When a sales representative from one of the two major property portals approached a well-established north London agent almost a decade ago and asked for a 50% increase in their yearly tariff, the agent was horrified at what he described as “the audacity of this proposal”, and simply hoped that he had misheard the sales representative.
“Did you say 15%?” was the reply from Trevor Abrahamson, the owner of Glentree Estates. “No” the salesman retorted, “I said 50%”.
After expressing his displeasure Abrahamson agreed to pay the increased amount, but asked if he could terminate the meeting, since he had to get to work on an alternative plan for the longer term.
What was the alternative plan?
The plan was to invite 25 leading estate agents to a secret meeting at Zafferano, a restaurant in Belgravia. Everyone turned up without knowing the context.
The first question asked at the meeting was, “What’s this meeting all about?” Abrahamson responded, “Whilst China is planning for the next 50 years, our industry is planning for the next two weeks!”
He explained that he wanted to see a new property portal launched, which is “owned and controlled by agents themselves”, in order to try to “counter-balance the overwhelming fiefdom that the two largest portals had created for themselves”.
There was overwhelming agreement among the agents and from that moment on, the concept of Agents’ Mutual as a business and subsequently OnTheMarket.com as a brand was born.
It has been almost nine years since the property website, backed by a consortium of heavyweight high street agents, including Savills, Knight Frank and Glentree Estates, launched in a bid to challenge the dominance of Rightmove and Zoopla.
Supported by a multi-million pound marketing media campaign and its ‘one other portal’ rule – which bans its agents advertising on both Rightmove and Zoopla – plus prohibiting online agents from listing, OnTheMarket increased market share, mainly at the expense of Zoopla, while strengthening the position of Rightmove.
Having established itself as the UK’s third largest portal in terms of consumer traffic and agent support, OnTheMarket firmly believed that it was on course to replace Zoopla as the number two property portal by the end of 2016 on its way to achieving its medium-term objective of challenging the market leader, Rightmove.
However, due to a lack of consumer traffic it has never quite managed to succeed in regaining power over the homebuyer audience and in turn returning control to the traditional high street brands.
But while OnTheMarket failed to dislodge Rightmove and Zoopla as the two biggest portals, it did make some inroads into this highly competitive market, supported in part by a decision to float on London’s junior AIM market in 2018.
The float saw OnTheMarket change its membership criteria to drop its ‘one other portal’ rule and allow online estate agencies to list on the website for the first time, but it never quite succeeded in challenging the dominance of Rightmove and Zoopla in the sector, and while that could be about change following the agreed takeover of the portal by £33bn global property data group CoStar, the question is, at what cost?
Abrahmsohn penned a piece that appeared in The Times over the weekend. Here is what he had to say on the situation:
“My history with OnTheMarket dates back to 2010. Fresh from the sale of Prime
Location to Zoopla for £50 million in 2006, I arranged a meeting of estate agents
to explore creating a new agent-owned portal. Primarily as a buttress against
the unfair dominance and abuse meted out by the two duopolous property
portals, Rightmove and Zoopla.
“Creating a fairer market with a self-owned agency site was the goal. Any
value inadvertently created from the appreciation of OnTheMarket’s shares was
never an objective for me.
“We founded OnTheMarket as a utility site and a mutual organisation, Agents’
“Mutual. To raise capital OnTheMarket demutualised and listed on the London
Stock Exchange’s Alternative Investment Market in 2018.
“Before CoStar arrived turnover grew to about £34.5 million, 10,400 agents used
the site and cash reserves stood at £11.5million. OnTheMarket was stronger
outside London than in, but always dwarfed by the colossus Rightmove with
about ten times more consumer traffic.
“If would be fair to say that the present OnTheMarket management team woefully
under-promoted the site and as such, was never able to take full advantage of
the public quote to raise capital to take on Rightmove in a meaningful way.
“Rightmove, on the other hand, have used their dominance to increase
their turnover to approximately £350 million, with a 74 per cent profit margin and an
annual profit of about £263million. Over the past decade Rightmove
has returned nearly £1.4 billion to shareholders through dividends and buy-backs.
“All at the expense of agents, who do the work to create the listings and provide
the revenue for the site.
“Will OnTheMarket and CoStar do anything to change this feudal
relationship or just increase the burden on agents to pay higher fees? It will be
interesting to see how the sand settles and what effect this acquisition will have.
“Unfortunately, estate agents’ ownership and control over their own industry and data is
now lost for good. All three portals are now owned by groups aligned to their
shareholders and not agents or customers. This was something I was so keen
to protect for the good of the industry.
“Ordinarily “he who pays the piper calls the tune”, but unfortunately that is not the case for
the estate agents. OTM is an early Christmas present for CoStar but a booby
prize for the OTM shareholders.”
EYE NEWSFLASH: OnTheMarket shareholders vote in favour of CoStar UK takeover
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