Yahoo! (YHOO)
Yahoo! (YHOO: Charts, News, Offers) has decided to partner with Zillow in an effort to secure more advertising space in the online real estate industry. Yahoo’s real estate business has taken a backseat to its competitor Realtor.com over the past few years, and the internet pioneer is working hard to dethrone its arch rival from being the number one real estate listing service on the internet. As a step towards accomplishing this goal, Yahoo has reached out to Zillow, the second largest online real estate network, for help. Yahoo is hoping that its newly formed alliance with Zillow will enable it to reclaim its position at the top of the online real estate market. What makes Zillow so appealing to Yahoo? How does Yahoo intend to monetize this partnership?
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Stock Analysis
The most obvious advantage for Yahoo will be the increase in users and exposure for its real estate network. The Yahoo Real Estate network will now have direct access to all of Zillow’s traffic. This is particularly enticing for Yahoo because there is only a 10 percent overlap between the Yahoo’s 6.14 million users and Zillow’s 7.05 million users. Yahoo has just tapped into an entirely new customer base without the headache of having to earn their user loyalty. Zillow has already done that. Yahoo has acquired access to a network of members that are already active participants in the Zillow community. However, Yahoo realizes that simply expanding its network size does automatically make it more profitable.
Yahoo’s primary revenue source with its online real estate business is advertising. It currently concentrates on recruiting broad based advertisers to fill its ad space. As a result, Yahoo has established a nice clientele of mortgage companies, credit agencies, and other similar services. Yahoo has found that these more “universal” advertising offers tend to work well because almost everybody needs them, especially potential homeowners. Zillow, on the other hand, has taken a more granular approach to selling ad space. Zillow has found considerable success by targeting more “local” advertisers such as nearby real estate agents. Yahoo is hoping that Zillow can help it capitalize on the more targeted advertising opportunities that it has been missing out on. Yahoo is optimistic that Zillow’s more “local” advertising strategy will help bolster and enhance its current advertising offerings and increase revenues.
Overall, Yahoo seems to have made a nice move with the Zillow partnership. The Zillow deal has given it more online presence while putting pressure on Realtor.com. Yahoo’s acquisition of more users is very important because network size and reach is a key factor of success for a real estate listing service. In addition, Zillow’s added advertising inventory and more “local” advertising sales approach will create more revenue opportunities for the internet pioneer. Yahoo most certainly has plans to work with Zillow on enhancing its service functionality, but it needs to act quickly so it can capitalize on its current momentum. Yahoo is hoping that Zillow will help it surpass Realtor.com as the number one online real estate listing service, but Yahoo knows it will not be easy.
More News about Yahoo:
- Move.com Back on Hitwise Top 20 List – A closer look at the online real estate market share breakdown. Is Yahoo gaining ground?
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