In recent times Crikey has been the beneficiary of an intriguingly steady trickle of tips about online jobs site Seek branching out into the other big classified advertising category — real estate.
In June, a source claimed that the 25%-PBL-owned Seek was looking at both developing property services internally and acquiring remaining property classifieds businesses. It was also claimed that Seek “has bought large volumes of free to air television and outdoor media to market something large in September and October”.
A few weeks later we heard that Seek head of M&A, Jason Lenga, was in the final negotiations to purchase an online real estate lead generation business based in NSW – whatpricemyhouse.com. (He said it was a side deal with some mates.)
Now, finally, we’ve got what appear to be the juicy details:
Seek, despite their denials, are actively behind the PBL/Seek entry into the online real estate business. The new portal will launch at the beginning of October and will be called propertyseek.com.au.
Most heavily involved have been four real estate franchise groups at a Corporate level: LJ Hooker, Century 21, Elders and Raine & Horne NSW (not national). It was these four groups that approached PBL about launching another real estate portal, after the relative failure of their earlier attempts; propertypage.com.au and homehound.com.au.
It is believed that the Franchise Heads/Corporate want to make the new website exclusive ie. force the individual franchisees within their groups to advertise on the new site and stop advertising anywhere else online.
Why? Well here’s the kicker. For every individual franchisee, eg LJ Hooker Parramatta, that LJ Hooker Corporate can convince/force to advertise on the new website, the more equity that LJ Hooker Corporate gets in the new business.
So the individual offices pay to advertise on this new website only so Head office/corporate make more money (more equity). The cost to advertise on the new site will be $175 per month with a 30% price increase after the first year.
Needless to say there is no love lost between the individual real estate offices and their Franchise Heads (corporate). This new business “model” will do nothing to help those relationships. Most real estate offices will probably see this for what it is: Head office trying to squeeze the little guys so Head office can profit. And all this after two previously unsuccessful attempts by the abovementioned Franchise groups to run their own website (propertypage.com.au and homehound.com.au).
The prospect of these individual real estate agencies being told “where to advertise” is unlikely to be successful, particularly when their competitors will be free to advertise wherever they like! Add this to the fact that that the main people profiting from the new website will be the Corporate Head offices by way of their equity stake and the likelihood of this getting off the ground seems to be wishful thinking more than careful planning.
So it seems to be on, and the online turf war is about to get a whole lot more interesting. If Seek can make serious inroads into the property market, James Packer might yet get to score another victory over News Ltd and Fairfax without buying into the dinosaur world of dead tree newspaper journalism.