Print media remains an important component of real estate marketing, and REA Group should utilise its links with News Limited products to ensure its long-term success, a former senior Telstra executive has said in a letter to the Fairfax-owned Australian Financial Review.
“REA’s Achilles heel is its seeming unwillingness to embrace its brothers at News to ensure its franchise is unassailable in the long term,” Ted Pretty, former group managing director at Telstra, wrote.
REA Group is majority owned by News Limited.
“For real estate, unlike the jobs, travel and dining verticals, there is a strong case to be made for a bundled offering of online advertising with high-quality regional/local print, particularly when the local agents own a chunk of the print.”
His letter was in response to comments made by REA Group CEO Greg Ellis that Fairfax’s recent purchase of the Melbourne-based The Weekly Review was a bad move by the publisher. It also comes immediately after REA Group announced a 32 per cent jump in net profit for the half year to December 2011.
“The purchase of The Weekly Review by Fairfax did two things for Fairfax,” he wrote. “First, founder Antony Catalano was eating Fairfax’s lunch as the viability of The Age was under threat from the loss of advertising – the acquisition was a necessity. Second, it has strengthened Fairfax’s hand in new strategies to take on REA in other markets.
“But Fairfax will not be without company as at least two new glossies are reportedly in the planning for the Sydney regions.”
Mr Pretty added that “News’ print guys have a lot to offer REA but presumably [Mr] Ellis doesn’t think so.”
He continued that Fairfax would seek to outspend REA Group on advertising the Domain brand – “a very expensive and primitive strategy” – while fellow online listings portal Homehound is expected to introduce a print strategy and Onthehouse “is enjoying a return to market favour and quietly building its online reach for modest cost.”
He added the market “should also watch out for the ‘Ray White’ family’s next steps.”
“This is all happening as the US online property portals think about their market entry strategies (and partners) for Australia.”
Mr Pretty, who is chairman of corporate advisory and investment firm CMB Capital, is also a director of the ASX-listed data centre operator Next DC and, and until its recent delisting, RP Data. He was also an executive director at Macquarie Capital Advisers for four years, and was CEO of Gulf Finance House and chairman of Fujitsu Australia.
Tony Blamey, general manager real estate, Fairfax Marketplaces (owner of Domain.com), told Real Estate Business that Ted Pretty’s comments were “an endorsement of our strategy.”
Domain offers agents listings in its newspapers – both at city level with The Age, The Sydney Morning Herald and The Canberra Times and through the local newspapers Fairfax owns across Australia – and online at domain.com.au, and via mobile technology.
Mr Blamey said Domain’s offering was part of a multi-channel strategy, of which mobile was becoming increasingly important, to the point where it is now a viable third channel in its own right.
“We’re leading the market [in mobile], and we’re approaching one million app downloads. One third of agent enquiries are now coming from mobile.”
Furthermore, Mr Blamey said Domain’s offering to agents extends beyond listings to include Australian Property Monitors (APM) – which is now 100 per cent owned by Fairfax – and the agent CRM system MyDeskTop.
“We are a real estate services business,” he added.
Mr Blamey added that listing numbers and agent subscriber levels have continued to grow for Domain, which stemmed in part from the necessary "marketing investment" Fairfax had made in the Domain brand.
He added that he wasn't aware of any US-based companies looking to enter the Australian online listings market.
REA Group declined to comment for this article, while Mr Pretty was unavailable at the time of writing.