Zillow Paid Advertising

It’s amazing how often people go gaga over impressions but never bother to ask how many of those impressions lead to anything. I’ve been guilty of it myself in the early days of ad buying. Great post!

Is there a minimum monthly commitment? It’s possible, though unlikely, that Zillow traffic converts 8x higher than the other traffic you buy so it’s still on pace or even better. If there’s not a minimum buy or commitment I’d throw 260 bones in the account and see what happens.

Hey Eric

Thanks for breaking down how to analyze this stuff.

Click through rate is very important. The brand opportunity is there, but I don’t need that anymore.

Nice, balanced post.

Zillow sales rep was driving me crazy to. Selling full, 1/2 and 1/4 zip codes here for about twice what they quoted you. Was considering trying it out for a month or two when they released their new product which included a contact form direct to me – on their site. No Thanks Zillow, vendors may think Realtors are dumb, but we are aware of lead theft and how it is accomplished. Only a matter of time before a full out federal class action arises against a few of the worst offenders.

By the way, have you checked out advertising costs on Facebook? hahahahahahahahah

Hi Eric,

Spencer from Zillow here.

Thank you for the post, and for the analysis. First, let me commend you mightily for being as analytical and thoughtful when thinking about how and where to spend your advertising budget. I wanted to comment to address a few points though.

First, I don’t agree that the Zillow CPC needs to be lower than the CPC in SEM in order to be attractive. I think someone who types in “Austin real estate” into google and then clicks on your sponsored link is much less qualified than someone who is already on Zillow and is looking at Austin listings and then clicks on a graphical showcase ad with a photo of one of your listings. If I were an agent, I’d certainly pay a higher CPC for the Zillow click than the Google click. Now perhaps the $2.36 CPC is still too high (depending upon your ability to convert that click into a commission-paying transaction) but I take issue with your point that the Zillow click needs to be cheaper than the search engine click.

Second, I wanted to point out that we don’t really think CTR or #Clicks are the right metric to evaluate Zillow’s showcase ads (which is why we don’t sell them on a CPC basis). That’s because our showcase ads are now expandable — goto Zillow and look at a showcase ad and hover over it. We have a massive “expand” rate” which far exceeds the click thru rate. (We don’t yet disclose the expand rate, but we will soon.) Also, unlike Google, we allow (and encourage) agents to put their phone # in the showcase ad — again, another reason why CTR isn’t the right way to evaluate the efficacy of the ad. (For more info, see here: http://www.zillow.com/advertising/Agent.htm or call 866-324-4005.)

OK, last point… one of the biggest selling points to agents with respect to Showcase Ads is the fact that they OWN that ad space for a period of time (usually for a year). Every single consumer looking at real estate information in that zip code on Zillow will see your ad, whether they’re on the map page or a listing page. This is invaluable when you’re at a listing presentation: you can credibly say to a seller “if you want this house to be advertised on one of the most visited real estate sites in Austin (where we have ~87,000 visitors per month, growing 82% year-over-year ; http://tinyurl.com/njmxbm) then you need to list your home with me. This is a key reason to buy a showcase ad and it has nothing to do with CTR or comparing CPC between Zillow and SEM.

Talk to you soon,
Spencer

Hey Spencer –

Thanks for stopping by. This wasn’t intended as a dig at Zillow specifically, but more of a, “hey, make sure and look at the right numbers when evaluating ad space.”

As I said, closed transactions are the bottom line number that I look at, and it’s easiest for me to crunch numbers looking at the actual traffic an advertiser will bring. I put a lot of time into my site, and I know that it will convert better than any ad – so I like online advertising to bring me traffic.

Couple of points:
1) I heartily disagree that your traffic is more qualified than Google. Because of the Zestimate (and for other reasons,) Zillow is full of just as many looky-loo’s as qualified buyers/sellers. In my opinion, the Zillow traffic is slightly less qualified than search traffic – but only slightly so.
2) PPC is more attractive to me b/c you can turn the dial instantly. Are you slammed with business and don’t have time for all the leads? Turn it down. Do you need more business? Turn it up.
3) Laurie touched on it for a second (and I actually used it as an example when turning down zillow ads,) but Facebook advertising is MUCH cheaper, and MUCH more targeted. There is no way you guys can compete with the traffic I can get from FB. I know exactly who I’m advertising to, and only pay when they click.
4) My ad on Zillow is not going to win a listing at the presentation.
5) I don’t see that an “expand rate” is more valuable info than click through. As stated, I want people on my site so that they will convert to a lead, which converts to a sale.

6) My biggest point: If you guys encourage phone numbers in ads, then you need to track the calls. One of my friends manages Apartment Guide in Austin, and they give every advertiser a unique 800# with their ad. Why? They know it drives traffic and they use this to keep clients in the book. If you guys are really going to drive phone calls, then track it, and show me. Otherwise, it’s just posturing.

Eric, Your ad on Zillow SHOULD not win you a listing

Spencer, I appreciate the political correctness of your statement regarding winning listing presentations as a result of advertising on Zillow. To your credit you didn’t suggest that listing agents claim that it might actually sell their home. Thank you for that, I appreciate truth in advertising.

There are several agents here in Long Beach who have openly told me they still use local advertising in their presentations to acquire listings with full knowledge that none of the local marketing drives buyer traffic any longer. It is a listing tool. The tool is broken. Agents still use the tool – that is a lie.

For the last few years, we in the blog/online real estate world have thrown around the concept of transparency. I really don’t see many people practicing it, but the lip service still abounds.

It is better to tell a seller the truth about what will actually drive buyers into their homes. Its driving the right buyers in which sells homes.

People are so mad on impressions nowdays, just a shame that they dont pay as much attention to click through rates. First impressions dont always count. Be careful when buying advertising. Excellent post Eric

@Brandon –

I don’t know if there’s a minimum monthly commitment – that’s a good question. Spencer? It would be interesting to try it out for a month and track conversion – even throwing a unique phone number on the ad to track calls.

I’m not a big fan of paying for advertisements per page views or impressions. We’ve purchased an ad lately from one of our local chambers of commerce and agreed to a ‘page view/impression’ metric, but also agreed to a monthly cap on what we would be charged. Thankfully we agreed to this up front, as when the chamber sends out a newsletter the page views skyrocket for folks looking for information on the latest ballet, discount, or whatever.

Yeah I got the call last week and listened to the pitch, which seemed to be a “next step” type of scripted call as the guy kept trying to get me to let him walk me through a demo online over the phone. To that I responded “just explain it to me. If it takes lnoger than 30 seconds to explain and I don’t understand it, then I’m not interested”.

He persisted with the “well, that’s why we really need to walk through and I’ll show you how the ads work”. To that I responded “just email a link to an example ad and I’ll look at it and see how it works myself”.

I’m with you Eric, I want hard data and I want to know what I’m paying for. I still haven’t received the email with the link to a showcase ad, and I haven’t gone to Zillow to look at one either.

And it somewhat peeves me that we’re the ones going out and obtaining the listings that show up on the sites that then turn around and try to get us to pay for the traffic that said listings drag in. Seems like I’m being sold what I created.

Steve

Great post Eric!

Spencer, thanks for coming on and giving the point of view from Zillow’s standpoint. Very rarely does “the company” do that.

Discussions like this are normally opinion driven with each side stating there thoughts.

Eric laid out his data driven analysis. He knows how much a “click” costs from various sources and clearly Zillow loses in his analysis. That leaves the question “What’s the intangible value” of a zillow account?”.

I think to settle this, what we would need is for Zillow to provide statistics on the percentage of agents that renew their advertising at the end of their contract.

Since real estate is a commission based business and most realtors thouroughly understand ROI, the renewal rate would be very telling.

On the other hand, the absence of facts is very telling as well. I’ve been solicted by Zillow in the past and they always try to sell me on impressions. I’d really like to know what their success rate is in retaining customers. I wander why they don’t post it?

@Eric I’m surprised to hear that you’ve had a good experience w/ fb advertising. All that I’ve ever heard is that it has huge PV volume but terrible performance.
I definitely agree with you that we need to track calls if we’re going to include the fact that we allow phone #s as a key benefit of Showcase Ads. We’re already doing this with some brokerages but we need to do it with agents also.
If you buy Showcase Ads through our phone sales group there is a minimum commitment (6 months I think) but if you buy it yourself online you can just do it for 1 month.

@Steve I’m sorry the salesperson never sent you the link. That’s unacceptable, and I’ll look into it. On your other point though, I don’t agree with your statement “And it somewhat peeves me that we’re the ones going out and obtaining the listings that show up on the sites that then turn around and try to get us to pay for the traffic that said listings drag in. Seems like I’m being sold what I created.” Yes the listings belong to the agent (well, to the broker actually) but the traffic exists on Zillow. Would Zillow have traffic without the listings? We have a data point on that: Zillow had about 4 million unique visitors per month (top 10 site) before we had a single listing. Zillow produces its own traffic because of its Zestimates. I think your criticism would be valid if we were like the countless other sites that just take listings (typically via an IDX feed, but sometimes via broker feeds and agents’ manual uploads) and slap them onto google maps and put up some ads. Those sites do deserve your scorn because they are indeed selling you what you created.

@Tim you’re right, there’s no question that renewal rate is a great way to determine whether our advertisers think the ads are of value. To be perfectly honest, most of our ads are sold in 10-12 month increments and we haven’t been selling ads long enough to have come up for renewal yet. So we don’t have data on renewals (yet). Anecdotally, advertisers seem to be happy so far. But the way to really tell is to watch their wallet.

Thanks for the discussion everyone.

@Spencer – FB can be incredibly effective if you use an ad that attracts the type of traffic you want, and if you limit its display to only the users that will bring qualified traffic. I don’t want to get into too many details, but most advertisers on FB go about it the wrong way.

I have another blog post coming about demanding transparency from vendors. You guys sound like you’re more than willing to provide that to us, so I’ll be interested to get your take. Look for it on BHB within the next day or two.

Transparency is what Zillow is all about. It’s why we exist. There are some things that are off limits (for competitive reasons) but for the most part, we’re big advocates of transparency.

I’ll try to keep an eye out for it on BHB but if you ever want to reach me directly you can always email me at spencer at zillow dot com.

Eric and Spencer, you both make very goos points. I was curious to call Zillow but Eric you beat me to the punch as well as saving me time. Eric, I am paying 55 cents per click through homegain. Where else have you found your ppc to have closed deals at reasonable rates? Great informative post and comments. Thank You Eric & Spencer.

Eric,

Great post, and great success in driving a very meaningful conversation. I’ve been fortunate enough to not have Zillow call me. I’ve made the mistake of going with R.com and have been harassed endlessly by trulia as well as other companies promising great success. I hope that these lead thefts would get out of our business, but as long as other realtors are willing to pay, these thieves will continue to rob us.

Steve Trang,
I don’t understand why you consider Zillow a “lead theft”. We allow agents and sellers to list their home on Zillow for free. FOR FREE. FOR FREE. Each month, we send millions of clicks to agent and broker websites FOR FREE. FOR FREE.

Let me state that again: We are the 2nd largest real estate website and we allow you to list homes on our website for free. In almost every city, our local traffic far exceeds the circulation of your local newspaper. And (again) we allow you to list homes for free.

Yes we sell ads which allow agents to get even more exposure for their listings. If you don’t want to buy an ad, that’s of course up to you. But I don’t like it when someone calls me or my company a thief.

Eric, thank you for this post, it was very informative.

Spencer, you handled yourself in a very professional manner. You are to be commended.

Thank you both for the information.

This reminds me of a pretty scammy practice that other businesses use on unsuspecting agents. They call and guarantee top placement for a search term for what seems like a great price per month. What the agent doesn’t know is that the search term hardly gets typed in at all. Then it goes back to Eric’s argument on impressions and click-through rate.

Her Eric,

Great job putting all this into prespective. So much easier to understand when it is written in layman’s terms!

thanks for sharing this article

I’ve gotten calls from zillow as well and I just hang up. What suprises me is that Spencer has this much time on his hands just for this one blog post.

I wonder how many people they have on payroll doing damage control on thousands of other Realtor blogs. That’s expensive, and is reflected in the cost of their ads.

Jim,
Zero people on Zillow’s payroll do fulltime “damage control on thousands of other Realtor blogs”. We don’t have that role here at Zillow. However, many of us do it in our spare time because we think it’s very important to correct any misunderstandings or misperceptions about Zillow in the marketplace.

Eric,

I greatly appreciate you analysis on breaking down the basics of the effectiveness of PPC/Impressions. Having followed your blog’s on your site and BHB it’s evident that you extremely good on managing your business.

Spencer,

Thank you for your detailed response to this blog it does show that your are sincere about your business. I’m suprised that some people would bash your ability to interact with the real consumers.

As I may not completely agree with your business concepts I admire you for taking a public stance.

Keep up the great work Eric can’t wait to read your next Blood Hound Blog Post.

Interesting post – thanks for putting that information up there Eric.

I suppose at the end of the day it all comes down to conversion rates, rather than click through rates or impressions or fairy dust or whatever else someone wants to put out there into the ether. After all, sales is what we are after, right?

Eric, obviously you know what your budget is and you have a good idea of your expected ROAS (return on ad spend) – whether it be through an independent publisher or via the major search engines. Hence your 50 cent cap rate.

I’d be interested to see if anyone out there is advertising with Zillow and how their TRUE conversion rates compare to other sites?

Sometimes traffic converts exceptionally well through certain sites, making the extra ad spend worth it. My guess is that Zillow won’t outperform the major search engines by much…but I’ve been wrong before.

This has been a great discussion so far…

My brother is in the mortgage industry and went through the exact same situation with Zillow a few months ago, and came to the exact same conclusion as you did Eric. He said it was just too much $$ compared to the other options out there. (however, he’s not using any of those options either)

My 2 cents to him were to give it a shot though. It’s relatively inexpensive compared to some of the other marketing options (postcards, drip campaigns, etc.)that he already does and could easily pay for itself with 1 closed transaction. Unfortunately for us, he still hasn’t done it so I can’t give you guys results. He does use the mortgage marketplace and has been getting solid leads from that for a while now.

On the Facebook thing: a couple months ago I ran 5 separate ad campaigns on FB for 2 weeks. Spent just over $1000 after all was said and done. We got good traffic and results from it though, so it was worth it. As you mentioned, it can be very targeted, which I loved. I’ll definitely be toying around with more FB ads as time goes on.

Take care,

Jeff

Gretting from Medellin, Colombia.

Nice posts guys! I left the U.S. real estate market years ago and have been in Central/South America ever since. I have yet to try Facebook ads, though after the recommendation from Jeff, I may have to look into it.

Good point on renewal rate. If Zillow could post some stats on renewal rates, it would go a long way towards building that credibility.

Adios,

Justin

I have never been a fan of Zillow and don’t want to contribute to a monster.

Hi Eric,
Thanks for initiating such a lively discussion.

Justin: although I do not have renewal rates to share, there are certainly alot of real estate agents succeeding with their advertisements on Zillow. Just a few of these success stories are displayed at http://www.zillow.com/advertising/Testimonials.htm. Although these are not renewal rates, they should address the credibility aspect that you were seeking.