Online real estate has gone through its “classical” period, from 1995 to 2000, and its “dark ages,” from 2001 to 2005, but is now in the midst of its “renaissance” due to “data enlightenment” and “consumer driven industrial change,” per Spencer Rascoff, Zillow's CFO and VP of marketing.
Speaking at Kelsey's ILM conference in Philadelphia, Rascoff said a key in the current environment is that the ad dollars are available “to support consumer-facing brands.” Previously, he noted, all Web site efforts needed to be oriented toward lead generation or sponsorships. The result has been the success of a slew of vertical sites, including CNET, The Knot, Bankrate.com, WebMD and Zillow.
Zillow launched in February 2006 as a research tool that enables the 30 million individuals likely to purchase a home within 24 months to check house values. Usage has been through the roof. “We were expecting a million unique visitors by August, but we had multitudes more,” said Rascoff. More than 250,000 visitors have gone in and edited their home information, Wiki-style.
While usage is very strong, ad sales aren't there yet, Rascoff conceded. “Monetization is slower than we'd like,” he said. There are currently 50 advertisers, including mortgage lenders, movers, real estate brokerages, home builders and luxury consumer products. They are attracted, in part, by the site's Wall Street Journal quality demographics.
Part of the challenge with sales is a shortage of staff. The site has 10 salespeople in New York and San Francisco, but it should have had 30 or more by now. The competition for sales staff is intense, said Rascoff. “It is harder to hire direct sales than we realized,” he added.
Another challenge has been to ensure the quality of Zillow's real estate data. Most of the data come from county courthouses, and accuracy is very high. More than 62 percent of house prices are within 10 percent of their “Zestimate,” said Rascoff.
But the data are inconsistent outside the prime coastal areas, he said especially in states like Texas. Moreover, some states, like Idaho, are “non-disclosure” states, which makes it more difficult to get good housing data. “If we can improve our data, we see a potential 25 percent increase” in usage, he said.