How property portals are expanding across the value chain

Big property portals around the world have built their businesses off of advertising. Much like the classified sections in the newspapers they replaced, portals like Zillow Group in the U.S. and Rightmove in the U.K. offer the most prominent way to advertise properties for sale.

But in an effort to grow their revenue streams and provide more value to consumers, many of the portals have added other verticals in addition to advertising, looking to develop other services a home seller or homebuyer might need. They are expanding across the value chain.

As an example, one of the big areas of focus over the past few years has been valuation and data services. The first step in many home selling journeys involves a home value estimate. So, many portals have begun offering this information to consumers through automated valuation models (AVMs), a computer-generated model based on a mix of publicly available information and portals’ listing data. Zillow’s Zestimates are a good example of this.

While I was serving as head of strategy at the New Zealand property portal and classifieds site Trade Me, we invested in Homes.co.nz, in part, for this reason (I left Trade Me in January to pursue other interests after four years at the firm). Trade Me recently launched Property Insights, which offers home valuations for properties across New Zealand. It was a calculated, strategic move to expand the value offered to consumers beyond advertising and increase overall value in the market in the process.  

For this article, I look at how the big property portals in the U.S., U.K., Australia and New Zealand have expanded across the value chain. By tracking past and current trends, some commonalities emerge. Based on these, I’ll also suggest future ones.

Current verticals where portals are expanding their focus

Data and valuation verticals have been a key area for portals for the past few years. In addition to Trade Me’s efforts, Zoopla announced a partnership with property research startup Property Detective earlier this year, Zillow has had its Zestimate since 2006, and REA Group launched a tool to show estimated home values for all properties in Australia in 2015.

Home services and repairs is also a big area of focus, and potentially lucrative. Many of the big portals are making moves into this space, with marketplaces that connect tradespeople with homeowners that take a clip of the ticket along the way.

In December 2015, News Corp. (REA Group’s parent company) paid $40 million for a 25 percent stake in HiPages, an Australian online marketplace for tradespeople.

And just a few months later, Fairfax Media’s Domain Group (the No. 2 property portal in Australia) acquired a 35 percent stake in Oneflare, a similar tradesperson marketplace, for $15 million.

Antony Catalano, CEO of Domain Group, told startupdaily.net that the investment is “part of our strategy to broaden our offering to consumers and agents across the property lifecycle, into home improvement and local trade services.” It’s also a huge revenue pool, with both businesses tapping into a $100 billion local services market in Australia.

If we go back to the color-coded chart above, I wouldn’t be surprised if a few of those reds in the home services category flip to yellow or green over the next 12 months.

The rationale for expansion

At Trade Me, one reason for our desire to expand across the value chain was to extend and expand our relationship with consumers outside of the actual homebuying and selling experience. If the utility a property portal provides consumers occurs on a more regular basis, the more likely they are to come back to the portal when it’s time to sell their home and buy another one.

Growing revenues is another motivating factor when looking to expand. Many property portals see a relatively limited runway of growth in the core advertising business. Once they mature and capture a large market share, what else is there to do but slowly raise prices over time?

Expanding into adjacent services that complement the core advertising proposition makes sense. It provides consumers with more value, streamlines the entire process, and allows the property portal to tap into new revenue streams.

Another key reason for the desire to expand -- and a bit of a dirty little secret -- is that it’s exciting! If there are a bunch of Type A personalities running a property portal and setting strategy, it’s quite boring to travel the same track and look for small, incremental efficiencies. It’s sexy and exciting to try new things, especially for the types of individuals in these positions (and I’m just as guilty as the next person).

The Rightmove situation

Unless you’re color blind, you might notice that the Rightmove column in our chart is nearly all red, meaning it hasn’t expanded across the value chain. But wait, I can hear you asking, isn’t Rightmove a global leader in the property portal space?

It is, and as I discussed in my previous article on the investment strategies of the major portals, it has a narrow and focused strategy on its core advertising proposition. Zoopla, the No. 2 player in the U.K. market, has the opposite strategy. It aims to be the one-stop shop for consumers, aggressively expanding across the value chain in the process.

So we have the top two players in the U.K. with completely different strategies. We should be able to see which approach is the winning one, right?

My analysis leads me to believe that Zoopla’s strategy is a result of its market position, rather than the cause of it. In other words, because Zoopla has always been the No. 2 underdog in the market with its potential of dislodging Rightmove extremely unlikely, management opted for an alternative strategy to differentiate its offering.

So, in the end there is no clear winning strategy. Or rather, both are winning strategies. But what is clear is that the big portals focus on their core proposition and completely nail it before expanding across the value chain.

Future focus areas

If I consider future trends and where the big property portals are and will be spending more effort, two emerge: the mortgage and insurance space.

Zillow Group does a great job of this with its mortgage rate comparison service, and Zoopla made a big move in the space with its £160 million acquisition of uSwitch (which has a mortgage comparison service) and its investment in startup Trussle to speed up the entire mortgage process.

These two areas represent the biggest potential revenue pools across the entire value chain. Everyone is talking about them, but not everyone is doing something in that space. It’s difficult to execute on because of the inherent complexity and well-established incumbents.

During my time at Trade Me, we launched a big effort in the insurance space with Trade Me Insurance. We partnered with an existing player in the market and worked together to launch a Trade Me-branded insurance product. It was a considerable undertaking and represents a big, long-term bet in insurance.

Where to place your bets

Another way to view the value chain is as a roulette wheel. If you’re a property portal, startup, or VC investor, where should you place your bets?

I would do three things:

• Place the biggest, long-term bets on mortgages and insurance. It’s the biggest revenue pool and ripe for new solutions that reduce friction. Property portals are ideally placed close to the transaction where they can add real customer value.
• Place the second-largest, short-term bets on home services and repairs. The Australian market is locked up with REA Group and Domain active in the space, but there’s still room for a big property portal tie-up in the U.S., U.K., New Zealand and Canada.
• Stay away from other categories like moving, home inspiration, agent profiles and conveyancing. These all sit on smaller revenue pools, face strong competition from global giants (Houzz), or offer limited value to consumers from a property portal’s perspective.

Expanding across the value chain is a smart strategy that will continue in mature and emerging markets for the years to come. There will always be outliers like Rightmove, but for now, it is the exception to the rule.

Zillow Group: not quite a global leader

Many Americans, myself included, tend to think that the U.S. is the leader when it comes to online businesses. With established tech giants like Google and Microsoft and emerging players like Uber and Airbnb, they can’t be blamed for thinking the U.S. is the home of online.

But this is not the case for my area of specialisation, online property portals. The market leader in the U.S. is Zillow Group, but what may come as a surprise to many is that they are not the global leader in the space. In fact, the U.S. market is significantly behind other markets like the U.K. and Australia when it comes to business model maturity.

Comparison on a global stage

I included the following financial snapshot in my previous article on the investment and acquisition strategies of the major property portals around the world:

Subsequently, I asked the rhetorical question, “Why is Zillow so far behind in terms of profitability?” That’s exactly what I decided to take a look at today, by digging deeper into a few areas of comparison.

The profitability question

Zillow Group has the highest revenues of the major property portals around the world, but significantly lags in profitability. In fact, on a standard cash-in/cash-out basis, they are not profitable.

I prefer to look at full year results, as it’s a longer time period and presents a more complete picture than quarterly results. In 2015, its last full financial year, Zillow reported revenues of $644 million and expenses of $794 million.

In other words, they only collected $81 for every $100 spent.

Rightmove, the market leader in the U.K., collects $350 for every $100 spent. They are an exceedingly profitable business.

And I’m not just cherry picking by comparing Zillow to Rightmove. For every $100 spent, REA Group in Australia collects $266, Trade Me in New Zealand collects $277, and Zoopla in the U.K. collects $183. These are all profitable businesses that represent a positive return on investment.

So why is Zillow lagging so far behind?

Revenue growth

The U.S. market is significantly bigger than the U.K. and Australia. So perhaps Zillow is just earlier on the growth curve, right? Let’s take a look.

Again, based on the last full year’s financial results, Zillow’s pro forma revenue (which reasonably includes Trulia) grew by 18%, compared to Rightmove’s 15% and REA Group’s 17% (for their Australian operations only; total group was 20%).

So on that basis, the growth curves are not wildly different at all. But if you go more granular and dig into Zillow’s last six quarters, you get a different picture of accelerating revenue growth. The real test will be to look at their full 2016 financial results.

On a full year basis, they are basically growing at the same rate as the other big international portals. But their recent quarterly results suggest faster growth in 2016.

Employee count

Another aspect to look at is the average revenue per employee. At last count, Zillow employed around 2,500 people compared to around 400 at Rightmove. That’s about $260k/employee at Zillow compared to $600k/employee at Rightmove.

If Zillow were to achieve the same level of efficiency by doubling their revenues on the same cost basis (extremely unlikely), they would be collecting $162 for every $100 spent - a big improvement!

Monetising their customers

One last area to examine is the monthly average revenue per advertiser (ARPA) - effectively how much their customers pay for their services.

It’s difficult to get matching time periods, but here are the most recently reported ARPA numbers for Zillow, Rightmove and REA Group in the 2015/2016 timeframe. Clearly the international portals are able to better monetise their services than Zillow.

I would argue this is a factor of business model maturity. All markets have significant competitive tension. In Australia, REA Group greatly benefits from a vendor-funded marketing environment (where home sellers pay for marketing directly). But clearly Rightmove and REA Group simply have more experience and expertise around monetisation.

Followers, not leaders

It is not my intention to disparage Zillow. My point is to properly place them in a broader, international context, and acknowledge that they (and the U.S.) are not market leaders in this space.

Many people don’t realise that the U.S. is behind in the property portal space. Zillow is not on the leading edge. The clear market leaders are not in the U.S., but the U.K. and Australia, and there is a lot we can - and should - learn from them!

How the world’s top real estate portals think about innovation

Innovation is a tricky, vital component for every firm, and the world’s largest real estate portals are no exception.

I thought a lot about innovation during my four-year tenure as head of strategy at New Zealand’s leading property portal Trade Me. Much of my time centered on identifying and growing new ventures.

When I joined the business in 2012, it had about 300 employees. I used to say there were 299 people focused on growing the existing business and one (me) focused on growing new lines of business.

That was a big portion of my attraction to Trade Me and the role in the first place. I was intrigued by the idea of running a “conveyor belt of growth,” as the job description stated. I quickly learned that innovation at a large, publicly-traded business is vital, for reasons I didn’t fully realize until years later.

Why is innovation important?

Many assume, of course, that innovation is important at a big corporate, but rarely ask why.

The answer, in my eyes, boils down to relevance. The world moves lightning-fast; if you stand still too long, you die. Innovation isn’t a luxury; it’s standard operating procedure for any business.

But you can’t simply go to your teams, announce your intent to innovate and rejoice when the magic begins. You need to focus your efforts in the right areas, where you have a strong competitive advantage or existing network effects. In other words, areas that will naturally multiply your efforts.

For example, at Trade Me we knew when people were looking for new homes or browsing for vehicles. That was our competitive advantage. So we acquired an insurance-comparison business and launched a new insurance brand.

Innovation vs Execution

Execution is a critical component of effective innovation, a fact easily overlooked. Ideas are a dime a dozen; execution animates innovation but it’s where most companies fall down.

In a big company, new ideas come from all sources like water out of a firehose: customers, employees, market scans, books, board directors. Everyone has ideas, and they’re rarely unique.

Execution is the critical component of successful innovation. It breeds winners. Mismanaged ideas mire leaders with deadly false hopes. Those who execute on a new idea best, succeeds. It’s simple: if you want to improve innovation, focus on execution (more on this later).

The differing models of innovation

Large firms can tackle innovation in a number of ways. Below isn’t an exhaustive list, but how we thought about and considered innovation at Trade Me:

• Run an internal skunkworks team. This is the sexiest option. Who doesn’t love the idea of a small, elite group of contributors in a dimly lit side office working on the next big thing. On the plus side, you have dedicated resources working on new, new, new all the time. On the downside -- it’s very easy to fly off the rails without proper oversight.
• Corporate venturing. This was the strategy at Trade Me while I was there. We regularly scanned the market and made opportunistic investments and acquisitions in interesting businesses. Once we made an investment, we worked with the firm’s leaders to supercharge their company. Our big goal: make 1+1 equal 3. (Big not-so-secret secret: it doesn’t always work out.)
• Work with local innovation aggregators. Find your local incubator or accelerator programs, scout for new opportunities and help promising startups. This can be a great place to find talented people and nurture promising ideas. This tactic marks a much earlier stage than corporate venturing and requires patience.
• Internal hackathons. Shut your entire company down for a number of days and get everyone working on prototyping new ideas. At Trade Me, we held 24-hour hackathons twice a year. It’s a great way to get ideas flowing and increase motivation and excitement, but the outcomes are usually smaller and more incremental and can suffer without proper follow-up.
• Nothing. Just acquire businesses or potential competitors when they get big enough. Let the market do the hard work for you by vetting new ideas, teams and execution. You’ll pay a higher price for the business, but with the higher price comes a higher certainty of success.

The challenges of corporate venturing

All big corporates face many innovation challenges. In my opinion, the biggest is always attention. How do new programs with uncertain outcomes compete against known opportunities with more certain results? As a CEO, I would much rather put my resources behind an initiative I know will pay off, rather than one that might pay off. That’s the innovator’s challenge.

Based on my experience as an entrepreneur and corporate ventures guy, I recommend segregating resources to solve this inherent perceived value disconnect.

Commit most of your resources to your existing businesses, but set aside resources, time and effort for the new stuff: 1 percent, 5 percent, 10 percent -- whatever you think makes sense for your business. Make the delineation in your mind, keep the two separate and stick with it.

One of the other big problems we faced at Trade Me was our small market. With a population of approximately 4.5 million, New Zealand has a smaller number of potential startups and entrepreneurs available, in addition to low deal flow.

The inherent challenge of working with startups narrowed our opportunities further. In my venturing, I found that startups don’t like to solve your problems; they like to solve their problems.

So what about everyone else?

When I left Trade Me in 2016, I knew deeply how we thought about innovation. But, like my interest in how other major property portals look at investments, I am intrigued by how other major portals think about innovation. How important is it to them? What processes do they have in place to efficiently execute on it?

Let’s take a look!

Innovation at three of the world’s top property portals

Trulia’s Innovation Weeks

When Zillow and Trulia combined forces in February 2015, they became the dominant real estate portal in the U.S.

Although they’re united under Zillow Group, they operate separate consumer teams. Each brand sets a week aside each quarter for innovation. Trulia calls it “Innovation Week”; Zillow calls it “Hack Week.” It’s a time for their teams to dream big and develop new products and features.

“Our culture emphasizes autonomy and innovation,” said Jeff McConathy, Trulia’s vice president of engineering. “Anyone can participate in an Innovation Week. You don’t have to be in a technical role or an engineer.”

Trulia sees this as dedicated time for all employees to experiment with new product ideas or work on pet projects they’re passionate about.

“We like to encourage employees to work with new technologies and new teammates so they can hone new skills and engage with colleagues they may not interact with on a daily basis,” Jeff said.

Each Innovation Week has a theme. When I visited earlier this year, the theme was personalization and user behavior.

The event starts the week before with a pitch party, where participants pitch their project ideas to the group. A social mixer follows to encourage team formation.

During Innovation Week, senior leaders and subject matter experts make themselves available with scheduled office hours. Trulia also trains teams on public speaking and designing pitches.

The Monday after the week of hacking -- where all participants are encouraged to put aside their normal job tasks and to avoid scheduling any unrelated meetings -- teams present their work at an event open to all in the company.

A panel of judges and the audience choose the winners. Judges pick a theme winner and the audience picks three winners: first, second and third place. The theme and first place winners work with Trulia leadership to get their ideas on the release roadmap.

Last year, teams presented more than 120 projects. Five Innovation Week projects have already shipped this year: updated Local Info Pages, Rent Near Transit, Trulia bot for Facebook Messenger, Trulia for Apple TV and Quiet Streets Map.

In addition to the week dedicated each quarter to innovation at its largest consumer brands, Zillow Group also practices a good deal of corporate venturing through acquisitions of related businesses. It also maintains strong ties with the startup community through formal relationships with two U.S. real estate tech accelerators: MetaProp NYC in New York City and Elmspring in Chicago.

Earlier this year, Zillow also hosted MetaProp’s demo day at its San Francisco offices.

REA Group’s Big Idea

Leading global digital business REA Group, parent company of Australia’s realestate.com.au, has several innovation programs.

REA Group Chief Technology Officer Tomas Varsavsky summed up his firm’s position: “We disrupted the industry 20 years ago, now we’re the incumbent to get disrupted.” Innovation is already in the DNA of the company, but its innovation programs -- it hopes -- will help it stay ahead of the curve.

Similar to Trulia and Zillow, it runs quarterly three-day hackathon events it calls “REA.io.” It encourages its employees across the globe to work on anything during these events -- even projects that aren’t directly related to the firm’s business. “It’s as much about the culture of the company as about the ideas,” Tomas said.

The firm also runs a small “Innovation Team” focused on consumer tech. It’s an internal team that plays with virtual reality, augmented reality, 3D modeling, a HoloLens, drones and more to help keep the firm on technology’s bleeding edge.

But the big idea came two years ago.

In an effort to bridge the gap between an idea that’s too big for a two-to-three-day hackathon and a business-as-usual product roadmap, it launched “The Big Idea” in May 2015.

The event starts with a company-wide call for project ideas -- typically bigger, more ambitious and more disruptive than hackdays projects. Dozens of ideas pour in not only from tech pros, but also the firm’s salespeople, marketers and those in its legal department. The firm posts those ideas for all employees to view and reviews them on a global scale. Eventually, it filters the ideas to six finalists.

REA Group then holds a “Shark Tank”-style event where the finalists pitch their ideas. The panel picks a winner (or winners) who receive $100,000 and 60 days to develop their idea into a working prototype. The company provides resources -- both internal and external -- to help the teams succeed.

The first year employees submitted over 40 ideas. This year they submitted over 60. “I was worried that we’d use up all of our good ideas the first year, but there was very little overlap and repeat ideas the second time around,” Tomas said.

For example, this year’s winner Linda Brunetti, a digital engagement consultant from REA Group’s Corporate IT team, is preparing to kick-off her project.  She’ll get support from one of REA Group’s existing lines of business, an exec-level mentor, internal IT resource, and a connection to an agency to produce a minimum viable build. In addition, she gets two months off from her day job to focus on the project.

Tomas has some advice for other companies thinking about rolling out innovation programs: “People often get caught up on the ROI of a hackday, but the culture you’re creating and the signals you’re sending companywide are just as important. Everyone is an innovator and we’re going to create space to make it happen.”

Rightmove’s Head of Innovation

Rightmove, the U.K.’s top real estate portal, is the only major portal I found with a dedicated head of innovation. A big part of Hannes Buhrmann’s job is to experiment with new consumer ideas the firm may want to implement in the near future.

To accomplish this, Hannes typically works with external teams.

“My focus is to conceptualize and validate the propositions,” Hannes said. “Sometimes that validation might consist of user research, clickable prototypes, functional prototypes and, at times, deploying fully functional features in a closed alpha or beta environment.

“When developing fully functional features, we specifically assume that the code will eventually be thrown away,” Hannes added. “This is for two main reasons: speed of development and avoidance of polishing something that may fail as a consumer proposition. The basic approach is fail as fast as possible, and as cheaply as possible.”

Hannes’ team’s inspiration for its innovation efforts include:

• To aid Rightmove’s overall business objectives
• To better understand the broader competitive environment (i.e. not only what other portals are doing, but also what other companies are doing within the property vertical, whether established or startups)
• To uncover technological advances that present new opportunities for disruption

In general, the firm focuses on ideas and technologies that it can produce in the near term, not blue sky stuff.

For example, the team is currently toying with a “Where Can I afford to Live?” tool. It’s live in early alpha here (best viewed on a desktop). It’s rough around the edges and has some usability issues, but that’s the point. The goal is to get stuff out early, pull in feedback, plan next steps and release frequently.

Like the others, Rightmove also runs a hackathon event. The annual three-day event has been going for over a decade.

Making innovation work for you

While innovation is all about execution, success doesn’t happen without a smart framework to cultivate it. Like Trade Me, many of the top portals have structured programs designed to encourage innovation and build a culture of experimentation. Then they pump promising ideas through the execution engines of their larger businesses.

We held hackathons at Agora Games, the tech company I founded and ran before my time at Trade Me. It’s safe to say that the primary impetus for holding the events – and the primary outcome – was to reinforce a culture of innovation.

I’m impressed by the depth and breadth of innovation at REA Group and Zillow Group. They both run a number of different programs – from hackathons to innovation teams to a heavy involvement in the entrepreneurial scene. I’m also impressed by the massive commitment senior management at Zillow makes; one week every quarter is a big chunk of time! And given the number of projects that have launched from the event, I’d say this is a good model to follow.

A successful program requires commitment and structure.

Outside of these programs’ tangible results, the other benefits flourish. Employees receive a clear message that innovation is important. The firms maintain a vigilant eye on the future. They’re willing to make a real investment in their talent and the future of the business by supporting these programs.

When I speak to property portals from around the world about innovation, my advice boils down to three points:

• Stay plugged in to the local entrepreneurial environment (like Zillow Group does with its strong ties to the startup community)
• Hold structured innovation programs multiple times a year (like REA Group does with its quarterly hackathons)
• Devote some resource – however small – to experimentation (like Hannes’ team at Rightmove)

Doing the above will keep you on the cutting edge, so you don’t get left behind.

How major property portals think about mergers and acquisitions

How do large residential real estate portals around the world think about investments and acquisitions? What types of companies do they look to acquire and how do they incorporate them?

As the head of strategy at New Zealand’s leading property portal, Trade Me, I dealt with these questions on a daily basis. I hunted for new lines of business, scoured the landscape for investment and acquisition opportunities and then executed the deals in my four years at the firm. I also developed an intense interest in how similar firms in other countries went about the same ventures.

Property portal models differ around the world, but in general they aggregate real estate information, allowing consumers to search for homes to rent and buy.

Scratching my Entrepreneurial Itch

In January, I left Trade Me and moved back to the U.S., my home country. With these questions still swirling in my head and my curiosity kindled, I decided to investigate. So I hit the road to find out how portals around the globe deal with growth, particularly around investments and acquisitions.

My journey included interviewing and studying the following portals:

• Rightmove and Zoopla, the largest and second-largest portals in the U.K., respectively.
• Zillow Group, the U.S.’s top player.
• REA Group, Australia’s leading portal.
• And, of course, Trade Me, New Zealand’s leader.

Based on the last full year’s reported numbers and converted to U.S. Dollars. Sources: Rightmove, Zoopla, Zillow Group, REA Group, Trade Me.
*Adjusted EBITDA numbers.
^It’s difficult to make apples-to-apples comparisons on portal profitability. For example, Zillow Group reports “Adjusted EBITDA Numbers” on a non-GAAP basis, which can be misleading as this article points out. Zillow's actual EBITDA result is around a $68 million dollar loss.

I hypothesized that I would find a common thread in the strategies of each firm. Surely they must evaluate investments in generally the same manner. I was excited to learn what each considered the “right way.”

The Journey

Rightmove is the leading property portal in the U.K. It reported 2015 revenues of $250.9 million and has a market cap of $5.1 billion.

The 16-year-old firm dominates the U.K. market with a massive homebuyer audience built on organic search traffic. In 2015, its site received 17.5 billion pageviews, according to the firm. It makes the bulk of its money by charging agents and developers to list homes.  

Rightmove’s mergers and acquisitions strategy sets it apart from all other major portals in the world: it simply doesn’t do them.

Instead, it focuses squarely on being the U.K.’s best place to list a home for sale. Period. It invests in that goal alone, year after year, without spending much attention on other business opportunities.

It plans to maintain that singular focus as it aims to raise the average monthly revenue per advertiser (ARPA) closer to its target of approximately £2,500, an amount consistent with newspaper advertising in 2007, the firm explained in its 2015 annual report. Its current ARPA stands at £750.

Zoopla, on the other hand, has the most aggressive M&A strategy I found among the major portals.

Driven by its entrepreneurial CEO Alex Chesterman, the U.K.’s No. 2 property portal aims to be the one-stop shop for home buyers and sellers. Its tagline could be: “Whatever you need, you can find it at Zoopla.”

The 8-year-old firm has a much smaller audience than Rightmove. Rightmove accounts for approximately three-quarters of the time consumers spend on the U.K.’s top four real estate portals, according to comScore data cited in Rightmove’s 2015 earnings report. Zoopla is second with approximately 20 percent of the attention.

London-based Zoopla has a market cap of $1.7 billion and 2015 revenues of $140.4 million.

The firm makes aggressive investments, ranging from seed investments in startups like the one it made in property repair reporting software platform Fixflo to nine-digit acquisitions of mature businesses like its purchase of the home-related services cost comparison digital platform uSwitch.

In some cases, Zoopla folds its acquisitions directly into its core business; in its smaller investments, it takes a more hands-off approach.

The U.S.’s top player, Zillow Group, is a giant. It has a market cap of $6.0 billion and reported $679.9 million in 2015 revenues.

The portal conglomerate emerged in February 2015 when Zillow -- already the market leader -- acquired its top U.S. competitor, Trulia, for $2.5 billion in stock.

The 12-year-old firm’s M&A strategy is more defined than Zoopla’s. Zillow Group only makes full acquisitions; it doesn’t bother with seed investments or minority stakes in new ventures.

It acquires businesses to build audience, plug service gaps and prepare for new opportunities in the residential real estate space. For example, it acquired two New York City portals in recent years to grow presence  in the lucrative Big Apple market: the rental site Naked Apartments for $13 million in February of this year and the portal StreetEasy for $50 million in 2013.

It’s also made big acquisitions to provide better tools to its real estate broker and agent advertisers, epitomized by its $108 million July 2015 acquisition of digital transaction management platform dotloop.

From an outside perspective, it appears Zillow Group practices a hands-off approach to managing its acquired companies.

Most brands remain intact post-acquisition. Although part of the same team and under the aegis of Zillow Group executives, the acquired firms don’t appear to experience intense corporate oversight.

REA Group, a subsidiary of global media giant News Corp, runs Australia’s dominant portal, realestate.com.au. REA Group also runs a suite of portals in other countries (see below).

REA Group has a market cap of $5.8 billion and FY2016 revenues of $488.2 million.

Portal	M&A strategy
Rightmove	No activity. It’s focused squarely on organically building its consumer audience.
Zoopla	Aggressive and varying, ranging from seed investments in startups to full acquisitions.
Zillow Group	Aggressive, but solely focused on full acquisitions to build audience and tools for its customers (agents and brokers).
REA Group	Aggressive, with a strong international focus using full acquisitions to enter new markets.
Trade Me	Strategic. Makes investments and acquisitions to build service offering.

Along with Rightmove, investors see REA Group as a poster child for property portal success because of its clear market-leading position and its ability to effectively monetize its agent relationships. Both businesses are cash-spinning machines.

While Zillow Group and Zoopla built audience by acquiring domestic businesses, Australia-based REA Group has an international scope. It made early plays in Europe -- Italy, Germany, France and Luxembourg -- with mixed success, and most recently took a minority stake in realtor.com operator Move Inc. in the U.S.

REA Group finalized its $414 million acquisition of Malaysian portal iProperty in 2015, giving it a strong Southeast Asia presence. Its global aims are clear.

REA Group operates real estate sites in 11 countries: Australia, Italy, Luxembourg, Germany, France, Malaysia, Singapore, Hong Kong, Macau, Indonesia and Thailand.

Trade Me operates a portfolio of classified and marketplace businesses in New Zealand, including the country’s leading residential real estate portal Trade Me Property. As a group, Trade Me has a market cap of $1.5 billion and reported FY2016 revenues of $158.7 million.

Trade Me has a flexible investment approach. In my four years there we made minority investments -- like the one we made in the data valuation company Homes.co.nz -- and outright acquisitions.

The degree to which we integrated acquired companies varied.

Based on personal experience of selling my own technology company, the video game development firm Agora Games, in 2009, I prefer to give acquisitions as much autonomy as possible. This became our default position. However, in some cases we fully integrated acquisitions into existing business units.

Because Trade Me Property dominates the New Zealand market, our M&A philosophy centered on adding more services to our offering rather than expanding audience. For example, Homes.co.nz moved us into the data and valuation space, while our 2014 acquisition of rental viewing scheduler Viewing Tracker improved our offering to property managers and tenants.

Why should we care?

After finding a new investment opportunity and presenting it to my boss at Trade Me, he would ask: “So what?” He meant, “Why should Trade Me care about this?”

The same question applies to this globe-trotting survey of portal M&A strategy.

The answer is different than the one I expected when I embarked on my journey last spring. I expected to uncover general investment themes shared by the world’s major property portals.

However, after six months of travel and dozens of interviews, I am surprised to find no commonalities among them. No two portals share the same investment approach and strategy. Each achieved massive success in its own way.

It’s clear that no one winning strategy exists.

So, if you’re looking to replicate the success achieved by these global leaders, my survey suggests it’s best to pick a path that aligns with your aptitude and vision and then execute well.

Happy hunting!