The Real Deal New York

Charting StreetEasy’s path forward? It’s complicated

Zillow CEO Spencer Rascoff says experimentation with business model to come

May 04, 2016 01:32PM
By E.B. Solomont

From left: Spencer Rascoff with StreetEasy's Find Your Formula and Building Experts ads

From left: Spencer Rascoff with StreetEasy’s Find Your Formula and Building Experts ads

StreetEasy may be ubiquitous in New York City, but monetizing the brand is proving “a little more complicated,” according to Spencer Rascoff, CEO of StreetEasy parent Zillow Group.

Speaking during Zillow’s first-quarter earnings call Tuesday, Rascoff said that StreetEasy continues to gobble up market share, through initiatives such as Zillow’s acquisition of rental platform Naked Apartments for $13 million in February.

But StreetEasy’s diverse revenue streams, including subscriptions, display ads, and agent-advertising campaigns, mean the Seattle-based Zillow is finding it tricky to chart a clear course forward. Rascoff acknowledged that in order for StreetEasy to achieve its full revenue potential, Zillow has “more business model experimentation to do” before it embarks on a “full build-out of a sales team” in New York.

Company-wide, Zillow pulled in revenue of $186 million during the first quarter of 2016, up 25 percent year-over-year, executives on the call said Tuesday. In March, its consumer-facing sites – which include Zillow, Trulia, StreetEasy and others – attracted a record 166 million unique users, up 22 percent year-over-year.

But the company was far from profitable, reporting a $47.6 million loss in the first quarter, which it attributed to litigation with News Corp. and the National Association of Realtors.

Zillow does not break out performance by brand, so numbers for StreetEasy weren’t provided. But since its acquisition in 2013 for $50 million, the Manhattan-based listings site has experimented with new revenue platforms, including the controversial “building experts” and “neighborhood experts” programs.

The efforts appear to be paying off: Earlier this year, Rascoff disclosed that StreetEasy’s revenue more than doubled since Zillow’s acquisition. (A back-of-the napkin calculation indicates revenue in 2015 of at least $11.2 million, based on an earlier disclosure that StreetEasy’s revenue in 2012, the last time that annual revenue was disclosed, was $5.6 million.)

Nationwide, Zillow claims it has 63 percent market share of online real estate searches. On Tuesday, Rascoff said the company would focus on growing its national audience of users (read: sellers, buyers and renters). In New York, that effort was reflected in StreetEasy’s wry February ad campaign in public spaces, called “Find Your Formula,” which breaks down the compromises New Yorkers make when it comes to real estate decisions.

Enlisting more top agents to advertise on its sites is also a key goal, Rascoff said. Its “Premier Agent” advertising program, for agents who spent more than $5,000 a month on ads, generated $134.5 million in revenue during the quarter, up 25 percent year-over-year. The number of agents participating in the program increased 74 percent year-over-year, and collectively increased their spending by 83 percent, Zillow said.

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