Spencer Rascoff

Historically, Zillow has derived the bulk of its revenue from online advertising, charging real estate agents to gain access to the company’s growing ranks of home buyers and sellers. And while the advertising business won’t be going away anytime soon, Zillow has much bigger ambitions in 2012.

Essentially, it wants to become the place where agents turn to get the tools they need to more effectively do their jobs.

“We are in the midst of a calculated, strategic expansion evolving our agent offering from a one-sized fits all advertising program to become more of a central hub for a variety of marketing and business services,” said CEO Spencer Rascoff in a conference call with analysts during the company’s fourth quarter earnings call Wednesday.

The first of those new offerings will be a customer relationship management (CRM) product that’s designed to help agents better manage and organize contacts that they receive via the Zillow mobile applications and Web site.

That could put Zillow directly in the line of some other players, namely cross-lake rival Market Leader and even CRM provider Salesforce.com. A name has not yet be finalized for the new offering, which is expected to be launched later this month.

“You can expect to see more evidence of this strategic evolution in the quarters ahead as we expand our CRM platform and other services,” said Rascoff, adding that they plan to investigate possible strategic acquisitions to help bolster the “expanded portfolio of agent-focused tools.”

Later during the call, Rascoff added more details about the new push into real estate services.

“The strategy here is to have many hundreds of thousands of real estate agents using our suite of — mostly free — productivity tools. And then have a smaller portion of them actually paying for services in sort of a freemium model. The strategy is all about shifting from a seller of advertising, which is very finite and sort of monolithic, to a provider of SaaS-based suite of productivity tools of which ads, or lead gen, is part it. But CRM, listing distribution, technology for aiding Web sites; training and other things that agents need to make the most of the Internet and of this technology revolution. That is the direction that we are moving.”

Zillow posted record revenue and profits during the fourth quarter, turning a $922,000 profit on revenue of $19.9 million. The Seattle company completed an IPO at $20 per share last July, and it is now trading at about $34 per share.

Previously on GeekWireColorado real estate group explains why they booted Zillow’s Diverse Solutions

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  • http://blog.findwell.com Kevin Lisota

    In an industry dominated by independent contractors and 1-man(woman) shops, there is a spot for a tech company to hit the nail on the head by providing useful services to manage a real estate agent’s marketing and business. 

    I’d be bullish about their prospects here and think it’s a great strategic move to become more than just a listing website to the real estate industry.

  • Ray

    Doesn’t local MarketLeader do all this?

    • johnhcook

      Yep, Market Leader certainly is a rival to Zillow in this arena, and I pointed that out above. One other thing I was thinking was whether Zillow could use some of its cash to buy Market Leader outright. After all, Market Leader’s market cap stands at $80 million, below the $92 million in cash that Zillow now has. (Not to mention issuing stock). 

      And since curious minds want to know, Zillow now has a market value of $936 million.

  • Guest

    Maybe Zillow should focus on user tools and on making their data more current. I spend 50%+ of my time going back and forth between Zillow and Redfin making sure a property is still listed.

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