The Face of Real Estate
Zillow: a Study of Market Positioning
Within a very crowded and confusing marketplace defining who you are—what you represent to your customers and potential customers has to be summed up within a single thought, by them not you. The battle between how you perceive yourself through what you outwardly portray (image), and how the market really sees you through their interactions with you (identity), makes or breaks you in a competitive environment. In light of Zillow’s recent “USDA seal of approval” from the Consumer Finance Protection Bureau (CFPB) let’s consider how consumers, competitors, and regulators view them relative to market alternatives, and compare their image against their identity in each case to understand how they became the face of real estate.
Home Buyers and Home Sellers
Consumers “vote” through their actions.
While statistics vary by research providers we’ll look not only at raw numbers but also percentage of market share captured in the consumer market. ZG commands 59 million unique monthly visitors (UMV). Of approximately 116 million UMV held by the top ten portals in the real estate consumer category, ZG holds 59MM or 51% of market share.
(As a note, the number three portal in this study was Yahoo Homes! with 20MM UMV—and their homes for sale content is from Zillow, effectively increasing Zillow’s reach by 30%.)
How did Zillow attain this prominence?
In the minds of home buyers ZG is the place to “find your home”, and perhaps where to find the best broker. There’s great congruency between Zillow’s image portrayed and the market’s perception of their identity as demonstrated through overwhelming UMV capture rates.
Zillow’s image is carefully positioned to focus on the emotional rewards of the people purchasing a home. Whereas NAR’s campaign, representing the image of Realtors and brokers in general, focuses on NAR and Realtors, with some not-so-subtle scare tactics thrown in. Consumers may well see NAR’s positioning as the identity of realtors, but it’s not the face of real estate they desire.
Although realtor.com’s advertising is humorous it does not connect with home buyers at the same subconscious emotional level as Zillow’s ads. It’s also not as singularly focused as Zillow’s “it’s about you living your dream” position. Realtor.com has the additional disadvantage of being “guilty by association” with the self-inflicted NAR Realtor identity in the eyes of consumers.
The obligatory yearly campaigns from the major franchises presenting the “broker as hero”, or “broker as hero”, or “franchise as hero”, or more “broker as hero” offer few options in helping consumers internalizing the emotional benefits of achieving their dreams with each company’s image.
Particular qualities of a home trigger buyers to envision anticipated future life events there. The more of these events that are triggered the greater their flow of emotions and the more they like a home. Perhaps the same can be said for advertising campaigns within the real estate industry. Relative to NAR’s and the franchises’ ads Zillow is the “un-broker” in the marketplace and apparently consumers like that identity.
Zillow exhibits tremendous focus on home buyers in this year’s positioning strategy. They are building on their strengths and momentum, and this is fine. But in the background be sure that they are working toward fortifying their home seller strategies; so also expect Zillow soon positioning themselves as the source making sellers feel smart in this segment of the market.
The zestimate has been a favorite toy of sellers and buyers starting a decade back. What fun: they get an idea of what their home is worth, they can spy on their neighbors’ values and roof tops and backyards, and the most fun of all—they can do it all without a broker.
The first to market with an exceptional innovation which the marketplace adopts often holds a tremendous market advantage for decades, barring complacency or strategic error on their part. As such expect Zillow to continue refining their valuation algorithm and offering home sellers utilities beyond their AVM. This will further bolster their positive identity with home sellers.
Please recognize that all of the franchise and brokerage sites now presenting third-part AVMs will have no impact on Zillow’s market share. When everybody is offering the marketplace essentially the same information then no body differentiates themselves or creates any market advantage. This is money spent that will not cause any change in market share for anyone.
While vitalizing their drive to capture an ever increasing home seller share of the market ZG also continues expanding their automated home search technologies for buyers, offering improved recommendation engines using AI. They are staying at a full sprint in this segment.
Zillow receives the “USDA Seal of Approval” from consumers to be the face of real estate. Zillow will hold this position unless a competitor with a vastly superior AVM or home search tool can pull a finger or two off Zillow’s grip of the marketplace (#6) (+ a bonus).
Essentially anyone vying for buyer and seller leads is a ZG competitor. This includes the obvious contenders such as Realtor and Homes, but also every franchise and large regional brokerages including all agents affiliated with them.
ZG’s identity among many of these competitors is often of hated enemy for dominating “their industry”. Consumers have no interest in or even perception of this situation or additional portals. Consumers’ absolute indifference in another real estate portal, particularly one fully controlled by NAR brokers, is just one of many reasons the Broker Public Portal will fail. Another is the harsh reality of the market share figures in paragraph three of this article.
Within the real estate industry ZG attempts to present the image of a mere media company. However the identity placed upon them by the majority of practitioners within the industry is the antithesis of this; Zillow’s own actions seem to negate their own stated identity. A few love them for their lead system, while the majority is in perpetual “auto-hate” mode triggered at the mention of their name, as they erroneously believe that their meager websites would capture those tens of millions of visitors without Zillow’s existence.
Yet individual agents often spend a lot of money on Zillow. They may love or hate the situation, but with no franchise website offering the volume of leads these agents desire they are forced by their own companies to become “Zillow Brokers”. This portion of competitors “votes” through their actions and sees Zillow as the face of real estate.
The market position of ZG for these brokers is momentarily one of strategic alliance in creating business opportunities they would not have been able to generate on their own. But this alliance comes at at an ever increasing financial cost and erosion of control of the brokers’ own business models, as Zillow perpetually demands greater involvement in tracking response speed and increasing “proof of worthiness” for each lead presented.
And finally, in dimmed conference rooms ZG’s large-scale competitors “vote” through their actions grimacing as they sign backdoor deals for their agents’ advertising at the sites they hate, because they reticently acknowledge Zillow’s identity as the face of real estate.
Zillow has moved well beyond a media company, beyond any kind of portal, and beyond anything the largest brokerages and franchises can offer their agents—with their market offerings only increasing in speed and impact.
We are the Borg Zillow; You will be assimilated; Resistance is futile
The CFPB’s partnership with Zillow will only reinforce Zillow’s identity with consumers as their advocate; as why else would a consumer protection unit of “the government” otherwise associate with them? The CFPB has inadvertently, or perhaps deliberately, exhibited to the public their trust in Zillow and essentially given them their “USDA Seal of Approval”. And this outward display of government approval comes without the tens of millions of dollars NAR spends lobbying government representatives; this must be the difference between “paid” and “organic” results.
The CFPB not only recognizes Zillow’s identity as the face of real estate but is capitalizing on this identity with consumers. Why not NAR; obviously they are capable of shipping out lengthy questionnaires to consumers every year and must have a mailing list somewhere?
But could the CFPB which is charged with cleaning up the real estate industry, protecting consumers, and testing to see if new regulations are being followed, turn to a trade group for help which has previously been charged with protectionist actions and harming competitive markets by another part of the government?
The government “votes” through their actions distinguishing Zillow as the face of real estate.
Zillow’s market position as the face of real estate came through a lot of hard work, taking on risks no one in the industry ever has or ever will, and by offering the marketplace innovations they would never have seen from the industry insiders. Zillow’s identity as the face of real estate came about simultaneously through its own efforts and due to the lethargy and inept positioning of the industry incumbents.