Zillow, Trulia, Redfin And Your Website. Are Search Ads Coming to Every Real Estate Website Near You?

The Wall Street Journal printed an interesting article related to Real Estate Search Marketing: 8/21/07, pg B1, "Investors to Web Start-Ups; Where's the Advertising?"

Rebecca Buckman reported on the trials, tribulations and over all hassles of Glenn Kelman, CEO of Online Discount Broker, Redfin, as he tried (successfully, though frustratingly) to obtain second round funding from Silicon Valley VC's (Venture Capitalists). Redfin had already obtained $8 million from Seattle-area venture firms. (Paul Allen must still be more interested in Sports Teams, than Real Estate and Bill Gates never started selling anything at discount)

It seems Redfin still wants to make money the old fashioned way, "Earning It By Selling Services". Redfin wants to be "The E*Trade of Real Estate", or "The Virtual RE/MAX", not "The Google of Real Estate", like Zillow, Trulia, Yahoo Real Estate, etc.

After a string of VC's kept asking,"Where's the Google-Like Ad Beef?", Glenn could only throw his arms up in despair. Redfin did finally get its second round funding from Draper Fisher Jurvetson among others after meeting with more than 10 VC Firms. (No second round funding amount was quoted.)

VC's are not the only ones not getting the business models of the new online businesses like Zillow, Trulia and Redfin. Just as some Brokers still fear Zillow and Trulia, (who only sell online advertising) will become Brokers, VC's want all start-ups to be JLG: "Just Like Google".

All Zillow and Trulia just want a bigger chunk of our ad budgets. Redfin's the one who wants the whole commission enchilada.

Overture (sold to Yahoo for $1.6 Billion) was the first Internet company to monetize the online traffic/click stream, using only keyword-relevant ads, with no organic results. Courts found Google's keyword-relevant ads surrounding free-search findings was sufficiently different from Overture's business method and didn't violate Overture's patents. Wah-Lah, a whole "new" way to mint online advertising dollars.

In my conversations with VC and Angel investors, they're always looking for a successful example or proof of concept. But it's dangerous to make generalizations with Google as your model. The further you get away from Google's free search results with keyword relevant ads, the further you get away from Google's proven business/revenue model.

Will searchers for Real Estate info, value estimates and/or maps, click on ads at the same rate as those who click on ads around their Google search results? Or will Real Estate content Websites yield the same poor click-through-rates (CTR's) of the Social Networking sites? Zillow isn't giving out all its numbers (Traffic: 3-4 million visitors/month - Yes. CTR - No).

Social Networking Websites get many times the traffic Real Estate sites get. I know of no evidence home buyers will click on ads more frequently than visitors to MySpace, YouTube, Friendster or FaceBook? Will Real Estate sites be Google-Like or Social-Network-Like?

Of course there's always PPV (Pay Per View) or PPM (Pay Per Thousand) Ads, but they aren't as sexy as Google-Like, keyword-relevant Search Ads and they take a sales force or a sales agency, with their salaries and commissions.

If you wanna be the next "Google of Anything", you've gotta have the Ads-Driven Model.

Do you have ads on your Real Estate Website or Blog yet?

Adapt Or Die!  Happy Searching.

WebHomeUSAblog; The Blog of Real Estate Search Marketing

Comments

[Louis Cammarosano]

For ads to work, don't you need millions of visitors. While Zillow and Trulia have made impressive gains in driving visitors, neither of them drives sufficient traffic to make big money selling ads.
Also, since the draw of Zillow is Zillow's content, it probably distracts from the advertiser. After all people go to Zillow to get a homevaluation, not to click on a Direct TV ad or one of the Google Ad sense links that populate their site.

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