Zillow, Yahoo renew ad partnership

Companies extend agreement into 2014

Zillow Inc. and Yahoo have extended into 2014 an exclusive advertising agreement by which Zillow provides for-sale listings to Yahoo Real Estate and sells ads featuring real estate brokers and agents that appear on both sites.

Zillow.com and Yahoo Real Estate are two of the most visited real estate listings portals on the Internet. The advertising alliance gives Zillow the ability to sell ads to real estate brokers and agents that appear on both sites, splitting revenue the ads generate with Yahoo.

Zillow’s annual report suggests the listing and sales partnership generated between $5 million and $10 million in revenue for Yahoo Real Estate last year.

Zillow said its cost of revenue increased by $5.6 million last year, to $10.6 million, an increase "primarily attributable to revenue-sharing costs related to our strategic relationship with Yahoo Real Estate," plus an $800,000 increase in credit card and ad-serving fees.

In announcing the renewal of the listing and sales agreement, Zillow claimed that the combined sites allow advertisers to reach more U.S. Internet users than the next two largest competitors in the real estate space combined, citing statistics from comScore.

Zillow’s closest competitors include Realtor.com, the official listing portal of the National Association of Realtors, and Trulia.com.

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Realtor.com operator Move Inc. also provides framed Realtor.com search results via MSN Real Estate, and syndicates a separate set of listings and powers searches at AOL Real Estate through its ListHub subsidiary.

With the extension of the partnership, "the Yahoo-Zillow Real Estate network remains the largest real estate network on the Web," Zillow CEO Spencer Rascoff said in a statement.

Zillow and Yahoo signed the listing and sales agreement in July 2010, with an initial term of 30 months from its February 2011 launch date.

The agreement stipulated that after the initial term of 30 months, it would be automatically renewed for another 12 months "unless one party provided written notice of nonrenewal at least 180 days" before the end of the initial term. A Zillow spokeswoman said that the companies have agreed to that 12-month extension ahead of time.

"Since the renewal was not guaranteed, this announcement signifies a definite renewal," said Zillow spokeswoman Cynthia Nowak in an email. "The term is still 42 months" from the February 2011 launch date.

Ads that Zillow sells to agents and brokers through its "Premier Agent" program include branded "Showcase" ads targeted by ZIP code, and space on "buyer’s agent lists" lead forms that appear at the bottom of listing detail pages on both Zillow.com and Yahoo Real Estate.

Agents and brokers who purchase "featured listings" ensure that those listings appear ahead of unpaid listings on both sites, unless users select another sort preference (requesting that listings be sorted by price, for example).

In its latest annual report to investors, Zillow — valued at nearly $1 billion after going public in July 2011 — said revenue was up 117 percent last year, to $66.1 million, driven in large part by a 95 percent increase in Premier Agent subscribers, to 15,799 as of Dec. 31.

Under the terms of the 119-page agreement governing the Yahoo-Zillow partnership, Zillow is released from its exclusivity obligations if Yahoo Real Estate fails to maintain a minimum monthly user count. The minimum monthly user count is confidential.

Yahoo Real Estate is allowed to terminate the agreement if the average number of listings provided by Zillow falls below 70 percent of the average existing-home inventory for sale in the U.S. for two months in a row, as calculated using data reported by the National Association of Realtors.

According to the listing and sales agreement, Zillow’s relationship with Yahoo Real Estate predates the February 2006 launch of Zillow.com.

The agreement notes that the companies entered into a mutual nondisclosure agreement in November 2005 that remains in effect. When Zillow.com launched the following year, Yahoo Real Estate incorporated Zillow’s automated home valuations, or "Zestimates."

The companies announced their advertising alliance in July 2010, and Zillow began powering for-sale listings on both sites in February 2011.


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