Around these parts, Zillow is a pretty well known entity. But get out of the Seattle tech echo chamber and the online real estate company — despite attracting more than 45 million visitors last month — doesn’t have anywhere near the brand recognition of a Starbucks or Amazon.com or Expedia.
But Zillow CEO Spencer Rascoff says he’s setting out to change that in a big way in 2013, looking to create a “massive, enduring brand.” As we previously reported, Zillow is launching its first national TV advertising campaign and bumping up marketing spending by a hefty 70 percent this year. (Granted, it’s starting from a relatively low base since Zillow has historically driven its traffic via word-of-mouth and PR).
Why the shift?
In a conference call with analysts today around the company’s fourth quarter earnings, Rascoff noted that there’s a huge amount of “brand whitespace” in the real estate category. That means no one brand symbolizes real estate in the U.S.
Zillow, with $150 million in cash and cash equivalents in the bank, is looking to change that. And it’s doing it in a big way. (Previously: Zillow revenue grows 73% as it squeaks out a small profit)
Here’s more of what Rascoff had to say in today’s call:
“Even though Zillow is the most visited real estate Web site in the category and even though most of our traffic comes to us organically and for free, we still have a relatively unknown brand. We’ve actually done extensive consumer research in the U.S., and if you ask Americans to name an online real estate Web site, more people say ‘I don’t know’ or ‘I can’t name one’ — than say Zillow. And we are the number one site in the category. More people say Amazon — who doesn’t even have a real estate section of their Web site — than say the company that is number two in the category. I am just trying to paint of picture to you of what I mean by brand white space. We believe that by advertising, and by continuing to invest in product development, we have an opportunity to create a massive, enduring brand from which significant shareholder value creation and margin expansion comes.
In the near term, we are going to continue to focus on brand growth, traffic growth and revenue growth at the expense of margin maximization. We’ve been driving this Ferrari kind of around a suburban neighborhood, and after extensive testing and learning in 2012, it’s time to take it on the open road and see what it can do. So, that is the way we are looking at 2013.”
Rascoff said that the new marketing spend will occur in TV, radio and online — and the primary reason for that investment is to grow brand awareness. In Rascoff’s view, Zillow has a rare opportunity to step on the gas and accelerate in front of its rivals, using advertising to create an enduring brand much as executives at the company did at Expedia.
“Our advertising strategy at this stage is to grow awareness among home buyers in the U.S. that Zillow is a great place to come and shop for a home,” he said.
In the past, Rascoff said that they’ve seen examples of companies that have been able to utilize advertising to “extend their lead” by creating a dominant brand. “We are following those recipes,” he said.
Here’s a look at Zillow’s upcoming TV ad. Get ready to see a lot of this in the coming weeks.