Following on the heels of Zillow’s highly anticipated announcement that took place on Tuesday, February 17, 2015 that confirmed the completion of its acquisition of Trulia, Inc. for $2.5 billion in a stock-for-stock transaction—and the formation of Zillow Group (a media company that maintains Zillow’s portfolio of consumer and business-to-business brands), the group’s management team hosted a conference call on Wednesday, February 18 to discuss the actual closing of the acquisition.
“This is a pivotal day in our company’s history, and we are extremely pleased that we have now closed the acquisition of Trulia,” said Spencer Rascoff, CEO of Zillow Group, who kicked off the call with a sense of both anticipation and excitement at what’s in store now that Zillow and Trulia are under the same roof.
The Next Phase of Evolution
With the acquisition now finalized, industry practitioners across the board are voicing their opinions and sharing with their employees just what the combined power of Zillow and Trulia means for their organizations. In a recent email to employees, Ryan O’Hara, CEO for Move, shared the following: “First, the merger reduces the number of major competitors in the market for online real estate services to two—Move/News Corp and Zillow/Trulia. My expectation is that the two of us will wage a spirited battle for the hearts and minds of consumers and the industry, and we will push each other to be better performers—more focused on the customer, quicker to innovate, more committed to adding value at every stage of the real estate cycle. In this way, everyone wins.”
No matter how the acquisition is viewed, it’s clear to see that it will up the ante across the board. “Taking a long-term view, this is an excellent outcome for consumers, customers, employees and shareholders of both companies,” said Rascoff, who explained to conference call attendees that it’s now time to begin the next phase in the company’s evolution: To become the largest, most trusted and vibrant home-related marketplace.
A tall order indeed, the main focus for the remainder of 2015 centers around the successful integration of Trulia. “Over the coming quarter, both Zillow and Trulia management will work closely to combine our complimentary teams and cultures of innovation,” said Rascoff, who pointed to their intent to execute a brand portfolio strategy as being the key to success in this area. Not only will this allow consumers a choice of diverse experiences throughout the process of shopping for a home or rental on mobile or web, it’ll also enable advertisers to increase their reach to a wider range of consumers. “Our belief in giving power to the people remains unwavering as we begin the next phase of our evolution to become the consumer destination for all things home,” added Rascoff.
Looking toward the future, whether it’s the short term or long term, Rascoff went on to discuss the importance of rightsizing—and its role in setting the stage for continued growth and, ultimately, success. “As with any integration effort, there are some roles that were eliminated, primarily due to redundancy in the combined company’s sales and support organization,” said Rascoff. With the finalization of the acquisition on February 17, approximately 280 positions were cut, with an additional 70 positions scheduled to be cut within the next three months, leaving approximately 2,000 employees at Zillow Group. “I’m excited about the company’s long-term outlook with the staff we have in place and having the right size company,” explained Rascoff.
With the right infrastructure in place, Rascoff addressed one attendee’s question during the question-and-answer portion of the call regarding the company’s marketing strategy moving forward by explaining that they’ll continue to advertise both Zillow and Trulia significantly. In fact, Zillow’s advertising budget will be larger than it was in 2014. While he made no statement regarding Trulia’s marketing path forward, the group intends to continue to grow their audience across all four brands (Zillow, Trulia, StreetEasy, HotPads) through product development and advertising to ensure they have the largest consumer audience.
Keeping Up with a Competitive Environment
Another hot topic brought to light during the question-and-answer segment of Wednesday’s call dealt with how the competitive environment surrounding the Zillow/Trulia acquisition will come into play as we head toward the future.
“There’s been a competitive environment from the get-go,” said Rascoff, noting that realtor.com® was a competitor from the beginning. “We’ve always had competition, yet it’s important to understand that Zillow did incredibly well—as did Trulia—while they were competing with each other. There’s still a lot of competition, and I don’t think it’s more or less than it’s been over the last 10 years.”
According to a statement issued by Move, Inc. on the imminent close of the Zillow/Trulia deal: “Zillow’s year of the merge will be realtor.com®’s year of the surge. As our competitor grapples with the challenges of integrating two very similar businesses, realtor.com® will continue to provide the most accurate and up-to-date property listings in America, as well as the most valuable professional tools for brokers and agents.”
“Competing in business typically involves trying to be better, cheaper, faster or different than your competition,” said O’Hara in his email to employees. “How will we compete? By continuing to build the best web and mobile experiences for consumers and the best and most valuable tools for brokers and agents, and by providing the market with the most comprehensive, most accurate and most up-to-date listings in the U.S. I can also promise you we will quicken the pace of product innovation and apply more marketing muscle to our consumer and industry outreach…And that’s how we win.”
The portal power play continues in these most interesting real estate times. Stay tuned to RISMedia for continuing coverage.