Online real estate giant Zillow Group saw revenue jump 13 percent to nearly $177 million in the third quarter as agents shelled out big bucks to advertise on its sites.
The parent company of New York City-based StreetEasy counted nearly 97,000 agent advertisers nationwide as of Sept. 30 – a 2 percent drop year over year – but revenue from those agents rose 27 percent to $129 million.
On average, agents who advertised with Zillow spent $270 a month during the third quarter. But the collection of agents who spend more than $5,000 a month is growing. That group spent 57 percent more during the third quarter than it did during 2014’s third quarter.
“We’re continuing to focus on growing revenue from these high producing agents, and not from increasing the overall number of advertisers,” Zillow CEO Spencer Rascoff said Tuesday during an earnings call. “We anticipate these highly producing agents will continue to increase their spend with us to grow their business and growing their market share in their respective cities.”
It’s unclear how the strategy will play out in New York City, where agents have resisted StreetEasy’s building specialist program, a new agent-advertising program that designates paying agents as experts in specific buildings.
Nationwide, Zillow pulled in $402 a month for each agent advertiser during the third quarter, a 20 percent increase from the $334 figure during the same period last year. Zillow estimates that 3 percent to 5 percent of leads that agents get from Zillow result in sales.
Zillow, which acquired rival Trulia for $3.5 billion last year, had 142 million average monthly unique users across Zillow, Trulia, HotPads and StreetEasy, including a peak of 150 million unique users in July, executives said.
While Zillow Group does not break out performance by StreetEasy, the company said its real estate subcategory – which includes agent advertising, agent services, StreetEasy and rentals ad revenue – accounted for $130 million, up 27 percent year over year.
Zillow reported a loss of $21.4 million during the third quarter, more than last year’s $18.6 million loss, because of costs associated with acquiring and integrating Trulia, the company said on the earnings call.
On Tuesday, Zillow also took questions from Twitter, including a user who asked how long Zillow intended to “[charge] the same agents more dough.”
Rascoff said Zilllow is not increasing prices for agent ads, but targeting individual agents who are buying more ads. “We are trying to service small number of agents that are higher performing, and spend more on advertising, produce better service for consumers, rather than have a very large number of agents, that’s spend very little,” he said.