Independent Study Shows Trulia As #1 Threat To Franchisors
According to this post on the Trulia Blog, Trulia is the #1 lead generator in the RE.net:
Threewide’s ListHub, the most widely adopted network for listing distribution, works in concert with MLSs, various franchises and brokerages, and core real estate technologies to bring real estate companies a single dashboard for controlling their online marketing strategy. Analyzing the traffic that’s sent to clients from their syndication feeds, Threewide found some interesting results. Here are some highlights:
- Study analyzed about 600k listings sent from MLSs and brokers to 16 of the largest real estate sites for the month of October 2008
- Trulia generated the most leads* in this period with almost 12,500 – over 30% of all client leads!
- The second closest competitor had just over 15% of all leads and the 3rd just over 12%, with the top 5 making up almost 80% of all leads sent
- Trulia had the highest percentage of redirected traffic** with over 35% of all traffic sent to ListHub clients
- Finally, over 8,000 listings received at least 1 lead from a consumer coming directly from Trulia, with our nearest competitor sending traffic resulting in leads for a little over 3,600 listings
These statistics show that Trulia delivers the most leads, and in these challenging times we all know how important that is! AND, considering that some of the 600K listings sent to Trulia were already being displayed from other broker listing sources and thus not actively displayed on the site to prevent showing duplicate listings, the actual percentage of leads sent from Trulia to Threewide’s clients is even better than the original report shows.
This is, of course, great news for Trulia. The data supports Trulia’s business model and its claims overall. So first off, kudos and congratulations to the Trulia crew!
However, as much as I like the boys and girls and Trulia, I have been saying since the beginning of this blog that Trulia poses a threat to franchisors and large brokerages. Trulia has steadily denied such a thing, pointing out that they work with and for brokers and agents.
The thing is this: I look at consequences, not intent. I have little doubt that Trulia intends to be a helpful partner to brokers and franchisors. But the consequences of that may be entirely different from what was expected.
Consider the above news from the perspective of the average agent.
What services do you get from your broker that keeps you paying him a share of your commissions? Whatever they are, they comprise the broker’s capital; that together with your labor as the agent creates the economic value. Elsewhere, I wrote about the relationship between capital and labor in real estate. The basic equation is capital + labor = production. So when capital costs go up, labor costs have to go down if production remains the same. And vice versa.
When Trulia replaces the broker as the #1 source of leads, then the rational agent quite rightly asks, “If I’m getting more leads to my website from Trulia than from my broker’s website, shouldn’t I get a higher split of the commission?”
The same logic goes for franchisors, such as Coldwell Banker or Remax. If the national Remax site generates fewer leads than Trulia.com, a broker’s incentive to keep paying for use of Remax’s capital (i.e., its website, its platform, etc.) decreases, barring a sufficient increase in production to smooth over such things.
Even if Trulia funnels those leads to Remax National, who in turn funnels it to the franchisee, the rational broker can conclude that they can simply cut out the middleman of Remax and go direct to Trulia. For that matter, as Trulia continues to do deals with MLSes and REALTOR associations, the rational broker (and agent) can get around all those people taking cuts of their commission checks.
Is there a happy win-win solution here? I’m not sure. At the end of the day, the market will flock around the most efficient producer. If that’s Trulia, then it’s Trulia. The study results above suggests that it might be. But then, none of us have any idea of Trulia’s financials… so all this wonderful lead-generation for Trulia might be coming at a loss, which would suggest that it won’t be around long enough to displace any existing players.
One thing that does come to mind for me, however, is that if I were managing a franchisor today, or a large brokerage company today, I might take a look-see at my own lead generation efforts to my members/agents, and compare it with what they’re getting from these various third parties. Then either prepare to provide value in some other way to continue to justify the cut I am taking, or prepare to invest heavily into capital (i.e., website, lead generation tools, etc.) to compete. Anything else is shortsighted in the extreme.