The Challenges for Google Real Estate
July 14, 2009 by Simon Baker
The launch of Google Real Estate search on Google Maps in Australia, the US and New Zealand has shaken the property portal world. It is expected that Google Real Estate will make an appearance in the UK and German markets shortly.
Last week we published our initial thoughts on what the launch of Google Real Estate will mean for the existing portal sites in Australia. These thoughts are equally applicable for portal sites around the world.
Having followed the debate about Google Real Estate and its potential impact on portal sites, we thought it would be good to outline what we believe has to fall into place for Google to truly impact the property portal market leaders around the world.
Management of Spamming, Scamming, Phishing
A key challenge for Google is managing active abuse of the free listings site. Given that anyone can upload listings to the Google Real Estate section, it will be only a matter of time before false listings are uploaded to gain clicks and leads. It will not be hard to imagine false listings being loaded to secure potential buyer leads and then these leads being sold back to the estate agents.
Google already experiences this problem in its normal search results where a range of techniques are used to get to the top of the search and to capture clicks which are then monetised in a number of ways.
Craigslist is a great case. Agents in New York took advantage of free rental listings on Craigslist leading to numerous repetitive and false listings. The solution that Craigslist eventually employed was to charge for listings on the site.
It is not clear how Google will tackle the same problem.
Building a Comprehensive Database of Active Listings
If major portal players decide not to upload to Google in key markets, then Google will face the challenge of sourcing enough active listings to provide the consumer with a comprehensive experience.
Sourcing listings may be challenging as Google will be reliant on smaller portal sites, software providers, individual agents and franchise groups for listings. Given agents are not always proactive and Google is unlikely to employ direct sales method, it may be challenging for Google to build enough awareness amongst agents to build a comprehensive database of listings.
Therefore it may be tough for Google to build a comprehensive database equal to or better than the market leader. If this happens, consumers may not switch from the incumbent sites to Google.
Ensuring Listings are Up To Date
This issue is closely related to the spamming and phishing discussed earlier. Old listings are problems on any portal site and for Google it will be no different here. Agents are notorious for leaving old listings up on portal sites (and even in their shop windows) as a way to capture buyer leads for redirection to active listings. A simple search of Google Real Estate already uncovers out of date listings on the site.
Property portals handle this situation by either displaying listings in date entered order or they allow the consumer to sort the listings from newest to oldest. Portals also employ algorithms that ensure that agents don’t game the system by taking listings off the market and then immediately putting them back on so that they go back to the top of the search.
Management of the Same Listing from Multiple Sources
Google is likely to source the same listing from multiple places. They may get a listing from the agent, the franchise group site, and potentially several portal sites. The question is how Google determines which listing to display first. They have probably already developed an algorithm to determine which listings to display first. However, the agents, franchise or most likely the portals, will work to understand that algorithm and therefore compete to ensure that their listings are displayed first. This already happens with the main Google search.
There may also be the challenge of the same listing being on the site at different prices. It will be interesting to see how Google handles determining the most credible sources.
Driving Significant Traffic But Not at the Expense of Revenues
An interesting challenge for Google is how to drive significant traffic to the Google Real Estate section while maintaining the PPC revenues it already captures from real estate related searches.
Historically, consumers went to Google, entered a search for property and then were presented with a list of sites they could click on. Most people clicked on the natural search results while some clicked on the paid search results and therefore Google made money.
To drive traffic to the Google Real Estate site, Google will need to think about how it promotes the site. The obvious way is to incorporate the listings on Google Real Estate into the search results. However, while this will drive significant traffic to the Google Real Estate section, it will probably take away PPC revenues as consumers no longer need to click to the paid search results.
Google will be able to put PPC search results around the listings, however as consumers are looking for houses, they will be less likely to click on the PPC search results. This approach may actually give better results for consumers however it may drive less revenue for Google.
Building Applications Consumers Expect
Consumers have come to expect a range of applications from portal sites as part of their overall experience. These include email alerts, saved searches, comparisons and so on. Google will have to build these out to provide the consumers with a comparable experience to existing market leaders.
Agents Ceasing to Use the Incumbent
Finally, for the existing market leaders to be truly impacted by the presence of Google, agents will need to stop spending or significantly reduce their spending on the existing portals sites. This is unlikely to occur as these existing portal sites are still cheaper than alternative advertising opportunities (i.e. print) and they are still driving significant traffic to the agents. It is unlikely that agents will forego quality leads to save a relatively small amount of money.
Agents may stop using the smaller paid for portal sites as Google may be seen as a substitute for them.
In addition, in some market, agents actually use online marketing as a profit centre. Where agents receive vendor paid advertising, agents sometimes on charge the cost of online advertising at a rate higher than they actually pay the portal site.
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I don’t really believe the challenges are that great for Google given the growing numbers of uploads that they are experiencing. We shortly will be uploading all our properties directly into Google.
Certainly agents will embrace it (for obvious reasons) what remains to be seen is whether the public embrace it. We have all our properties on Google linked directly to our website to it will be interesting to see any dramatic increases in traffic to our website.
Whilst it is early days, I can share the fact that the traffic from the NZ feature of Google maps to the realestate.co.nz website is pitifully low – it barely registers on the referral link rankings.
We have uploaded to Google real estate the full content of listings representing 93% of all NZ licensed real estate listings.
The key issue for the public at this time is twofold:
1. They cannot find the feature (and don’t know about it)
2. Consumer behaviour in real estate search is primarily driven by images – not pins on maps
Clearly Google has plans – the investment in this initiative has been considerable, it will be interesting to see how things pan out in the coming months.
It’s also live in the UK:
http://maps.google.co.uk/help/maps/realestate/
Although it is not possible to find from the maps home page.
Alistair,
question.
My very limited understanding of your business is that you are the CEO of http://www.realestate.co.nz, an industry owned portal that over the years has been staunchly against media companies getting their claws into the NZ RE business online?
So why (and I ask this with a genuinely open mind) would you give all your members listings to google? I get the feeling that many people think of google as the quirky nerds from CA. who are in it for the fun. The truth is they are perhaps the most worrying powerful business I have seen.
[...] To read the article click here [...]
Simon,
With the release of Google looming it was interesting to see the two main portals release several enhancements to their sites and product offerings just prior to it occurring.
Google does not want to be seen as another portal as they are all about search. You make some good points above and I think to some extent it will be a case of wait and see what happens.
We have seen an increase in our traffic as a result of Google Real Estate launching but what is most interesting is that with some of their most recent changes to their algorithms we have seen our traffic from CPC drop from number 1 to 3 with Organic now being the number 1 source and I think the point you make about Revenues is correct. What is will mean is that more agents will need to set up Adwords Campaigns which is something I think they should be doing anyway.
As for the Agents Ceasing to Use the Incumbent this will be interesting to watch as there are many that would like too but don’t have any alternative at this point in time.
Java,
Your comments regarding our site are correct. We are there to protect the industry against the media company owned competitors (now just one left to knock over!).
Having said that we do not have a right to our role and strange as it may seem (i) we do not have 100% subscription (ii) in the case of search engine ranking we compete with our customers for placement as a lot of them (still) think that their website is where the public want to go and look at listings.
My logic is then – if I have all my customers load up to Google – which they all will – its free and most office work on the basis of any website is a good website! – I cannot afford not to be there as to do so will impact my Google rankings and leave the public devoid of our omnipotence on the web search results.
Google was keen to get an “anchor” credible portal to ensure that the majority of listings have a “trusted” landing page.
It is very interesting that since launch we have been approached by a number of our customers saying – can you please not feed our listings as we want to be the only one sending our listings to Google – we politely tell them that our terms and conditions give us complete rights to post these listings to where we believe it is in the best interest of our customer to feed and display.
Over 10 days into the operation of Google real estate NZ and with the lion’s share of content – we still are getting a tiny amount of links thrus as compared to natural search.
Al,
not having a go here but have you ever thought of getting into politics?
Correct me if I am wrong, but what you’re saying is, Google are too big not to start working with?
Java,
I think the web demonstrates one clear principle – none of us know what 3 years out will look like, just as we did not know 3 years ago what today would look like online.
Therefore in my judgement we need to deal with today – and today looks like I can gain more from Google than I fear that I may have to give up through whatever strategy Google may adopt. I am a customer of Google – in content and in money – I believe they need me, not in isolation but in aggregate and therefore they will respect my role and be careful not to destroy me and the content and value I add to their business. Clearly they could take me out – but why would they and why won’t they have done that a long time ago?
Food for thought – and as for politics – I like making money for my shareholders – politicians like making people feel happy!
Interesting reversal of strategy.
Begs the question What if REINZ done a deal for their listings on Trademe? .
Trademe now has over 3 times Reinzs Traffic and huge market share with the member agents.
One wonders why institutes continue to burn members cash trying to compete with the big players.
Snoop,
I am not sure what information you base your comments on. Here are facts.
1. REINZ (Real Estate Institute of New Zealand) is a shareholder (50%) of realestate.co.nz. It does not own the website.
2. REINZ contributes no money from members to realestate.co.nz
3. Realestate.co.nz earns subscriptions from licensed offices – all of whom select to subscribe purely on the basis of the value of the business proposition. There is no obligation on any real estate office to subscribe
4. Realestate.co.nz has 1,60 subscribing offices giving a total of 110,000 listings. Included within this total is 69,338 homes for sale (inc sections).
5. Trade me Property has far less subscribing offices and has 90,000 listings. Included within this total is around 49,670 homes for sale (inc sections).
6. Realestate.co.nz charges $200 per office per month for all listings
7. Trade me property charges $599 per office per month for just residential listings
8. Realestate.co.nz traffic for June was 343,598 UB’s
9. Trade me Property traffic for June was 825,247 UB’s
I think the game is far from over – the NZ real estate agents do not accept that Trade me dominates the market – the industry supports the site that provides the most effective form of marketing at the most cost effective rate – we have been around 3 years and have never loss that industry support.
Realestate.co.nz is an industry owned website of around $3m revenue – Trade me is a media owned (Fairfax) web company with a free cash generating capability of over $100m pa – and a value in excess of $1 billion.
So how have we done over the past 3 years??
Thank you for that great post. I agree with Alistair and his forecast for the future.
From memory realestate.co.nz has been going for more like 9 years.
Trademe is a very interesting success story in property listings,given the short time in the game.
A good testament to leveraging other traffic into verticals.
One wonders why EBAY overlooked this in AU.
Snoop,
The history of realestate.co.nz is somewhat chequered!
Back in 1994 the Real Estate Institute of NZ set up an MLS with a website called RealENZ.co.nz.
This website operated unchallenged until 2001 when a division within the industry saw the major franchise groups breakaway from RealENZ as they felt that the site was not evolving to the needs of the web. This breakaway group set up their own portal called realestate.co.nz.
Between 2001 and 2004 the 2 websites of RealENZ and realestate.co.nz were the only two in the market – each virtually with 50% of listings each.
in late 2004 The Real Estate Instutute and the breakaway group got together and convinced the breakaway group to shut down and all the industry to support one site. That site being RealENZ.
During 2004/5 Trade me property started as did allrealestate.co.nz during which time RealENZ went from bad to worst in technology terms and user experience.
In late 2005 the breakaway group eventually got frustrated and approached the Real Estate Institute to layout a new proposal. To form a new company to independently run the website (at the time it was a marketing dept in the Institute).
In August 2006 a new website was launched, new technology, new board and management and new brand realestate.co.nz.
I see the Google vs. Australian portals has stepped up a gear – now Google vs. Median giants.
Is this the case of biting the hand that feeds them – but who is the biter and who is the bitten??
http://bit.ly/142JHm
[...] Real Estate search is al actief in Amerika, Australië en Nieuw Zeeland, maar volgens een post op Property Portal Watch zijn Groot Brittanië en Duitsland nu aan de [...]
[...] Click here to read Simon Baker’s article, The Challenges for Google Real Estate. [...]
What a great article and and interesting debate. Very refreshing to have the CEO of a portal discussing his thoughts openly like this – thanks Alistair.
This discussion has become very relevant here in the UK where google are launching their real estate listing capability (which has actually been available for some time as Henry Yates points out above).
One point not mentioned is the effect on For Sale By Owner portals which have always been percieved to offer lower online exposure than, and largely due to, the portals such as rightmove and primelocation not accepting our listings.
Globrix seemed to offer a solution to this as they were tacitly accepting FSBO listings but have now openly ceased this by removing listings from thelittlehousecompany.
Tech driven search offerings such as that from google and services that scrape and compete with portals (such as gartoo) offer FSBO portals an opportunity to compete with portals on a level pegging.
The FSBO market is very small and niche today, but entry to the market by credible providers such as ourselves and Sarah Beeny, together with a changing online playing field (thanks Google) and more informed consumers may change all that…
We welcome googlemaps entry to real estate and are happy to compete with portals and estate agents in areas of customer service and quality of the online product and services.
[...] challenges for Google knocking over the market leaders. Here is the link to the article called “The Challenges for Google Real Estate”. All of these still hold [...]
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