Here we are on the eve of a new dawn. Brokers and agents need to make quick sense of what the closing of the Zillow-Trulia merger will mean for their immediate and ongoing future. To help you in that end, here is a cheat sheet for the Zillow/Trulia merger. I will cover deal structure, what it means for the two brands and share insights about how you should react to the news.
The Zillow/Trulia deal is an acquisition via a “stock-for-stock” deal. At the close of the transaction, Trulia stock (TRLA) is converting to Zillow (Z) stock, and a new holdings group, yet to be named, will be created. Trulia stock is converting at a pre-determined price of 44% of Z’s price on the day of close – which should be tomorrow 2/17/15.
In the scenario proposed by Z in the offer to acquire TRLA, the brands will maintain their individual brand identities. TRLA stock owners will own north of 30% of Z and Trulia’s CEO Pete Flint will join the board of the holding company along with one other Trulia board member.
What this means for Trulia and Zillow:
- Trulia and Zillow are still in business 100%: (Besides the champagne popping) this deal isn’t designed to make Trulia go away. With 54M uniques and not much overlap in consumer audience, killing the brand makes no sense. Trulia and Zillow each have individual brands and stories to make their co-existence a no-brainer.
- The new company will save a lot of money: Zillow’s CEO Spencer said that savings would amount to the tune of $100M. The lionshare of that will come from money NOT spent competing against each other, and in cost-savings from shared resources. I don’t expect a massive one-time lay-off, or any major disruption to operations.
- Things are just heating up: Check out this quote from one of Trulia and Zillow’s largest investors, the Australian hedge fund Caledonia, speaking to the future of the new combined entity. Note that Caledonia has invested a combined total of $1.9BN in Z and TRLA:
“So, we have a company with 72% of the home buyer audience but only 4% of the agent advertising spend … This is equivalent to a TV station with 72% ratings and only 4% ad share. Advertising dollars inevitably follow eyeballs across every medium, across every country.”
- No need to compete = renewed focus: With no energy wasted fighting each other, Trulia and Zillow can focus on winning even more consumers over – which in turn gives them more leverage in the industry. They may have shiny bells and whistles for agents and brokers, but the only reason you will pay them a lincoln penny is for the consumer eyeballs and leads they drive. Expect the new entity to throw even more of their combined weight around to strengthen their position in the market, and drive further shareholder value.
What it means for you – and insights for the future:
- You will be sold something: Trulia and Zillow’s sales teams will be bigger and stronger than ever. The new organization will learn to sell more efficiently, and will have even more leads and products to sell to agents and brokers. Maybe we’ll see different product packages and pricing structures, and hopefully that’s a win for agents and brokers. Remember, despite seeming monolithic, they only have 4% of the online ad spend, so they have a lot of selling left to do.
- More control over listings: Zillow parting ways with ListHub (owned by Move, now News Corp) creates an exciting situation for the industry. What happens when the largest sites for real estate consumers are not a part of Listhub? Will brokers keep using it – and why? Trulia and Zillow’s feeds will only get better as they unify listing aggregation resources and work with MLSs around the country. Frankly, Trulia and Zillow building up their direct feeds is GOOD for the industry! Here’s why: you get more control. With no middle man controlling your data, you can impact listing display and lead delivery. Just ask Keller Williams and their “my listings, my leads” strategy.
- Lead generation = Zillow: Remember when Trulia bought MarketLeader? MarketLeader also owns HouseValues.com and RealEstate.com, and Zillow already owns Hotpads, RentJuice, and StreetEasy to name a few more brands. The new Zillow entity will own the leading top-of-the-funnel sites under one umbrella. For them, the money is not in the syndication, it’s in owning the destination. Let’s put hearsay aside and recognize that it’s better to work with Trulia and Zillow when it comes to leads, rather than against. They have earned that respect.
- Where will YOU focus?: Focus on your role in the real estate ecosystem – helping consumers achieve their real estate dreams and goals. Train yourself to be responsive to consumer demands, and be a true market expert to help consumers make sense of the data coming at them from all directions.
Let the large portals continue their battle for metrics like page-views, SEO rankings and ARPU (average revenue per user). You need to double your focus on what actually matters to your business: showings, offers and closed transactions. Your only concern is whether the portals are working for you as an input into your marketing machine.
Your clients couldn’t care less about how the portals are affecting the real estate industry. All your consumer cares about is achieving their homeownership goals by understanding their local market conditions, mortgage rates, and their home’s value. Focus on delivering and exceeding consumer expectations, and your business will continue to prosper.
Hopefully with this cheat sheet, you are now more aware of what this deal means today, and what it could mean for the future. If a consumer asks you, “What does the Trulia Zillow deal mean?” you can now answer: “Business as usual, but people on Wall Street made a lot of money. Now let’s find you a house!”
Although I was a Trulia employee for over 8 years, the views here are based on my own experience and assumptions. I was never in any capacity involved in the merger talks, or have any knowledge about Zillow or Trulia’s future plans.