Trulia gushes about Market Leader deal, says Zillow ad campaign not hurting traffic

TruliaCEO_PeteFlint

Trulia CEO Pete Flint

Zillow is spending tens of millions of dollars on a big-budget advertising campaign this year, part of a plan by the Seattle company to establish itself as the dominant brand in real estate.

So, what does longtime rival Trulia think about it, and does it have any plans to counterattack?

Don’t count on it.

In a conference call with analysts today following Trulia’s second quarter earnings report, CEO Pete Flint noted that the marketing spend of competitors (he never mentioned Zillow by name from what I heard) is having little impact on the company’s overall traffic.

“We are seeing tremendous traffic growth, so we have not been impacted by competitive marketing activity, and we just feel really good about our playbook, both to drive consumer engagement, as well as our ability to satisfy and grow our agents and subscribers,” said Flint.

Asked in a follow-up about its own marketing efforts, Flint downplayed any potential big advertising spend, noting that the company is focused on product development and growing traffic organically.

marketleader2“Of course, we need data to inform our decisions, and consequently from time to time we run small-scale tests across multiple different channels,” he said. “But I’d characterize these as very small scale, and more than 99 percent of our traffic is organic.” Chief Financial Officer Sean Aggarwal added that there’s “no intention to spend any significant sums in discretionary marketing in Q3.” Instead, he said they will continue to invest heavily in engineering, adding that it is “in our DNA.”

Trulia finished the quarter with 34.9 million monthly unique visitors, up 49 percent year-over-year. Zillow, on the other hand, attracts more than 50 million monthly uniques.

Trulia also may not have the budget to go big on advertising, in part because the company is spending heavily to gobble up Kirkland-based Market Leader in a $355 million transaction. The importance of that acquisition, expected to close this quarter, was stressed throughout the conference call as executives repeatedly mentioned the deal.

aggarwal

Sean Aggarwal

In fact, CFO Aggarwal said that they are “tremendously excited” about the two companies combining, especially as the executive teams have begun working on the integration plans. “It is very clear that one plus one will equal three here,” said Aggarwal, adding that Market Leader is like the Salesforce.com of real estate agents.

He said they plan to create $15 million in incremental revenue through the deal after the third year. “At this point, we are heads down focused on the Market Leader transaction,” he added. “It is a big transaction for us, and we are very excited, and we see the opportunity to create something very special here, so, for the near term, our focus is going to be on doing a killer job on integrating market leader into the Trulia the platform.”

As another interesting data point, Flint noted that they’ve stopped working with Mortech, the mortgage software company that Zillow bought last year. In his remarks today, he said that they’ve “transitioned to other folks” as he cited the importance of both the mortgage and rental categories to their business.

Shares of Trulia were up more than 10 percent on the earnings news. They have risen nearly 130 percent this year.