Zillow Gets 55% of CA Buyers: An Analysis

Hmmm... now, carry the two... square root of mouse...

Hmmm... now, carry the two... square root of mouse...

From the lovely and talented Sara Bonert (@sbonert) over at Zillow blog, I learn that Zillow gets 55% of all California buyers:

Over half (55%) of those who reported using the Internet as a tool in the home buying process used Zillow. Realtor.com continued to be the most used site as 89% of buyers used it; with individual real estate company sites at 81%; individual real estate sites were used 66% of the time. Yahoo! Real Estate scored with 53% and Craigslist was at 49%.

I wonder (aloud) on the comments and on Twitter whether this is a good thing for Zillow, seeing as how they’re coming in fourth out of six options, behind Realtor.com (89%), individual brokerage sites (81%), and individual agent sites (66%).

The dashing and charismatic David Gibbons (@davidgibbons) responds:

@robhahn dude, you are not serious … try answer this … if you own a broker site do you get 81% of buyers? [hint: no, but Z does get 55%]

David does have a point.  But I fear 140 characters can’t do justice to my point.  So here goes.  CAVEAT: MASSIVE UNSUPPORTED SPECULATION FOLLOWS BELOW THE FOLD.

Analyzing the Numbers

Since I don’t have a copy of the 2009 CAR Survey of Buyers (that’s California Association of REALTORS, not the auto industry that is headed towards nationalization an bankruptcy) handy, I have to make a lot of guesses and assumptions and all kinds of other stuff that will make this whole enterprise fall apart.  But…

According to Zillow’s own stats, Zillow gets 8.9m monthly uniques — this is a national number.  And according to this article, Realtor.com did 11.3m monthly uniques in April of 2009.  Let’s suppose that the CAR survey percentages apply to this national number.

55% of X = 8.9m (Zillow) and 89% of X = 11.3m (Realtor.com).

The range of X is between 16.1m (based on Zillow) and 12.7m (based on Realtor.com) buyers nationwide every month.  Let’s split the difference, average the two and say the number is around 14.4m buyers nationwide.

Now, California as a state contains 11.95% of the total population of the United States.  If we go by this, then 11.95% of 14.4m buyers, or 1.7m buyers, should be from California.  With a total population of 36.7m, that means roughly 4.7% of Californians are in the market for a new home every month.  Note that this is a HUGE assumption, and likely to be wildly inaccurate as to the count of homebuyers in the U.S. or in California.  But it’s what I got to work with for now.

Let’s keep going.  There are a total of 3.6m listings on Zillow, as of July 1, 2009 according to this press release.  When I go to Zillow and do a search for all listings in CA, I get 255,893.  That amounts to 7.11% of the total listings count in Zillow.  Note the gap between % of population and % of listings; this may be an indication of the depressed California real estate market.  If we try to estimate the count of buyers in California under the logic of estimating real estate activity, then we’re looking at 7.11% of the 14.4m national buyer number, or 1.02m buyers of California real estate.  Again, a huge assumption.

Maybe the realistic number lies in between, so we’ll average the two and get to 1.38m or roughly 3.7% of the total population of California.  This represents the total California Buyers.

Going back to the CAR survey, Zillow gets 55% of this 1.38m monthly California buyer pool, or about 750K uniques from California.  Remember that there are 255K listings on Zillow for California right now.  That gives us just under 3 uniques on Zillow per listing.

With me so far?  What does any of this matter?

Okay, now then… there are 448 listings in Costa Mesa, CA on Zillow.com as of right now.  If the above ratio holds, then there are 1,344 uniques who are searching Costa Mesa on Zillow.  And the total number of California buyers looking for homes in Cosa Mesa is 1,344/55% = 2,443 (since Zillow has 55% of the total buyers).

Here comes the factual question for any broker or agent in the Costa Mesa market: how many monthly uniques do you get to your website?

If your brokerage website in Costa Mesa, CA gets more than 1,344 uniques a month, you’re outperforming Zillow.  That is, unless, a big chunk of your traffic is referred to you by Zillow itself.

The Logic

I couldn’t put this into a 140-character Tweet, but the question at issue is whether the 55% of total California buyers that Zillow gets is really meaningful.  David Gibbons argues that it is, because the 81% of survey respondents who used a brokerage website are spread out amongst hundreds, maybe thousands, of individual broker sites.  But that logic assumes that all 750K unique visitors to Zillow who are searching for homes in California are searching in the relevant area.  This is, I think, flawed.

The 81% number for individual broker websites is an aggregated number, but so is the 55% number that Zillow is so happy with.  Just because the traffic is on one site does not make it meaningful to a broker or a realtor who is interested only “live buyers” interested in his market area.  If 90% of Zillow’s California buyers came from and searched for San Francisco real estate, I rather doubt that the Costa Mesa realtors/brokers would care very much.

So if you’re going to do comparisons to see which site is more effective for marketing, then you do need to get down into the weeds a bit and compare for the relevant area.

In the analysis above, the numbers may be bad — after all, I was trying to estimate (in a hurry) the total count of California buyers as a whole, then California buyers in a given market area like Costa Mesa — but the logic, I think, is sound.  Maybe the true ‘threshold number’ above which a local brokerage site is outperforming Zillow isn’t 1,344 but 4,344 or 644, but there is such a ‘threshold number’.

And when the CAR survey shows that 81% of all California buyers used an individual brokerage website during their search, the fact that the 81% is an aggregated number does not therefore render it useless in a comparative perspective from Zillow with its 55% number.  The two are, in fact, apples to apples.

The only thing that would change the logic is referrals from Zillow to all these individual websites.  If Zillow showed data that 50% of their web traffic goes to an individual website, that changes the equation completely.  If the reason why brokerage and agent sites are at 81% and 66% respectively is because of Zillow, then that’s a different story.

Quod Erat Demonstratum

None of this takes anything away from Zillow’s accomplishments, in my mind.  They’ve done a great job of building traffic, building userbase, building value, etc. That they’re up to a lot of truly innovative stuff — like the mortgage marketplace, the focus on statistics and data, etc. — is not to be questioned seriously.  Zillow has become a very important company in our little industry.

But my initial point was simply that I would not be out there pounding my chest if I came in fourth out of six, with individual brokerage sites and individual agent sites beating me by 26% and 11% respectively. If anything, that would make me gird my loins up for even more work.

David’s logic, I think, could make Zillow ignore two of its most serious competitors simply because the competition is spread out amongst so many sites.  On the current numbers, that would be dangerous.

As always, I welcome feedback and especially criticism showing me where I’ve gone astray.  I’d especially like to see some real web traffic data from brokers in California, including what % of their traffic was referred to them by Zillow.

Thanks.

-rsh

  • http://realtor.org/ Todd Carpenter

    Zillow’s business model is to serve ads on web pages. Not sell houses. So what does it mater how they rank against and individual agent sites?

  • http://realtor.org Todd Carpenter

    Zillow’s business model is to serve ads on web pages. Not sell houses. So what does it mater how they rank against and individual agent sites?

  • http://ERAHouston.com/ Thomas Johnson

    ROB: Without any more data, this is navel gazing to the nth degree. How many of those web buyers used all of the above? How many started at Zillow, (David Gibbons is going to love what follows) found a neighborhood that was aggressively Zestifarmed by a smart agent and clicked through to the agent’s Zillow page, clicked through to the agent’s knock your socks off IDX solution that had the most complete data and bought the home of their dreams not knowing or caring which websites they utilized to find their dream home?

    I really do not think the consumer gives a tinker’s damn about the web tools she uses. She just wants to buy a house. My job is to make sure that agent is me as often as possible.

    • http://www.notorious-rob.com/ Rob Hahn

      Heh, thanks for the comment, Tom.

      I guess I’d say, don’t make more of this post than it is — an attempt to extend the discussion from Twitter. :)

      As I was telling someone last night on IM, not every one of my post is particularly deep thinking, heh.

      Also, your point is valid — and I said, IF Zillow sends a huge amount of traffic to broker/agent sites, then that completely changes the analysis.

      -rsh

  • http://ERAHouston.com Thomas Johnson

    ROB: Without any more data, this is navel gazing to the nth degree. How many of those web buyers used all of the above? How many started at Zillow, (David Gibbons is going to love what follows) found a neighborhood that was aggressively Zestifarmed by a smart agent and clicked through to the agent’s Zillow page, clicked through to the agent’s knock your socks off IDX solution that had the most complete data and bought the home of their dreams not knowing or caring which websites they utilized to find their dream home?

    I really do not think the consumer gives a tinker’s damn about the web tools she uses. She just wants to buy a house. My job is to make sure that agent is me as often as possible.

    • http://www.notorious-rob.com Rob Hahn

      Heh, thanks for the comment, Tom.

      I guess I’d say, don’t make more of this post than it is — an attempt to extend the discussion from Twitter. :)

      As I was telling someone last night on IM, not every one of my post is particularly deep thinking, heh.

      Also, your point is valid — and I said, IF Zillow sends a huge amount of traffic to broker/agent sites, then that completely changes the analysis.

      -rsh

  • http://www.tribusgroup.com/ Eric Stegemann

    I think the real question that Rob brings up here that needs to be answered is what percentage of Zillow’s traffic ends up getting a hold of a broker through either info requests directly on Zillow’s site or clicking over to the brokerage site.

    I happen to be a big Zillow fan since with our St Louis affiliate, they drive quite a few uniques and are 3rd in traffic only behind direct and Google organic. But I do wish they would release more data. They are about to take over Realtor.com as being the top RE website. Why not put it out there?

    I would also suggest that Zillow offer some kind of data on what kind of traffic their ads can produce (obviously it depends on the ad, but with their ad system how much variance can happen when you have the same info to fill in?). For around $50-75 / 1000 impressions it’s definitely on the pricier side of online advertising, however if they can show there are clicks our affiliates and I’m sure 100s of other brokers would be lining up to sign up.

  • http://www.TribusGroup.com Eric Stegemann

    I think the real question that Rob brings up here that needs to be answered is what percentage of Zillow’s traffic ends up getting a hold of a broker through either info requests directly on Zillow’s site or clicking over to the brokerage site.

    I happen to be a big Zillow fan since with our St Louis affiliate, they drive quite a few uniques and are 3rd in traffic only behind direct and Google organic. But I do wish they would release more data. They are about to take over Realtor.com as being the top RE website. Why not put it out there?

    I would also suggest that Zillow offer some kind of data on what kind of traffic their ads can produce (obviously it depends on the ad, but with their ad system how much variance can happen when you have the same info to fill in?). For around $50-75 / 1000 impressions it’s definitely on the pricier side of online advertising, however if they can show there are clicks our affiliates and I’m sure 100s of other brokers would be lining up to sign up.

  • http://www.drewmeyersinsights.com drewmeyers

    Eric-
    Personally, I think we’re pretty transparent overall. For example, take a look at Spencer’s AR blog today — Zillow traffic for June 2009 by city. Our sales team could give you more numbers about ad performance specifically.

  • http://www.geekestateblog.com Drew Meyers

    Eric-
    Personally, I think we’re pretty transparent overall. For example, take a look at Spencer’s AR blog today — Zillow traffic for June 2009 by city. Our sales team could give you more numbers about ad performance specifically.

  • http://www.tribusgroup.com/ Eric Stegemann

    I don’t dispute your transperancy in general. Heck the fact you guys post how far in general you are off for Zestimates in areas is great.

    But Drew you know me, I’m a data fiend. I just have a hunch that a lot of traffic leaves your site to go to brokers and I think that should be put out there…

    • http://www.notorious-rob.com/ Rob Hahn

      Yar, that’d be awesome data for Zillow and for the rest of us. I’d have to think Zillow refers a ton of traffic out; imagine showing that by zip code… wow.

      -rsh

  • http://www.TribusGroup.com Eric Stegemann

    I don’t dispute your transperancy in general. Heck the fact you guys post how far in general you are off for Zestimates in areas is great.

    But Drew you know me, I’m a data fiend. I just have a hunch that a lot of traffic leaves your site to go to brokers and I think that should be put out there…

    • http://www.notorious-rob.com Rob Hahn

      Yar, that’d be awesome data for Zillow and for the rest of us. I’d have to think Zillow refers a ton of traffic out; imagine showing that by zip code… wow.

      -rsh

  • http://www.mortgagesunzipped.com/ David Gibbons from Zillow

    Rob,

    Posting that kitten was a real shrewd way to win some support here ;-)

    I stand by my original feedback; you are muddling apples with oranges. Web traffic in Real Estate is INCREDIBLY broadly distributed. You cannot learn anything by considering the aggregate traffic to agent and broker sites.

    And Zillow is certainly a tool for driving traffic to those sites.

    When you purchase showcase ads you’ll see that we do in fact project the page view inventory available. What we cannot do is forecast clicks / referrals because the performance of ads varies greatly depending on their copy.

    • http://www.notorious-rob.com/ Rob Hahn

      Do you guys have any aggregate stats on how many visitors you send to other websites? Perhaps that will at least get us started in analyzing how important Zillow is to the average broker/agent.

      BTW, I want to make CLEAR that I am NOT knocking Zillow here. You guys have done and continue to do an amazing job. Folks who think I’m knocking your value or valuation are missing the point. That I think I wouldn’t have celebrated coming in 4th doesn’t mean Zillow suxxorz or some such. I thought I made that clear in the post, but it bears repeating.

      This whole post is to continue our argument/debate about considering “distributed traffic” vs. “Zillow traffic”. My view remains that traffic to Zillow is also “distributed traffic” — because consumers search a narrow geographic area, neither all of California nor all of the United States.

      If you get 10m visitors a month, and you have (let’s say) 5m outbound clicks, well, that’s kinda huge. I’d suggest trying to compile at least some data on that.

      -rsh

  • http://www.mortgagesunzipped.com David Gibbons from Zillow

    Rob,

    Posting that kitten was a real shrewd way to win some support here ;-)

    I stand by my original feedback; you are muddling apples with oranges. Web traffic in Real Estate is INCREDIBLY broadly distributed. You cannot learn anything by considering the aggregate traffic to agent and broker sites.

    And Zillow is certainly a tool for driving traffic to those sites.

    When you purchase showcase ads you’ll see that we do in fact project the page view inventory available. What we cannot do is forecast clicks / referrals because the performance of ads varies greatly depending on their copy.

    • http://www.notorious-rob.com Rob Hahn

      Do you guys have any aggregate stats on how many visitors you send to other websites? Perhaps that will at least get us started in analyzing how important Zillow is to the average broker/agent.

      BTW, I want to make CLEAR that I am NOT knocking Zillow here. You guys have done and continue to do an amazing job. Folks who think I’m knocking your value or valuation are missing the point. That I think I wouldn’t have celebrated coming in 4th doesn’t mean Zillow suxxorz or some such. I thought I made that clear in the post, but it bears repeating.

      This whole post is to continue our argument/debate about considering “distributed traffic” vs. “Zillow traffic”. My view remains that traffic to Zillow is also “distributed traffic” — because consumers search a narrow geographic area, neither all of California nor all of the United States.

      If you get 10m visitors a month, and you have (let’s say) 5m outbound clicks, well, that’s kinda huge. I’d suggest trying to compile at least some data on that.

      -rsh

  • http://mymcclellanville.net/ Daniel Bates

    I show up higher than Zillow when I do a search for just about any keyword and my area, there for I win :-p

    Personally, I don’t care where my buyers search online. If they’re not familiar with the area or don’t already know an agent in my area than they’ll come across my website after a few searches and if I don’t capture them than I didn’t do my job. I’m certainly not worried about an agent from Zillow Realty to steal them away, I’m actually more worried about them being on Realtor.com than Zillow or Trulia which make the NAR take note that they’re biting the hand that feeds them. I say embrace all the great technology that’s out there. Today’s home buyers are strong and independent and like to do some of the work themselves. So embrace this and encourage them to use Dwellicious (which allows them to bookmarks homes for sale including FSBO’s from Realtor, Trulia, Zillow, etc.) and offer them feedback on the homes that they show interest in.

  • http://mymcclellanville.net Daniel Bates

    I show up higher than Zillow when I do a search for just about any keyword and my area, there for I win :-p

    Personally, I don’t care where my buyers search online. If they’re not familiar with the area or don’t already know an agent in my area than they’ll come across my website after a few searches and if I don’t capture them than I didn’t do my job. I’m certainly not worried about an agent from Zillow Realty to steal them away, I’m actually more worried about them being on Realtor.com than Zillow or Trulia which make the NAR take note that they’re biting the hand that feeds them. I say embrace all the great technology that’s out there. Today’s home buyers are strong and independent and like to do some of the work themselves. So embrace this and encourage them to use Dwellicious (which allows them to bookmarks homes for sale including FSBO’s from Realtor, Trulia, Zillow, etc.) and offer them feedback on the homes that they show interest in.

  • http://www.zillow.com/ Sara Bonert

    Rob-

    You had me when you called me lovely. You lost me when you started doing algebra (I am sometimes blonde you know). So I’ll leave the commenting to the self-appointed data geeks like Eric. Haha!

  • http://www.zillow.com Sara Bonert

    Rob-

    You had me when you called me lovely. You lost me when you started doing algebra (I am sometimes blonde you know). So I’ll leave the commenting to the self-appointed data geeks like Eric. Haha!

  • http://www.matthewferrara.com/ Matthew Ferrara

    Rob:
    Interesting debate, but I fear it’s beyond mathematical; far worse than just academic. It’s totally irrelevant how many consumers use REALTOR.COM or Zillow or any of the other real estate sites because when you look at the OTHER end – the side from which agents actually DO something with any leads they get from ANYWHERE – it’s a disaster. For years we have worked with companies generating dozens, hundreds or thousands of leads a month from every corner of the web. And when it comes down to it, the vast majority of leads are simply abandoned by agents. I’m talking numbers like 88% of internet leads abandoned by agents in less than 30 days; and 92%+ simply abandoned in less than 5 days. Unless someone can corner the market on “READY TO BUY RIGHT THIS DAMN MINUTE!” leads, then it’s all sound and fury. We can generate traffic, get consumers to stop by, even get them to ask for help. But once we get that lead to the average real estate agent, it’s pretty much lost money. The only winners in this equation are Zillow and REALTOR.COM because at least they get paid UP FRONT through their advertising. From the real estate BROKERAGE standpoint, lead generation / lead management is not paying dividends.

    That’s why I content that Sally Simple who simply calls and emails the FSBOs online and keeps up with a few old friends on Facebook will likely have a better “ratio” of success than Larry Lotsaleads who has twenty domains, an IDX page or two, and even an enhanced profile on the big guys’ sites. In the end, traffic does not equal commissions. It’s still a matter of sales. And that’s the “secret” problem of the industry.

    • http://www.notorious-rob.com/ Rob Hahn

      Good points, Matt. :)

      Again, don’t make more of this post than what it is — simply a debate about “distributed traffic” vs. “single site traffic”.

      Your point is on-target, I think, and deserves its own discussion: lead management once it comes in. Do you have a post up discussing this issue specifically?

      -rsh

  • http://www.matthewferrara.com Matthew Ferrara

    Rob:
    Interesting debate, but I fear it’s beyond mathematical; far worse than just academic. It’s totally irrelevant how many consumers use REALTOR.COM or Zillow or any of the other real estate sites because when you look at the OTHER end – the side from which agents actually DO something with any leads they get from ANYWHERE – it’s a disaster. For years we have worked with companies generating dozens, hundreds or thousands of leads a month from every corner of the web. And when it comes down to it, the vast majority of leads are simply abandoned by agents. I’m talking numbers like 88% of internet leads abandoned by agents in less than 30 days; and 92%+ simply abandoned in less than 5 days. Unless someone can corner the market on “READY TO BUY RIGHT THIS DAMN MINUTE!” leads, then it’s all sound and fury. We can generate traffic, get consumers to stop by, even get them to ask for help. But once we get that lead to the average real estate agent, it’s pretty much lost money. The only winners in this equation are Zillow and REALTOR.COM because at least they get paid UP FRONT through their advertising. From the real estate BROKERAGE standpoint, lead generation / lead management is not paying dividends.

    That’s why I content that Sally Simple who simply calls and emails the FSBOs online and keeps up with a few old friends on Facebook will likely have a better “ratio” of success than Larry Lotsaleads who has twenty domains, an IDX page or two, and even an enhanced profile on the big guys’ sites. In the end, traffic does not equal commissions. It’s still a matter of sales. And that’s the “secret” problem of the industry.

    • http://www.notorious-rob.com Rob Hahn

      Good points, Matt. :)

      Again, don’t make more of this post than what it is — simply a debate about “distributed traffic” vs. “single site traffic”.

      Your point is on-target, I think, and deserves its own discussion: lead management once it comes in. Do you have a post up discussing this issue specifically?

      -rsh