Market Leader's losses mount amid transition
Company reports $3.1M net loss in Q2
By Inman News, Wednesday, August 4, 2010.Real estate lead generation and management company Market Leader Inc. said it finished the second quarter with a $3.1 million net loss as it continued to transition away from selling leads generated by sites like HouseValues.com in favor of providing customized websites and tools for agents and brokers.
Despite trimming losses by 9.3 percent from the first quarter to the second, Market Leader's $6.58 million loss for the first half of 2010 represented an 11.7 percent increase from the same period a year ago.
Formerly known as HouseValues Inc., the Kirkland, Wash.-based company relied on portals such as JustListed.com, HouseValues.com and HomePages.com to generate most of the leads it provides to real estate agents.
The company changed its name in 2008 and began a transition to a business based around providing personalized websites for real estate agents and brokers with integrated lead generation and customer relationship management tools.
Market Leader said revenue from its new "Vision" products -- including Growth Leader for real estate agents and RealtyGenerator for brokerages -- grew by $200,000 from the first quarter to the second, to $3.4 million, accounting for 58 percent of total revenue.
Growth in Vision revenue was up more than 60 percent from a year ago, driven primarily by new customers for Growth Leader, the company said. Average revenue per customer also increased for the fifth consecutive quarter, to $367 per month.
Market Leader said partnerships with franchises helped it sign up more than 100 new brokerage offices and teams to use RealtyGenerator. Those additions had little impact on second-quarter revenue but will improve the company's bottom line going forward.
Last year Market Leader announced separate agreements to provide RealtyGenerator to brokerages through Realty Executives International and Leading Real Estate Companies of the World. More recently, the company announced a similar agreement with Avalar Network.
Market Leader expects revenue growth in the second half of the year, but warned that increased advertising costs and continued investment in customer acquisition and support are likely to increase third-quarter adjusted losses beyond the $1.6 million loss in earnings before interest, taxes, depreciation and amortization (EBITDA) recorded during the second quarter.
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Submitted by Mike Parker on August 4, 2010 - 2:30pm.
Mike Parker
mparker@theblackwatercg.com
The Internet and marketing on it successfully, have changed tremendously. To some extent, that is what Market Leader is now in the process of overcoming.
When I first read Spencer Rascoff’s February 27 article in which he related that in his company (Zillow), the word “lead” had been eradicated and inquiries were now called “Customer- Initiated Contacts” I shook my head. “Just another case of MBA-speak,” I thought to myself. “It isn’t what you call them; it’s what they truly are.”
Well, Rascoff is right: customer-initiated contacts are what a real lead truly is. Real leads are plentifully obtained from an interactive professionally managed lead site with limited content and goals—among other places—targeted to find buyers with specific interests (foreclosures, bank owned properties, waterfront properties, vacation homes, relocation, condos, etc.,). Instead of laying a trap to get the visitor to give up a name, these sites entice the visitor to ask an agent for what they really want; one-on-one ( thus, you get real names and contact information, not 30% false information like many all-inclusive sites receive). In fact, these sites are short on specific information and long on giving limited choices: “ask me for what you want or go away” has proven to be a very effective way of filtering out the lookey-loos and dealing with the truly interested.
Coupled with effective training (because just about every agent thinks they know how to handle an Internet lead but in most cases, they really don’t know), the combination of skilled agent and real lead is a great thing. Because about 8% of visitors to such sites sign in and ask for more information, an agent can have plenty of real leads with a reasonable and attainable amount of traffic.
My point is this: "leads" generated by taking registrations from a tangentially-themed website and applying the logic that they are interested in buying a home are not "leads," they are a cruel misdirection; today, customer-initiated contacts really are what drives Internet marketing.
Market Leader will survive and prosper; it's just that as the Internet continues to morph, so do the solutions offered to agents and brokers. Their previous model was obsolete, and that is nothing new in the world of IT!