Australia’s refugee problem has attracted global attention. This from the New York Times.
Google barges in to the real estate market
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The Australian division of internet search giant Google yesterday introduced real estate listings on Google Maps in a move that is set to shake-up the online listing sector. Google product manager Andrew Foster wrote in a company blog post that users can enter a search that includes the words “real estate” and a suburb, and can then search through real estate listings marked on the map. “This also means you can perform a search and see all the properties for sale close to, for example, a local school you’re interested in your kids attending. You can click on each marker and each small circle to get more detailed information about the property, including the listing agent’s website and contact details.” “It’s also easy to refine your search further by criteria like bedrooms, bathrooms, garaging and price. And if you decide that Seaforth is more your speed, you can pan the map to another area entirely to see the listings there, and the map will automatically update, without typing anything new.” The move could pose a challenge to the two largest online real-estate portals in Australia, Realestate.com.au and Domain.com.au. Meanwhile Business2.com.au’s editor Peter Ricci writes: Google’s first foray into the highly competitive world of online real estate already has the industry in a spin. Currently there are a number of listings driven from Homehound, Harcourts and other property groups, although the big portals Domain and Realestate.com.au have yet to send their listings through the free service. The reason for this seems to be that they do not want to create a competitor with the pedigree of Google — but if the take-up is significant they may be left with no choice. It will be interesting to see how Realestate.com.au and Domain.com.au play with Google with this new product. In most major markets across the globe it is free for agents to list their vendors properties on portals such as zillow.com, however in Australia agents pay fees ranging from $400-$2000 a month, netting these portals tens of millions of dollars in subscription revenues. On top of this portals also take fees from 3rd party advertisers such as banks and building societies as well as selling sold data back to real estate agents and consumers. Google Real Estate is a solid first step and with Google’s already impressive mapping tool, consumers now have property listings to go alongside some great research tools. Judging by some of the comments on Business2.com.au (technology website for real estate agents in Australia and New Zealand) it has already won the majority of agents over. |
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12 Comments
Could this be useful for home owners who decide to sell the property without an agent?
The potential for new technology to remove agents from the transaction, with owners using free services and paying fees for their other requirements, should start to worry real estate agents.
There is alot of noise amongst a small group of real estate agents about the potential of Google to upset the market leaders realestate.com.au and domain.com.au.
However, it is unlikely that the entry of Google into the real estate segment will make a big difference.
We have a complete analysis of the entry over on Property Portal Watch (www.propertyportalwatch.com)
Check out the entry http://www1.propertyportalwatch.com/2009/07/real-estate-added-to-google-maps-%E2%80%93-what-it-means-for-australian-property-portals/
Simon Baker
Ex-CEO and Managing Director of the REA Group (realestate.com.au)
Simon, a local comparison would be one between the two sites listed by you, and allhomes. allhomes latter already has several of the mapping features offered by Google’s new service, and many over realestate.com.au / domain.com.au . Have you studied the market share and usage of these three sites in the ACT and surrounding regions? You certainly didn’t mention it in your press release.
I didnt refer to allhomes as it is a small site in Australia. Yes it is popular in the ACT however its coverage doesnt really extend beyond there. As for market share, well that depends on how you measure market share. Most, if not all, agents on allhomes are probably on realestate.com.au and / or domain.com.au.
As for functionality, well allhomes has mapping as does myhome, homehound and many others. The point being that mapping is not unique and what google really brings to the party is a free to list site with potentially access to significant traffic.
Lets see how they really go.
Simon Baker
http://www.propertyportalwatch.com
If it is more user friendly, feature friendly and cheaper - i mean free i think i know who is going to win out in the long run, thats capitalism kids! Long live the unregulated monopoly?!
I am surprised that there is no official response from major portals. No one can ignore “the Google effect” so, is only a matter of time that it will dominate the category. If realestate.com.au and domain.com.au have smart strategists and they act aggressively now, they can slow the pace of structural changes in the industry but they cannot prevent them. Google has many advantages over its competitors:
. large user base (9.5 million comparing to combined 6 millon for realestate.com.au and domain.com.au);
. dominant search engine to drive the traffic for free;
. independent developer community to cover market niches (and further fragment the market) when Google releases the inventory as a web service; and
. mobile market presence (and possibly soon the dominating position)
I have covered the above points in more details on my blog all-things-spatial.blogspot.com:
http://all-things-spatial.blogspot.com/2009/07/google-threat-to-real-estate-listing.html
I’m actually searching for a house to buy at the moment and have tried out Google’s real estate search. It is very nice and is easier to use than most other web sites. Unfortunately is is missing something critical.
Other sites have a feedback/contact link so you can report problems. Google does not, so there is no way for me to tell them that many of the houses that they are showing are not on the market and were sold long ago….
Arek
Why do the incumbents need to respond? They are the incumbents and Google Real Estate is the new boy on the block. Lets see how they perform over the next 6 months.
Also, Google does not dominate everything it does. Heard of Froogle - it doesnt dominate its space. Look at Chrome … its entered the market and has not displaced IE or Firefox … and then there is Bing and its impact on Google’s core business.
I wouldnt be jumping on the bandwagon just yet.
Simon Baker
http://www.propertyportalwatch.com
Google property listings is brilliant! Realestate.com and domain have been clunky & slow. I’m sold.
Hi Simon,
I agree that Google is not always successful or gains dominating share of the market it enters into. However, considering the relative size of the company and its global reach, it can afford a few misses. This cannot be said about REA Group or Fairfax (both under significant pressure - one consolidating and pulling out of overseas markets and the other suffering from general media slump). In my humble opinion they have only one chance to get it right.
Whenever Google enters a particular market it creates a disruption and, whether they are successful or not, the return to status quo is no longer possible. Therefore doing nothing is not an option for the incumbents. How long will it take to for investor to start asking “why haven’t they see it coming” and “what are they going to do about it”? They have to have a response that can be perceived as adequate to protect the dominant position.
If Google was going head to head with REA Group and Fairfax (ie. signing up agents to list for a fee) I agree, they would have a tough battle on their hands. However, the company did a classic “paradigm shift” in defining this game. Google is only interested in “eyeballs” and may not necessarily see itself as “competing” in the real estate listing industry. Rather as “facilitating user access to relevant information”. This is certainly the view NZ market leader realestate.co.nz took embracing partnership with Google from day one. In this scenario it is quite possible that Google will be a dominant search platform for real estate listings and will drive traffic to landing pages on real estate portals which will continue to service that traffic as they do now. It will be interesting to observe how things pan out at both ends of Tasman Sea.
I am drawing analogies from another industry that I closely monitor - online mapping - where Telstra and Google are in direct competition. The “free giveaway” approach from Google (paradigm shift at work again!) was no match for a small, in global terms, company who initially totally dismissed the threat based on its dominant market position in Australia. The lack of decisive response led to loosing that position. It very much resembles how REA Group and Farifax are now responding. In the end Telstra decided to join Google in local listing search market rather than risking loosing another battle.
Arek Drozda
http://all-things-spatial.blogspot.com/
Arek - Thanks for this.
The question about needing to respond is an interesting one. At the moment all Google has done is put real estate listings from its Google Base product on a map. It has yet to do drive traffic to those maps, drive significant leads to the agents, and it has yet to impact on the businesses of realestate.com.au and domain.com.au.
Free models have been around for ages so there is not real paradigm shift here. Myhome is free in Australia and in the UK, there have been a number of attempt at free – including Globrix funded by News. All of these have yet to knock off or impact a market leader.
I well remember when Justlisted (funded by Telstra) and Myhome (funded by Packer) entered the Australian market. Many people, including senior people at News, said “what are you going to do?” My response was to wait and see how much impact they really did have on the business. Causing panic is not smart but being vigilante and cautious is.
What we do know is that if there are any changes, they will not be overnight but over a period of time. If traffic gradually decreases to realestate.com.au or domain.com.au then there is an indicator. If agents don’t renew their subscriptions, then there is another indicator. Until these occur, you are shooting in the dark.
The fundamental core tenants of business should not change – great service (which Google cant do as there is no help line), clear articulation of the differences (e.g. private listings on Google or potential scam / phishing on Google), and continued development of new products. Remember, Google doesn’t have email alerts, premium products for agents to differentiate themselves, or simple lead generation.
Simon Baker
http://www.propertyportalwatch.com
Hi Simon and thanks for sharing your views. I am a total outsider to real estate industry so I should declare up front that I am only drawing on related experience.
I agree that it’s not about panicking and that changes will not happen overnight. At the same time I would also argue that aggressive response is highly warranted. If not for other reasons, just to send a clear message to the competition and investors that the companies are prepared to defend their turf AND that they have a strategy in place to deal with the situation. As the saying goes, “it’s not about what happens to you that matters, but how you respond to it”. The official “wait and see” position doesn’t give much confidence to their clients and investors… One only has to recall why realestate.com.au, seek.com.au or carsales.com.au exist in the first place - because News and Fairfax “stuffed up” at some point… they displayed the same attitude “we are market leaders why should we be worried?”. The history is often repeated so why can’t it happen to those companies as well? Let me quote another saying that “prevention is better than treatment” so, waiting for the evidence of business erosion is more riskier approach in my opinion than preemptive response.
Agree totally with your other point that free is not always the best competitive advantage. The sites you mentioned faced really big challenges because they not only had to sign up agents (for free) but also attract traffic at the same time (primarily pay for it). The difference is that Google already has a huge user base and they have a track record of turning commercial services into freebies (online maps is an example). True, they can’t offer much in terms of services to agents or people but I believe there will be plenty of intermediaries willing to take on those various roles you mentioned, once Google releases the inventory as a web service.
Till this point in time the two companies controlled to a large degree the whole process: relationship with agents, listing process, page creation, and branding and marketing to attract visitors. Now, “thanks” to Google, it can all be broken up, with Google being in a center and as a conduit between people looking for a property to rent or buy or else, and … suppliers of properties at the other end (not necessary agents!). This is the true business Google is in - matching searchers with source information they are looking for. And this is where it gets interesting because the events of this week opened up a whole new range of opportunities for companies from outside the current industry. I won’t go into details but it is not difficult to imagine, maybe highly improbable at this stage but plausible situation, that real estate agents and companies servicing them can be totally circumvented in the process…
In my opinion, traffic is the main asset of realestate.com.au and similar companies, not the relationship with agents. They may sign up all the agents that are in this country and have the best tools for them but if there is no one at the other end to click on the listings, they will be out of business pretty quickly. If you believe Google trends statistics the traffic to realestae.com.au has already slowed down so, whether with or without Google presence, the company should already be doing something about it. Joining Google would give them at least the opportunity for some extra traffic. As mentioned in my previous post, it will be interesting to see if the difference in the approach, here and in NZ, leads to different outcomes.
Regards
Arek
http://all-things-spatial.blogspot.com/