Last week’s post on LoopNet led to some interesting comments/discussion. Is it a marketplace, marketing platform, data provider, all of those things or something else? What these things mean can vary, so I’ll start with my own definitions.
To me, a marketplace is a collection of buyers and sellers transacting business. While LoopNet can lead to a business transaction, it’s not where business is done. It only generates leads, i.e., inquiries from parties interested in a listing. There’s no meeting of the minds, contractual obligation or money changing hands, which is why I think LoopNet is better referred to as a…
A platform in the business sense is a method for mass communication. It consists of tools, outlets and strategies that help you get your message across. LoopNet is definitely a mass communication outlet for CRE listings. Plus, it has tools to amplify your message beyond LoopNet with its ProTools. So LoopNet is without a doubt, a marketing platform for CRE listings.
Data Provider or Data Aggregator
Aggregating data just means you collect, store and maybe display data usually in an easy to navigate fashion. Often data aggregation is used to attract visitors in hope of getting them to do something else such as click on ads or purchase premium services. Zillow and Trulia use this model.
You can aggregate data without being a data provider but a true data provider adds value to the data it aggregates. They usually cleanse/standardize it, combine multiple data sources or offer reporting, analytics and other tools. For all this value, the user pays for access.
CoStar is obviously a data provider. LoopNet, by its founders’ and the FTC’s definition, is not a data provider. But it is. LoopNet provides property and comparable information, market reports, demographics and so on. From a broker standpoint, most of that has nothing to do with marketing. And for non-brokers, i.e., prospects, it may help them to decide which listing to pursue, so it’s really value added data.
The problem with being both a data provider and a marketing platform is that the goals are at cross purposes – and you end up not doing either one very well.
The value of a data provider is how good its data is. LoopNet does nothing to verify listing data and anecdotal evidence is strongly negative about the quality of LoopNet’s data. They can’t even claim they have everything that’s available in any market so their market data is based on incomplete and likely flawed listing data. Their property and comparable data comes mostly from other sources or agents are asked to update or supply what’s already there. So as a data provider, LoopNet doesn’t do a great job.
The value in a marketing platform is how successfully it leads to a transaction. When you charge users to view listings, you’re necessarily going to get fewer leads. You could argue that making users pay confers a higher level of intent or that what LoopNet shows non-paying subscribers is good enough but we’ll never really know. LoopNet claims they have over 6 million subscribers. But only around 100,000 subscribers pay – and it’s a good bet that most of them are agents.
While there’s certainly value in exposing listings to other agents, there are no statistics as to how many transactions are initiated from non-paying subscribers – those ones agents try to attract with their Premium Listing accounts. Most of LoopNet’s marketing “success” is anecdotal – as is much of its failure. About the only we can agree on is that LoopNet dominates search engine results driving traffic to their site and ultimately, an agent’s listings.
So now that CoStar is telling us that LoopNet is going to be a marketing platform, does that mean they’ll get rid of the market reports, property and comp data and all those other “value added” data services LoopNet offers? Probably. Does it also mean they’ll focus more on how to make LoopNet a better marketing platform? Probably not. After all, CoStar is a data provider. They’re not marketers. LoopNet is supposed to fill that void for them and just because they’re the only game in town doesn’t mean there aren’t better ways to market CRE.
In an attempt to look like they know what they’re doing, CoStar staged their disappearing building stunt. It was meant to let you know that if the listing for your building is not on LoopNet, it doesn’t exist. It would have been better if they rolled out that 3D technology on Loopnet. Because marketing has changed. It’s increasingly visual, social and transparent.
As LoopNet plods along with the same old interface on a gated website, agents may very well find that they get better results with their own content marketing. And as search engines continue to tweak their algorithms and deploy social search, LoopNet could lose its dominance in that area. Or some innovator might come along and show CoStar what a CRE marketing platform really looks like.