I bet you know what the Zillow app is all about. But just in case: this is the top American real estate online marketplace with over 100 million listings.
So I have a riddle for you.
Here’s what we’ve got: it’s free to list a property for sale or rent by owner or agent; Zillow’s search tools — the website and mobile apps — are free, too; finally, Zillow has nothing to do with money transactions, so they don’t collect any fees for closed deals.
The question is: how the hell have they managed to earn $325.2 million in Q2, 2018, which is 22% higher than for the same quarter last year?
I bet this is one of the top asked questions among those who think about real estate app development from the potential revenue perspective. However, the answer lies up above — in Zillow’s business model. Let’s get a closer look!
How Zillow Works: Top 4 Company’s Ways to Make Money
If you are interested in Zillow’s revenue streams and want to know where do they come from, you should remember only one word — ads. Yup, the company’s revenue comes from advertising, which is, however, has a bit more complicated structure than just a straightforward integration of Google ads.
Here’s how it puts Greg Schwartz, the chief revenue officer at Zillow: “We’ve got a few different revenue streams. The first and largest revenue stream is our Marketplace revenue stream — which includes local advertising from real estate agents, from mortgage brokers, banks, and brokerage firms — which is our largest and dominant revenue stream. Then we have what I’d call a more well-known display advertising revenue stream, primarily from advertisers who are adjacent to the transaction of moving, so wireless companies, telecommunications companies, and the like”.
But if you’re thinking of your own real estate app development, I bet you’d like to get a closer look at Zillow’s business model. Let’s do this now!
Source # 1: Ad Sales to Property Management Companies
This is the top revenue source for the mentioned real estate app. However, Zillow turned its advertising system into a useful tool that delivers some value to all parties. How does Zillow make money in this case?
- Zillow finds qualified leads — ready-to-pay renters.
- Then they’re sent to advertisers — property management companies which can deliver a solution regarding their issue (finding an appropriate house to rent, for example).
- Zillow is paid by property management companies but since they receive only qualified leads, their return on investment is maximized.
You can think of similar smart advertising system for your real estate app. It not only generates noticeable revenue but also provides additional value by matching the needs of tenants with the offers from landlords.
Source # 2: Premier Services
Another example of how Zillow works and makes money is premier services for real estate agents. For a monthly fee of $10 agents appear on property listings in the special section with increased visibility.
Premier services also prove that Zillow’s revenue streams don’t come from the simplest advertising solutions. Just like in the previous case, the company tries to provide some additional value to its users even when it comes to ads.
To maximize benefits for both real estate agents and customers, Zillow targets ads at users in agents’ local markets. Thus, they get quick access to professional assistance right in the app or on the website.
The Premier Agent service also provides opportunities for even deeper customer relationship management. To do this, agents can upgrade to one of three levels: silver, gold and platinum.
What’s the difference? With the gold level agents are given in the featured results when users conduct a search for agents. When upgraded to the platinum level, agents’ profiles will be displayed next to for-sale listings that match their zip codes (so agents are shown only to the relevant audience).
As of Q2, 2018, that ended June 30, Premier services demonstrated a 22% year-over-year increase, reaching $230.9 million and remaining the main source of revenue for the company. Consider this option when you decide to create a real estate app for your business!
Source # 3: Ad Sales to Other Businesses
Finally, we all know that moving into a new house isn’t that fast & easy. After you buy a house, you often need additional services that may come from furniture manufacturers, general contractors, interior designers, telecommunication companies etc.
A separate category consists of mortgage lenders. How does Zillow make money on them? Well, there are 2 options:
- Based on CPC (Cost-per-Click) — when a user searches for mortgage rates and then requests more info form a local lender.
- Based on CPM (Cost per 1000 impressions) — when an ad is displayed on the website or in Zillow’s mobile app it counts as an impression.
Source # 4: Affiliated Companies and Side Products
Not everyone knows that Zillow Group includes much more than the mobile application and the website. Today it also unites such real estate platforms as Trulia, RealEstate.com, StreetEasy, the mortgage software company Mortech and many others.
All these companies and products generate some revenue as well, increasing the overall earnings of Zillow Group. You can also think of developing products that relate to the real estate business and may be popular among your target audience.
Real estate app development, like any other business project, should bring you some benefits. While you are free to come up with your own fresh ideas, you also can scale already proven solutions for your market. And that’s when Zillow’s business model may be useful!
As you could see, Zillow’s revenue streams rely on advertising. Moreover, the company uses specific advertising solutions for different types of clients (e.g. renters, real estate agents, related businesses).
It’s also important to choose an appropriate mobile development agency to create a real estate app. Good companies, like Stormotion, can help you with your business model as well. Depending on your aims and target audience they can come up with recommendations on how to set up revenue streams for you. Good luck with your real estate app development!