It’s a Two Horse Race in Italy
May 25, 2009 by Simon Baker
Just over a year ago, casa.it was the clear market leader in Italy. However, on all dimensions the Italian property portal race has evened up with two players claiming market leadership – the REA Group / SkyItalia owned casa.it and the Real Web owned pair of sites, Immobiliare.it and Eurekasa.it. They both have a similar number of agents, listings, revenues, and visitors, and a similar belief that they are the market leader.
What is the true state of play in the Italian market, how did Immobiliare / Eurekasa challenge casa.it for the number one position, and what are the likely next moves from each of the players?
On the surface there are many property portals servicing the Italian market including Trova-casa, Prendicasa, Affito.it, casa24, idealista.it, tecnocasa, casaclick and so on. (It seems having the word casa in your name is pretty important!) However, cutting through the noise it is clear that there are really only two serious players, the REA Group / SkyItalia owned casa.it, and the Real Web owned sites, Immobiliare.it and Eurekasa.it.
The Nielsen Netview numbers for April reveal that Immobiliare.it is the most popular site in Italy with a 10% lead in unique visitors over second place casa.it. Immobiliare’s sister site, Eurekasa came in 4th place. Here are the top 10 from April.
- Immobiliare.it
- Casa.it
- Trovit Homes
- Eurekasa.it
- Tecnocasa
- eBay Real Estate
- Affito.it
- Trova-casa.net
- Nestoria
- Casa24
When you compare casa.it and Immobiliare / Eurekasa on other dimensions, you can see that there is very little separating them.
casa.it appears to have around 11,000 agents using the site. Of these, approximately a 1/3rd is on a trial subscription and therefore not paying. (Source: REA Group FY 2009 half year statement) Immobiliare & Eurekasa appear to have around 9,000 agents, most of who are believed to be paying. (Source: Management Interview) The result is that casa.it probably has more listings with an estimated 400,000 compared to Immobiliare / Eurekasa’s estimated 350,000 listings.
The ARPA (average yield per agent) in Italy has traditionally been very low in the range of €30 – €50 per month. When compared to other European sites, both sites are generating below par revenues. Casa.it reported €3m in revenues for the first half of FY 2009 (July 08 – Dec 08) and therefore will probably deliver around €6m for the full financial year. It is estimated that Immobiliare / Eurekasa will probably generate around €5m in revenues for the same period. What is interesting is that while the REA Group reported a first half loss for casa.it of €2.8m, Immobiliare / Eurekasa claim to be profitable.
Given that there is a clear tight tussle for market leadership, how was it that Immobiliare / Eurekasa have been able to close the gap?
From an external perspective, there appear to be a number of factors at play. Some of these are:
- Immobiliare & Eurekasa has stable and strong leadership with Carlo Giordano managing the business since launch in 2006. Comparatively, casa.it lost its CEO in mid 2008, and although it had interim acting CEO’s, has only recently appointed Daniele Mancini as the new CEO. In the same period there were also changes at the REA Group CEO level.
- Real Web has effectively used the twin sites of Eurekasa & Immobiliare to capture strong traffic from SEO while casa.it relies on one site.
- Immobiliare & Eurekasa have offices in the major centres of Milan and Rome while casa.it started life in the more regional centre of Treviso and only 18 months ago set up an office in Milan. Milan houses the leadership and marketing teams, while Treviso houses the sales team. Immobiliare & Eurekasa’s co-location of the leadership team and marketing team with sales may have helped the strong growth in paying customers.
- Immobiliare & Eurekasa have purchased multiple domains, including the plural of casa, case, and redirected to them Immobiliare while casa.it relies on the one domain name.
- Immobiliare & Eurekasa have purposely kept themselves under the radar and therefore have been able to sneak up on casa.it.
- Casa.it could probably have gained more advertising traction from its 30% part shareholder SkyItalia.
- The low price of subscriptions in Italy means that it is easy for agents to choose to be on both sites.
The objective is for either casa.it or Immobiliare to create a clear gap over the other. This will be very challenging as both are well funded, have good teams in place, and have a clear incentive to be a dominant number one. Neither can afford to underestimate the other and it is likely that the hungrier team will edge ahead of the other.
The potential outlier here is the motivation of the REA Group. In recent months, it is clear that the REA Group is retreating back to its core Australian business. While in theory Italy is the next best market for them, it is unknown if they will have the appetite to continue to fund the Italian operations which, in the first half of FY 2009, had a significant increase in losses.
However, if either wants to create super profits (40%+ EBITDA margins) such as realestate.com.au in Australia, Seloger in France, or Rightmove in the UK, they are going to have to find a way to be significantly ahead of the other site – at least twice the size of most dimensions. This is unlikely to occur in the current situation so at some point both sides will have to look at merging or one party acquiring the other.
The next 18 – 24 months will be telling for the long term profitability of the industry and in particular these market leaders.
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I think this article is off the mark as are others which talk about it being a one or 2 horse race. The question you should really be asking in all your articles which discuss market leaders or whether the market is competitive or not is not how much traffic does each site have, but rather what is the source of that traffic. Many of these portals depend heavily on SEO for traffic. This means that the race is effectively open for any portal which improves its SEO. I am sure that the % of direct traffic of both Casa.it and immobiliare.it is extremely low. Unless these sites have very high traffic a very high percentage of which is direct (say >90%), you can’t say that the race is over or that these sites have an established brand presence
Nicholas – perhaps you mean SEM?
SEM budgets can manipulate UB/Traffic figures simply by buying traffic.
SEO – this is just good site design focused on enhancing organic search results from the Search Giants. Good operators use SEO as a competitive advantage, and this seems the case with immobilaire et al.
I think Simon covers SEO as just one of the variables which contribute to strong sites and businesses. But you are 100% correct in your statement about the value of direct traffic. Few portals will divulge this information unfortunately.
Very interesting article, particularly in light of the REA Groups announcement that they are considering closing their UK operations, and writing down the value on their Dubai and Hong Kong assets.
Given that Casa made a significant loss in the first half, and that the REA Group is either selling or writing down other loss making businesses, does this mean that the REA Group has found a buyer for Casa.it ?
AJ, I take your point about SEM, but I did mean SEO. You can buy traffic, sure but that is not sustainable in the long-term – I think the ROI is very low, and the investment required to generate significant traffic this way is huge.
My point is that it is dangerous to say a market is closed when the major source of traffic to these sites is Google. If the barrier to entry is good SEO, that is not a huge barrier to entry. Look at the growth of Trovit. Trovit has come from nowhere to third place in 2 years, purely on the back of SEO and would bet that by next year it will overtake both casa.it and immobiliare.it in terms of traffic, simply because trovit is better at SEO. So I am sure there are other players in the market who can do the same.
The problem of being dependent on Google is to do with the volatility of the business. If Google changes its algorithms and as a result you lose your rank, well your business has no value if 90% of your traffic comes from SEO. So its not in the portals’ interest to divulge direct traffic figures – they are low and if this were known, their valuations would plummet.
Almost 3 months on from this article and it now seems clear that the REA Group are going to make Italy their main international focus in a do or die effort to secure some upside away from their dominant Australian position.
I’m sure Simon would agree that the other international businesses in the current portfolio being Luxembourg and Hong Kong have their limitations regarding serious growth. With the current boffins at REA looking to change the existing billing model for agents in Australia, the battle seems to be just increasing in intensity for the Italian market with the winner establishing a market lead and the loser having probably tipped a lot of cash down the toilet.
Apologies. Second paragraph of the above should read change to a billing model instead of from a billing model as REA is currently on a subscription regime.