Zillow is not slowing down with its plan to build a national real estate brand, even though it is in the process of gobbling up its next closest competitor in Trulia for $3.5 billion.
In today’s earnings call with analysts, Zillow CEO Spencer Rascoff laid out a plan to boost the company’s marketing and advertising spend from $65 million to $75 million for the year.
That’s a huge budget, considering that Zillow essentially built its business via word-of-mouth for its first eight years.
But now the company is pushing ahead with the full-blown marketing campaign, one it set in motion last year.
Why would Zillow continue to advertise, even though it plans to take out its main rival some time next year?
The answer is pretty simple: It’s working.
“We started seeing early data in January and February around the efficacy of our ad spend, and we started seeing early data around revenue and EBITIDA coming in ahead of our expectations for the full year,” he said. “So, the increase, and turning it up a notch, has really been happening all year.”
Rascoff added that the spending increase has nothing to do with the competitive marketplace, which is interesting since both Realtor.com and Trulia launched national ad campaigns after Zillow started spending heavily on TV advertising.
Even so, Zillow appears to be distancing itself from rivals, reporting today that traffic to its Web site and mobile apps was nearly 89 million visitors in July. (Trulia reported 54 million visitors for the month of June. Data was not available for July).
The national advertising effort is coming at a cost. Zillow reported a net loss of $10.4 million for the quarter, with its overall costs and expenses rising 56 percen to $89.4 million. More than half of that — $48.1 million — was tied to sales and marketing.