Everyone loves a good rivalry, and perhaps none have been quite as fun to watch as the matchup between Seattle-based Zillow and San Francisco-based Trulia.
These two online real estate companies have been at each other’s throats for years, a fight that has resulted in litigation and plenty of bombshells back-and-forth. In many regards, Trulia has followed on the heels of Zillow, whether it has been around launching apps, new features or going public.
Now, it’s going to be fascinating to watch this play out in the advertising sphere. On Wednesday, Zillow CEO Spencer Rascoff announced a bold plan to spend up to $65 million on national advertising in 2014, a huge uptick from the $40 million in spent in 2013 (the first year it advertised).
Today it was Trulia CEO Pete Flint’s turn, announcing the hiring of a new chief marketing officer and a plan to spend $45 million on an ad campaign. (Not to be outdone, Redfin also is looking for a marketing czar to ramp up its own national presence).
Both stocks fell on the news that they will be spending so much on advertising, with Zillow dropping 10 percent today (market value of $3.1 billion) and Trulia off 17 percent (market value of $1.1 billion)
I asked a Trulia spokesperson how they plan to differentiate from Zillow, which remains the leader in the category with an audience that reached nearly 70 million unique visitors in January. Here’s what they had to say:
We believe we have created a more authentic approach to our marketing efforts that will allow us to break through in the category. Most marketing in the space is sentiment-based and undifferentiated. We know that if we focus on building the best product and create a differentiated campaign we can drive all our key metrics.
We are putting $45m toward a multi-channel campaign across TV, online, radio and mobile that will likely kick off in late Q1. The design and implementation of the campaign will be guided by an analytical, data-driven approach. We are focused on the best efficiency by channel, and how these channels complement each other. From our research, it’s clear that a multi-channel approach delivers most effectively against the goals we have for the marketing campaign.
The goals of our campaign is to create more engagement and awareness with our uniquely transaction-ready audience. Of course we will be looking for unique visitors to grow, but even more importantly we will be looking at return visits, leads and overall subscriber growth. With these goals in mind, $45 million dollars is the right level of commitment. Anymore than that our analysis shows it will to diminishing returns and a negative ROI.
Interestingly, in Wednesday’s conference call, Rascoff stressed how Zillow was pulling away from its rivals. And he noted that some — without naming names but certainly referring to Trulia — are focusing more on tools for real estate agents.
Rascoff believes the winner in the real estate category will be the player with the biggest consumer audience, one of the reasons it is spending so much on advertising. That was the subject of a discussion on this week’s call.
“So our strategy is quite different from our competitors in this regard,” said Rascoff. “I would tie it back to our investment in audience and advertising as the way to juxtapose, we are making a $65 million bet in 2014 and a $40 million bet in 2013 that growing audience is what is going to result in us ending up with most of the ad dollars in our category,” he said. “And other companies are making much different types of bets.” Those include operating enterprise-level customer relationship management software offerings, much like what Trulia picked up when it bought Kirkland-based Market Leader last year.
This is going to be an interesting battle to watch for sure.
