Above: Realtor.com’s Damian Eales (left) and CoStar’s Andy Florance
The words from CoStar CEO Andy Florance were delivered almost as an afterthought that day in February 2023 at the end of an upbeat but otherwise boilerplate quarterly earnings report.
“While we typically do not comment on potential acquisition opportunities, we are confirming here that CoStar Group (corporate parent of Homes.com) is not acquiring Realtor.com,” he said. “We have tremendous respect for the people behind Realtor.com, and for the National Association of REALTORS® (NAR), but we continue to believe that Homes.com’s business model and our principles are well aligned with the interests of NAR members and real estate agents generally.
“As you’ve heard us say before, CoStar is always assessing opportunities to maximize shareholder value, including strategic acquisitions, and the discussions announced last month by News Corp with respect to a potential sale of Move, Inc., the operator of Realtor.com, were part of that ongoing effort.”
Just another potential business deal that didn’t quite work out, right? Wrong. Instead of the two companies coming together under the same corporate umbrella, storm clouds would continue to gather between the residential real estate portal powers. And as Homes.com and Realtor.com battle for second place behind Zillow, tension has ratcheted up in both traffic-number claims and the public relations one-upmanship.
Over the past year or so, CoStar ads have trumpeted explosive Homes.com gains, eventually claiming second place in home-search site-traffic behind Zillow in October 2023. Move, Inc. CEO Damian Eales fanned the flames during a recent MLS Forum at NAR’s annual midyear legislative conference, asserting that such numbers were lacking in veracity.
“If Zillow is the hungry lion, then perhaps CoStar is the wolf in sheep’s clothing,” he said. “A new competitor who plays by their own rules. We are calling out the falsehoods in their claims at the moment. They advertise that they have an audience of 156 million for Homes.com, which is plain wrong.”
CoStar had announced that its “Residential Network” (including listings for rentals and undeveloped land) had exceeded 156 million monthly unique visitors, and that the Homes.com site had surpassed 110 million monthly unique visitors, based on data from Google Analytics, in its Q1 2024 investor presentation. The 110-million figure alone surpasses Realtor.com’s numbers.
Not long after this, CoStar responded to the earlier accusations regarding traffic numbers.
“Eales’ comments about Homes.com web traffic were defamatory and, frankly, desperate,” said a company spokesperson. “Earlier this year, Homes.com, the fastest-growing portal in the U.S., launched the industry’s largest marketing campaign to drive hundreds of millions of visits back to Homes.com, where all agents benefit. The results are clear. Homes.com had more monthly unique visitors than Realtor.com, whether you look at our Homes.com Network or just Homes.com alone.”
RISMedia interviewed Florance by phone and Eales via email, seeking a deeper, fact-driven dive into the firestorm. The CEOs had unique perspectives on the numbers—both their own and their competitor’s.
“There’s been a lot of conversation around that these numbers aren’t real, but what’s missing is that they’re trying to divert people’s attention away from our commitment to investing to build that traffic,” said Florance. “You get into the whole discussion of how you are tracking the numbers, and the most accurate ones are Google Analytics, Adobe Analytics, things that are installed in the site that actually track the traffic.
“Things like ComScore or Semrush are small panels that track web traffic and then try to estimate what’s happening. Realtor.com uses Adobe Analytics, which is the equivalent to Google Analytics, and basically measures all the traffic to the site. That’s the data they’re sourcing. You have dozens and dozens of different things you could use to try to say, okay, look at this or look at that. But without a doubt, the panel, the census of the traffic that tracks everything to the site, is the most accurate.
“Our Homes.com site has over 100 million unique visitors. So it’s not just one month. It’s been five months now and four months in a row. But the question is, is that real? Well, sure it’s real. News Corp disclosed their traffic numbers, using Adobe Analytics, which is the same as Google Analytics, of 76 million.”
Eales countered, accusing CoStar of shifting gears by including numbers for other company websites in its formulation for Homes.com.
“CoStar can be credited for their creative writing, but their audience arithmetic is outrageous,” he said. “We’re pleased to see they came clean by admitting to include not one but 17 websites in their calculation, and we are encouraging Homes.com customers to now look at those other websites to see if their brand is visible and if they got what they paid for.
“The independent audited audience measure, ComScore, is reported by Zillow, Redfin and Realtor.com. It is the common currency for media planning across media buying agencies, and ComScore reports that Homes.com is a small fraction of what CoStar tells their paying customers. We’re not surprised, because Homes.com is also at the back of the pack across other independent measures like Nielson, SEMrush and SimilarWeb. Google Analytics isn’t independent because it is configured by the user, isn’t audited and it isn’t apples-to-apples.
“While we are pleased to have an audience so much larger than Homes.com, size isn’t everything. We’re focussed on quality as well as quantity, which means a highly engaged, high-intent audience delivering high-quality buy and sell leads. With the benefit of a 116-year-old brand and a market-leading user experience, Realtor.com attracts substantially more high-intent buyers and sellers, which is writ large when you consider SEMrush shows Realtor.com has more than 10 times the organic search-market share of Homes.com.”
Florance expressed surprise at the vitriol from the top corporate level. Overtaking of rivals is usually undertaken via confidential strategic maneuverings, with mild public statements and restraint normally the rule.
“I’m sort of shocked by the dirty play,” he admitted. “When we launched Apartments.com, the multifamily industry didn’t have quite the same sort of brutal street fighting kind of stuff. It was a little more polite, a little more civilized.Some of it seems desperate, but I have confidence in doing the right thing, knowing an honest message will prevail. You can only tell people something that’s not true for so long.”
Exaggerating traffic numbers moderately or falsifying them to the extreme is not an option for one big reason. Do it and senior execs could face serious consequences.
“All of us report in our public filings that we’re using the most accurate measurement, which is Google Analytics, and we all report that under penalty of law,” he said. “If we lie on earnings calls, the CEO, the CFO and the chief legal officer could go to jail. So of course that’s not going to happen.”
Marketing-cost returns
While Realtor.com and Homes.com claim differing traffic numbers to their websites, how they are obtained and what they mean, CoStar unquestionably spends huge dollars on marketing, with ads on various real estate websites, including RISMedia.com, streaming platforms and on TV, even during the Super Bowl, where both ad rates and audience size skyrocket. It is a strategy CoStar has determined not only helped propel it into second place, but will in time help the portal pass Zillow as the industry leader.
“We have the largest marketing spend in the history of the industry,” asserted Florance. “Our year-to-date investment in marketing is twice (as much as) all the other players combined. It results, not surprisingly, in having massive traffic numbers and huge audiences coming to our website. A simple way to think about that is if you are doing 1.7 billion impressions a month in click-through rates, typically 3% of that alone would give you 50 million unique visitors.
“Those only show a piece of the spend. It doesn’t include SEM (search engine marketing), billboards and stuff like that. And we are just wrapping up another wave of marketing, launching seven new ad campaigns coming to TV in late summer and fall. So we’re sustaining it and already getting ready for the Super Bowl next year.”
CoStar says that Homes.com’s media spend so far in 2024 is at $118 million, and that according to Vivvix and Sensor Tower, companies that track such details, Zillow is at $31 million, Realtor.com at $30 million and Redfin at $12 million.
Without going into detail, Realtor.com strongly disagreed with CoStar’s estimate of their marketing budget, noting that “we don’t publicly disclose our marketing spend, and disagree with the figure cited.”
Eales scoffed at Florance’s rosy Homes.com marketing overview.
“They’re spending big, but is it working?” he asked. “If you believe their self-reported claim that the single URL Homes.com has an audience of 110 million, we don’t. They were claiming it was over 100 million back in October of last year. Despite all that money spent on the Super Bowl, it hardly made a dent.
“The fact is, they’re the smallest of the big four (real estate portals), and despite all of that investment, they have only gained about 1% organic marketshare, so very few people are finding Homes.com on Google. We don’t have to spend as much because we have a formidable brand, and the majority of our traffic is unpaid. Because our audience is so engaged, it turns into quality leads, and that’s what our customers want—leads—not lip service.”
As far as Realtor.com’s marketing goals, Eales was succinct.
“Our goal is simple: a more engaged audience, delivering more leads to our customers and helping more consumers find their way home,” he said. “We’re building on our position as the No. 1 most trusted brand by real estate professionals because consumers want to go where the pros go. We will continue to evolve our high-impact retail advertising, which is promoting a differentiated search experience, and we are about to launch the next stage of our Buyer Agent Advocacy campaign showcasing the value of independent buyer representation, demonstrating that we are a dedicated partner to the industry and to consumers in their real estate journey.
“We’re also increasingly leveraging News Corp’s and Fox’s extensive media properties, reach and authority to bring our message to consumers everywhere.”
Almost on the same side
As previously noted, Realtor.com and Homes.com were this close to residing within the same corporate sphere. Florance has not spoken publicly about how close CoStar came to acquiring Move, Inc. from News Corp. Until now.
Certain aspects of the transaction were under a mutual confidentiality agreement, but he did share some details with RISMedia.
“Well, obviously in that process we were on a non-disclosure, but News Corp disclosed it in Australia that we were having conversations,” he said of the global giant headed up by Rupert Murdoch. “When you have conversations like that, they’re serious, and you would absolutely understand anything and everything about that business.
“One of the concerns for someone like us is the lead-diversion model. How long can you do that? And if someone comes into the industry and offers a more honest and transparent site and then invests in marketing it, they will beat you. The folks who actually serve the agents, and the homesellers and buyers better, will win. So that was a concern of ours if you looked at their business.”
Florance was asked how CoStar would have justified owning two residential real estate portals with differing philosophies. Might he have sunsetted Realtor.com simply to lose the competition?
“No,” he replied. “We would’ve converted Realtor.com to a ‘Your listing, year lead’ business. It would’ve been treacherous trying to completely change the business model like that. We would have used the traffic and the name, and then converted it, because you always win by doing the better thing for the customer. Anyone thinking about it knows it’s better for the buyer agents and seller agents. Anyone who understands the model knows it’s better for homesellers for sure.”
So which company ultimately pulled the plug on what was rumored to be a $3 billion deal?
“A couple of folks on our team were like, no, no, no…we can build the traffic for a fraction of that cost,” said Florance. “And, in fact, we have.”
Catching Zillow
So what’s next for Homes.com and Realtor.com? Few corporations are truly satisfied with a silver medal year after year. Can the gold-standard behemoth, Zillow, be overtaken?
“In some respects, we already did, because we are the No. 1 most trusted brand amongst real estate professionals,” said Eales. “But we also know we have opportunities to gain audience share and revenue share, and to that extent, we are delighted that at the peak of Homes.com’s spend we held audience share and have continued to improve audience engagement, as well as the quality and quantity of leads to customers.”
Florance was also confident his portal could leapfrog Zillow…in time.
“They’ve got a great franchise, and you don’t catch someone like that in a year,” he said. “It is a decade-long play. You work on it for three years, you work on it for five years, you work on it for 10 years. But we have a better business model for sure. ‘Your listing, your lead’ works really well with agents who are actually in the business. There are 1.6 million real estate agents, and about 500,000 do 85% – 90% of the business. The lead-diversion models like Zillow take the reputation that a listing agent or buyer agent has earned in their market and lets someone else who hasn’t established a reputation sort of steal that reputation.
“What we find is that the people who are relying on those lead-diversion models tend to be inexperienced agents who aren’t as established. We have a product that definitely resonates with the homesellers better, with the homebuyers better, and most importantly with the agents better, because the good agents get the biggest benefit from what we’re doing.
“We’re investing a billion dollars in marketing, and marketing drives traffic. So it shouldn’t surprise anyone that we’re up 200% year-over-year, or that we’re solidly over 100 million, or solidly approaching Zillow. And there’s no magic or tricks or distortion. It’s real. We have the capital, we have the commitment, we’re doing it. We are providing a positive solution to real estate agents in that we help them market themselves and their client properties.”
Future hopes and plans
Both companies have visions for what they plan to accomplish going forward.
“We will keep delivering high-intent buyers and sellers to our customers through leveraging the broader News Corp audience across titles like the New York Post and the Wall Street Journal, extending our media extensions into the Fox network, and investing enormously to improve our search experience through new mapping and generational AI,” said Eales. “And we are investing to replatform our core technology so that we can better service top-producing teams across all of their buy and sell needs.
“Our sell-side product suite of Listing Toolkit for agents and RealChoice Selling for consumers has been enormously successful and is scaling rapidly. In the coming months, we’ll give agents even more ways to connect to sellers by launching Listing Toolkit for teams.”
Florance has global expansion in mind.
“The way I look at it is we are an international company,” he said. “We have hundreds and hundreds of staff overseas. We’ve begun to do residential marketplaces in the United Kingdom. We’re the leader for commercial (real estate) in Europe. We plan to export Homes.com outside the United States over the next number of years, and all of our promises here we’ll be taking global.”
