads.
Firstly, we have the Google tsunami which boasts the number one Australian search engine, Google Earth, Google Mapping and now Google Base. We are kidding ourselves if we don’t believe their next announcement will be an Australian real estate directory.
With regard to online REA and Domain simply can’t compete with Google technologies – so much so that they offer Google Mapping on their respective sites. I suggested a few years ago that they were feeding the Google obsession to Australia by permitting them to upload from their respective portals to the Google search engine.
When Google launch their Australian property portal both REA and Domain will struggle to provide strong arguments to agents that support a pay to display argument. Today, we have anecdotal evidence that rental enquiries are peaking (we do have a rental crisis in Sydney) and sales enquiries are diminishing.
Secondly, we have the recent News/REA announcemnt that real estate branding in Cumberland Newspapers are now branded by REA. Why? In my opinion that Google do not offer print advertising and REA acknowledge that they need to assure agents that they print/online are united.
Google is sending online businesses back to print as they now feel vulnerable and threatened – ironic indeed that a retreat back to the traditional methods. Otherwise known as a safety blanket.
So where does this leave us ? My suggestion –
Fairfax will package their real estate dominance in print with online where advertising costs will reduce. News have just acquired FPC and they own just 58% of REA. News offer costly full gloss advertising (very costly). Fairfax Domains are in newsprint – cost effective which allows margin reductions should push come to shove.
Need I say more ? But there again I am on record many months ago that print has much longevity in real estate.
In essence what I am saying – if you own newspapers that dominate real estate and you own a property portal – watch the businesses become a real estate chameloen.
Glenn
The market is established so to become a player you have to get the recipe right. To break in you have to get it pretty right from day one..or have the finances to fund it till it is right and then pay for the advertising to convince visitors to return. This is what Myhome is facing right now.
The good news is that the recipe has been pretty well market tested so to get it right you just need to follow the recipe, add your own flavour and change the packaging a little.
IMHO use the REA recipe as a base but I would tone down all the “noise”. Realestate.com.au pages are way too busy. Concentrate on the interface and usability. Use the latest web 2 technology to provide superior speed and responsiveness but shy away from trying to be too cute with features you think will “wow” unless they have been well tested and researched.
Setup an online advertising model that copies from the worlds best. Google’s adwords program allows businesses to decide where they want to advertise and have them compete through a bid system to how they will be placed and only charges them on click throughs. A pest and building inspector will more than likely pay much higher for an ad placement on properties in their immediate service area than what a large bank will pay for the same ad space on a nationwide bulk purchase. Keep the links text only to maximise speed and minimise intrusion to the user.
If you really wanted, you could just use Google Adsense (or Yahoo Search Marketing or Microsoft Adcentre) and just share in the advertising revenue with Google (or Yahoo or Microsoft). You probably just halved your revenue, but it would be a damn site easier to roll out to market.
So how do you present it to the market? Offer it totally free to agents for a minimum of 18 months with the added advice that it may be even longer, and possibly always free.. Create an openly available XML standard and documented procedures that providers have to supply data in. Drive the concept to every single agent with enough lead time so they can force the multi-loaders to conform. And for the first 6 months if you do your own advertising model, give away say $100.00 of advertising to anybody (restrict it to certain industries if you want) that asks for it. Because its free many will test it and continue with their new found internet marketing success. Advertisers also have no problem driving the individual ad bid up higher when they are not using their own money which will ensure the value of ads will be artificially boosted.. (The guy who was just given his $100 credit helps keep the price for those that are using their own money). After the initial 6 months drop the free advertising to a smaller amount.
Minimise costs by not having any salespeople at all pounding the pavement, conduct a massive Viral email marketing campaign and let those in the industry promote the site to others members because of the price etc..
Make sure the industry and the publics expectations are kept very realistic so when its launched you can exceed those expectations and the site is viewed positively by all.
Thats my opinion of what would work in the market place? I could not tell you how hard that would be on the backend though.. Anyone like this as a concept?
Glenn
Robert,
Whilst I dont necessarily agree with all your points, I think your spot on in much of it. The portals know a storm is brewing so they are positioning themselves as best they can. I dont think the lifeboats have been lowered just yet, but they are checking the evacuation plan whilst trying to navigate around the storm!
Paul D
Robert
“Google is sending online businesses back to print as they now feel vulnerable and threatened – ironic indeed that a retreat back to the traditional methods. Otherwise known as a safety blanket.”
I don’t understand that statement. Why would Google send people back to print ??? It is not in their interest to do that. And, who are Google threatened by ? I must be missing something here.
Glenn
I took that as a typing error.. I assumed he meant News/REA.
Robert Simeon
Apologies guys,
I was referring to REA now being the masthead to real estate sections in the Cumberland Newspapers. No doubt that with the reported $170 million News Limited acquisition of FPC newspapers this new branding trend will continue. It is a smart concept as it provides REA with excellent real estate branding. Although previously REA and News have not exactly shared a close relationship.
My reference to Google was based on speculation that Google would roll out a real estate portal in Australia. Which potentially would change the entire landscape of pay property portals in Australia – given that the Google portal would be free for agents. Ironically, REA and News roll out a new alliance in print promoting REA. It still remains unconfirmed how much REA are paying News to masthead their real estate sections. It would not be a free promotion as News only have 58 per cent of REA.
What becomes even more interesting is to see what Fairfax Media do with their dominant Sydney newspapers and Domain online.
Just an interesting observation that when online businesses start feeling the pinch they immediately turn their attention to print to grow market awareness.
Interesting times indeed – if you want to read between the lines 😉
Paul D
Robert, I think you are putting the cart before the horse. I believe it is the newspapers chasing the on-line providers as a last resort to try to try to stave off extinction, rather than the other way around. And rather than REA paying News Limited to have their name on the masthead, they would be either getting it for nothing, or being paid by News. Even in Mosman things may change. 🙂
An article I saw just recently said —
” Wireless broadband technology has seen nearly 400 per cent growth in 18 months, according to figures released by the Australian Bureau of Statistics (ABS) this week.
As at September 2006, Australia had a total of 6.7 million active Internet subscribers – over half a million more than in March 2005.
5.8 million of these were household subscribers, while 826,000 were business and government subscribers.
This means that your current and future clients are becoming increasingly web-savvy. Agents everywhere are reporting that a high percentage of their buyers have already used the internet to “shop around”, and come along with a shortlist of properties they are interested in.” (end)
As I have said before, the newspapers are on the long slipery slide to oblivion. It won’t happen next week, but it WILL happen. The facts are there. Our advertising spend as a % of our sales is dropping every year, albeit with a hefty insistence from me and howls of protest from the salespeople. They are still making more than they have ever made, and the protests have gone once they realise that good content on the website draws good enquiry. With one day to go in the month, this is a record month already from both Domain and REA in terms of property visits. We have just completed 4 years on REA and in March 2004 we had 1,000 property visits. In March 2007 by the end of Saturday we will have had approx 18,000. These are numbers that if you had told me 4 years ago, I would have fallen off my chair laughing.
Robert Simeon
Paul,
Maybe – maybe not !! If you look closely at my points I was referring to the Google assault on the Australian markets. Now if Google launch their Aussie property directory which is free to agents REA simply go broke. That simple.
Yes – REA have run to newspapers to enhance their brand as they are petrified by Google. Fairfax have domination in Sydney print and online where – Fairfax can marinate both models to real estate agents.
REA – don’t have this opportunity. They are stand alone and on record of not liking the News/Faifax print mentality. How times change.
When Google launch in Australia, and they will. Paul, please tell me what the pay portals will do ? Or, better still – where they go !!
Paul D
I agree with you that Google will get into real estate information in some form. The assumption that they will give it to agents for free, is a fairly broad assumption. Google already charge for adwords, and they would be eyeing the possibilities not of just providing real estate information, but the cash flow that it could generate.
The pay portals may well have to sharpen their pencils to keep the business, either way, increased competition will hold prices to reasonable levels. If the competition is too tough and there are casualties along the way, that’s life. This all happened in the US several years ago. There was a huge proliferation of real estate websites, many failed, the good ones survived. It won’t be any different here.
snoop
I think all the media companies are working hard on creating true cross media offerings.
To date its been pretty much lipservice but News and Fairfax will continue to dominate.
They have deep pockets and revenue lines to protect.
IF Google launch base here they will look to be the aggregator with free listings and sell ads around it.
Both the major portals will have strong presences on google.
Sure small agencies can list properties but it wont be a great user experience,and my bet is you will get more clicks from the portals.
Elizabeth
Good afternoon,
Robert, I think you are blind if you assert that Realestate will be the only portal to suffer in your Google Base fantasy world. The very first portal (after realestateworld and myhome) to collapse would most certainly be domain, as it only as some relative strength in Sydney and a bit less in victoria (and that is only in print).
From a business perspective I would suggest that Google would offer perhaps free listings, but a hefty priority placement based on a per property model. Googel adwords for each and every listing, Image and map placements.
It might be a free ticket to play, which is highly attractive, but it is the approach to getting better results out of the service which I think we need to look at. Then, what happens with the listings data? Are vendors permitted to list directly on the site? Private Sales listings on the site, next to mine, with a google advertisement for a lawyer or ZeroAgents on my listings pages?
Does anyone have expert knowledge in this area? I am very much reliant on my nephew for information, and to be honest with you all, whilst I love the child as if he was my own, he is speaking an entirely differnt language when it comes to anything IT.
E
Chris
This debate all seems a bit one dimensional. Did anyone stop to think (unlike Robert
Robert Simeon
Chris,
You are correct with “one dimensional” as Fairfax control and dominate print advertising in Sydney real estate. Print revenues in residential real estate account for approximately eighty per cent of the total spend.
At this most interesting juncture where REA have upped the ante in print spend with their brand which commenced a few weeks ago.
Just as interesting is the statistic that the larger agencies are actually out performing the portals in sales enquiries. Why ? Because they run smarter database oriented websites.
Yes, rental enquiry from portals dominate as agencies spend little time pursuing these markets. The agencies that dominate suburbs derive better results by implementing their own technologies.
However, the leading three Mosman agencies that spend upwards of $3,000,000 a year in print with a 75 per cent mark share. I doubt my other two competitors would drop print !!
And then again Fairfax have some very exciting releases to roll out in print and online – otherwise known as their real estate mothership.
Elizabeth
Robert,
Tell us more about this realestate mothership.
Is this something which you can share with us as part of the domain discovery committee?
E
Robert Simeon
E,
Nothing more to be said on this topic just that with many businesses it is classified as “work in progress”. 🙂
Peter Ricci
Well Avina Larf was not the original author, but once it was thrown up as a joke then as far as I am concerned it was all in good fun and that should be the end of it. I hope Nick doesn’t get into any trouble as it wasn’t intended to get out into the open market. Took a couple of calls before I released it was a prank and then even longer before I caught on that it was not even a New Ltd article.
I called an REA source immediately after posting and he knew nothing about it, which made it a closed deal it was a prank.
What I did not know was that it was directed straight at me. Well at least I checked my sources before going to far….
But that is just it, I never look at the source url from non harmful resources (always check banking etc)
I will be honest, it had me for about 10 minutes, until I started thinking. I was really gobsmacked at how Google would bother spending 350 million when it could probably be number one in a year spending as little as 10 million.
Nick Buick
I actually thought you were playing along Peter – was Robert and Elizabeth I expected to see fire up – always next year ;).
Have now pulled the subdomain down. A friend of mine made news headlines around the world about 6 months ago when he put NZ up for sale on Ebay – reporters started bailing him up in car parks and stuff. Ah the devils playground.
Robert Simeon
Nick,
I have no doubt whatsoever that you would have caught me – however I went for an early morning surf and late breakfast and by the time I returned it had been broken. I did copy and paste it as it was one of the best April Fools pranks that I have seen.
This time next year Google will be a portal so you will need new material. Maybe JustListed buys REA to rebrand under the new Sensis flagship !! Or ZeroAgents buys REA and rebrands as ZeroREA !!
I am sure that you will come up with something as I am sure that ASIC will give you a suspended sentence or at worse weekend detention where you will have to mow Simon Baker’s lawns for 12 months.
Nick Buick
ROFL