Predicting The Next Generation of Zillow Ads

I am going to “jump in here” and will even attempt to make a prediction as to what Rich may be considering now.

Today, Zillow solicits random agents through hundreds of telemarketers to sell agent ads in zip codes at “market rates” prices.  Essentially, the only requirement or qualification for buying those leads is a valid credit card.  That means that the majority of the touch points are now between Zillow’s call centers and largely random buyer’s agents.  This ad strategy was essentially built on the immense traffic that Zillow had generated initially by making Zestimates available directly to the consumer.

As was the case when I assisted Trulia in engaging the industry, the reason for offering the listing broker free ads was to encourage listing brokers to post their listings on the portal.  And, back in those days, the consumer traffic on the new portals was minimal as the majority of the consumer eyeballs were focused on print ads that were bought by listing brokers and agents nationwide.  Remember those things called a newspaper?  Then as the consumer traffic grew, buyer’s agents flocked to the portals to eventually buy the leads that were generated from the display of the listings of others.

So let’s go further to explore a series of what if scenarios.  

What if Zillow were to flip its current ad model from a “buy side” focus, to a “sell side” focused ad model?  Meaning, like was done in the years before the internet introduced portals, the listing broker / agent actually paid for the ads on Zillow.  Then add this dynamic into the new model.  Not unlike the print ad model we had before the Internet, the listing broker / agent would receive all of  the buyer leads in return for the ad they had paid for on Zillow.  No more leads given to random agents with a valid credit card as the only qualifier to get the leads.

And then there's this.  

What if Zillow were to repurpose its agent call centers with call centers that served to qualify the consumer, not to sell the agent buyer ads?  Meaning, that Zillow would qualify the consumer and then redirect the potential buyer to an agent in the listing broker’s company.  Not to one of their competitors, like what is done today.  This is the part where the listing broker / agent would collaborate to determine if the lead were to be assigned to a team member on the listing agent’s team or to another buyers agent in the office where the listing was taken.  The result?  The consumer gets to work with an agent that likely knows more about the listing and will also be able to communicate and collaborate readily with the listing agent in that office.  And if that consumer lead turns into a buyer, both agents will be able to coordinate the transaction on a similar technology platform hosted by the broker.

The result?

In my opinion everyone wins if this scenario could be accomplished.  Zillow wins, the listing brokers win, the listing agents win, the listing broker’s / agent’s buyer’s agents win and the consumer wins big.

So how does Zillow get paid?  There are many options with this model v. what is being done today.  Zillow could charge an ad fee upfront for the consumer ad exposure, or they could enjoin in the transactional process and take a referral fee at the closing.  As is the case in most business strategies, options are good for all parties.  And the cost of the upfront ad fees could be shared by the listing broker, the listing agent and any participation buyer’s agents in the listing agent’s office.  Not unlike the days of the broker selling ads to agents, the listing broker could design a paid ad program to essentially redistribute the Zillow leads within their own company.

So I guess the big question is what do you think?  Or the more strategic question would be, what would your company dollar look like if you controlled the complete transaction and increased your rate of in-house sales by as much as 40 or 50%? 

Here is the most important part of this concept.  What I see here is a real potential for Zillow to partner with the brokerage community.  This creates a whole new meaning for what the Premier Broker relationship could be with the industry.  For Zillow to play an important role in doing what the broker is incapable of doing now - facing some 150 million plus consumers a month.  And for the listing broker, and the listing agent, to provide the consumer with a more fluid, aligned and controlled transactional process.  It’s all about improving the consumer real estate experience.

Finally, please remember that this is simply a prediction I am making without the benefit of any feedback or specific information indicating such a direction from the Zillow Group.  

As I said in a comment on the attached article.  In 2005 prior to the launch of Zillow, Inman issued a nationwide challenge to the industry to guess the very secret Zillow business model.  I submitted my prediction to Brad and I won the challenge.  

So, let’s see how close I get this time with this prediction as Rich and his team contemplate improvements and enhancements to the current Zillow ad model.