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Placester and $5 Websites: Seth Price Responds To Your Questions

Seth Price - PlacesterWe’ve had a lot of discussion in the GeekEstate community about Placester’s recent deal with NAR to provide IDX-fed websites to Realtors for $5/mo.

I asked Seth Price, VP of Marketing at Placester, to answer a few of your questions.  We speak fairly frankly on this blog, so I tried to get to the meat of the critics’ concerns as quickly as possible.

$5/mo websites are attractive to agents, but many wonder if prices will go up later, advertising will be added, etc. There seems to be no profit margin in that pricing.

That’s a great question. The pricing is not temporary nor will we ever force display advertising (or any type of advertising) on anyone’s site. Building great technology on the web is about leveraging massive scale, we’ve seen this happen before with email, there was a time not too long ago that everyone paid for an email client, then Google came along and offered Gmail for free. We will never go back to paying exorbitant fees for email service again. The same has been coming down the pike for websites. We’ve seen it on the consumer and e-commerce side with Wix, Squarespace, Shopify & Weebly. No one has been able to do it in real estate until now, that part of our mission, to give every real estate professional the tools to effectively market themselves online.

Is there a critical mass of agent subscriptions that you need to reach for the model to turn a profit, or is it a loss leader with an alternate revenue stream?

Gone are the days of “if you build it, they will come”. You have to create massive value just for the right to engage with today’s consumers. That’s not lost on us. It’s also not unusual for companies to pour all of their potential profits into innovation and expansion. Amazon is a great example of this, for 20 years they’ve barely posted profits, they’ve spent a fortune on expansion and free shipping, and have completely transformed the way we buy things online.

Can you afford to provide support for agents’ websites at $5-$10/mo?

The short answer is yes. We do this by building technology that is really easy to use. If you’ve had an opportunity to try our website on-boarding process, you know that it’s now possible to launch a fully featured real estate website in 5 minutes. That reduces the handholding required to get your site up and running and reduces the number of customer support touches needed to maintain a website. The other piece is that we made a clear decision early on to become venture backed company, that provided us the resources to scale our team to support growth without sacrificing quality and service.

You seem to be aligning yourself not only with Realtors, but against advertising portals (referencing the portals “placing themselves between agents and their clients” quote). Is that the overall company philosophy, or does it only apply to the agent website products?

We believe that houses will always be bought and sold with the assistance of real estate professionals. We focus 100% of our efforts on creating tools that make the job of being a real estate professional easier and more effective. Our goal is not to be against the portals, it just so happens that they focus on trying to connect directly with buyers and sellers, then they monetize that connection with the highest bidder. We think about it differently, we want to empower agents and brokers to build relationships directly with consumers, in the markets that they serve. They shouldn’t have to pay a premium for the leads that they create with their hard work.

The hurdle for most agents is getting a website developed and online without much of a hassle. Agents will keep a monthly-fee service provider for years if it remains updated. Placester and Zillow websites seem to be focusing on simplifying that part of the process–what makes Placester’s process different or better?

I think the answer here is simple. We focus on one thing, building great website experiences for our customers. You will never see a placester.com as a destination site for real estate listings. We don’t compete with our customers. That gives us a great incentive to offer the best of what we do in the websites we create for professionals in this space.

Are there any plans to develop apps, or other related products aimed at Placester website customers in the future?

There are lots of plans but at the moment no apps in the near future. We are going to focus in adding features that help our customers drive traffic and effectively capture leads online. Essentially, we’re adding the best of what works and passing things that just take up space.

Seth is a nice guy, as well as being an excellent marketer, so of course he’s going to stay on message.  I think there are some interesting nuggets here in terms of the company’s mindset, though.

Can a venture-backed website company operate with an Amazon mindset that profits are not a current concern, and if so, for how long?  Will the positioning as an ideological opponent of portals build a more loyal base of users in the agent sphere or be a detriment to aligning with neutral agents?  Will the bulk of agents be able to get their websites built without needing support? (Personal experience: I tested out the system and had a website running in just a couple of minutes, customized heavily within 10 minutes.  It’s the easiest system I’ve ever used, including the online IDX agreement, but most agents are not GeekEstate agents.)

We know that a website won’t generate significant traffic without more work than just setting it up.  The question isn’t necessarily whether these sites show huge lead conversion numbers, but is there still positive ROI for an agent at $60/yr even if they’re not driving traffic to the site?  You could spend a lot of time/money customizing, blogging, and generating traffic/leads on this platform, but even if you didn’t, does it make sense as an “online business card” for the hundreds of thousands of agents who still don’t have websites?  Will that be enough to make Placester successful?  I’ll let you answer.

About Sam DeBord

Sam DeBord is a former management consultant and web developer who writes for for Inman News and REALTOR® Magazine. He is Managing Broker for Seattle Homes Group with Coldwell Banker Danforth, and 2016 President-Elect of Seattle King County REALTORS®. His team sells Seattle homes, condos, and Bellevue homes.

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  • Sam, interesting and timely interview.

    I think agents should not get too hung up on the $5 per month price.

    As an agent we have to evaluate which website will perform best for us. Whether you pay $5 per month or $50 per month does not really matter, what matters is which site will get you more clients. With the large commissions Realtors get, one additional sale would cover any difference in monthly pricing, plus a lot of profit, so the one that gets you the most clients is the best website for you.

    I agree their site is very easy to setup, and the support right now was great, so Placester should be something people should evaluate along with other options.

    • Bryn, excellent point. We will not be perfect for everyone, but as you know, the majority of agents and brokers have websites that are failing them as a marketing tool or even as an online business card. Our goal is to change that. Thanks for reading and commenting.

      • The real question is how do you help with traffic acquisition? There are really only 3 ways/sources.. http://virtualresults.com/vr-sales-qa-traffic-acquisition/

        Mobile has entered the equation in a massive way though, which is where the big portals are really crushing it.

        • Drew, That is one question that needs to be solved and as you know, customer acquisition is generally a result of a multi-pronged approach. You can’t drive without the vehicle and we intend to be the vehicle at the core of that multi-pronged approach to help real estate professionals dominate their niche of the web.

  • “Building great technology on the web is about leveraging massive scale, we’ve seen this happen before with email, there was a time not too long ago that everyone paid for an email client, then Google came along and offered Gmail for free. We will never go back to paying exorbitant fees for email service again. The same has been coming down the pike for websites. We’ve seen it on the consumer and e-commerce side with Wix, Squarespace, Shopify & Weebly. No one has been able to do it in real estate until now, that part of our mission, to give every real estate professional the tools to effectively market themselves online.”

    The difference is that Google was making a killing from search…prior to doing gmail. They had revenue to cover the losses from gmail. So the $$ in your case is coming from VCs. But for this strategy to work, there needs to be massive revenue coming from somewhere else… where is your major revenue going to come from long term to cover this?

    • Excellent point Drew.

      They might not make money, but that has not stopped numerous companies that have massive traffic from selling at a huge profit to a large competitor.

      It seems traffic is most important. Making a profit is not a big concern for many VC funded companies.

      • Early on profit might not be. But they need to make money eventually to satisfy investors, or attract users and sell the company.

    • Not to mention Google makes money from Gmail in e-mail ads, also connecting users to a bigger picture of Google products, and also collecting big data from email.

    • Drew, I think we are splitting hairs here. There are countless companies that have committed to innovation and audience growth at the expense of early profits. That generally is the nature of a VC backed technology company. Thanks for the comments and for your feedback over the last few years.

  • “They shouldn’t have to pay a premium for the leads that they create with their hard work.”

    Totally agreed. In the portals case, THEY are doing the hard work of finding/attracting buyers. That’s what agents are paying for.

    • He might be talking about agents having to pay to appear alongside their own listings on Zillow. But agreed, the considerable value that portals like ZT bring to the table is aggregating buyers. Agents should pay to reach an online audience just as they have paid to reach offline audiences, via print, for decades.

  • Wix, Squarespace, Shopify & Weebly ” – Listed as websites they compare themselves to.

    all of those services cost more than placester. With a WAY bigger userbase. I have no clue still what they’re trying to do. $5/mo leaves room for no profit and without a healthy profit, how can they afford to test new features, hire talented engineers to code them and more?

    And then they go on to compare their business model to amazon! I just don’t understand. They know their biz better than I do so I don’t doubt that they have something bigger planned than I can see but, from my point of view it’s crazy!

    • I agree, I’m struggling to figure the revenue scenario out without raising prices substantially or competing with their clients and building/powering real estate portals (I read somewhere a deal with Hearst Newspapers – which means they are competing with their clients for the same traffic). They could/will likely do CPC campaigns for their clients – same as boomtown, marketleader, etc. Everyone knows a website with zero traffic is useless & that agents will pay to get leads.

      • Drew, How are you? I wish I could outline the entire revenue model and roadmap in the comments of a blog post. I guess the short answer is that we want to make it really easy and economical for every agent to get a fantastic website, them we want those professionals to be able to choose where and how they promote themselves online. The Newspaper portals are a great example of that. Imagine if the search experience on your local paper was on par with the big portals, the choices one would have on where to engage with your potential customer gets really interesting. It’s been a while since we talked, I’m happy to go deeper into our vision. Let me know when you next get up to Boston.

        • But powering newspaper portals, means you are competing with your own clients for traffic..no?

          Hearst’s RE sections are/were powered by the portals..Zillow (not sure if they still have that deal in place or not).

          • Drew, That’s only if you think if traffic as an end sum game and finite resource. The number of touch points that a consumer requires before making a final decision has shown no signs of decreasing and no individual destination will ever be the end all be all for the hearts and minds of the consumer. There will continue to be riches in the niches where our individual customers live.

    • Andrew, awesome comments. I am honored and will take them as the greatest form of compliment. Yes, it can seem crazy from the outside when you look at business models that prioritize growth and innovation in their early years. You are 100% correct that we have many things planned in the months and years to come. But first and foremost, we have to build a great platform that solves the problems that 90% of the agents brokers have marketing themselves online: Building their brand online.

  • Placester seems like a no-brainer for agents based on bang for the buck and ease of use. Kudos to them for a great product.

    I’m not sure the AMZN analogy holds here though. AMZN’s core businesses are almost certainly profitable and, as many know, they use those profits to fund new products. If AMZN stopped investing in new products they would be profitable. Placester’s core business is probably not profitable, so funding new products requires additional capital and their core business is probably never going to be profitable (unless they achieve massive scale and largely automate customer service).

    • Exactly right! Great comment Malcom

    • Malcolm, first thank you for the kind words about the product. We feel like we are just scratching the surface of what we can do to build an indispensable platform. Regarding your question about the amazon analogy, you are correct that amazon has some core profit centers that if they focused solely on those they could show shareholder profits. But it took them almost a decade to build that core business. What I am referring to is a mindset, a commitment in more than just words, of the entire company not to chase short term profits at the expense of being able to transform an industry and build truly amazing platform for the professional in real estate.

      • Seth, Good clarification. Zillow has spent the best part of 10 years losing money in order to build a loyal audience of homeowners that they are only now starting to monetize. As long as your core products have little competition and/or high switching costs you’ll be good. I wish you luck.

        Interestingly, Amazon’s implementation of this strategy is somewhat in question now with new competition to their core business from Alibaba and Google Shopping Express. They may need to narrow their focus again to protect that core business.

        • Bezos, is an interesting character who seems to be hell bent on controlling every aspect of the e-commerce ecosystem. His audacity is second to none. again, thanks for the kind words.

      • “the entire company not to chase short term profits at the expense of being able to transform an industry and build truly amazing platform for the professional in real estate”

        Seth-
        what do you see that end result being? I am venturing a bet that no platform that doesn’t help with the demand side of the equation (buyers) will scale. How is Placester going to help your clients generate more business, outside their own spheres?

        • Drew, You sound like you’ve done some venture investing. I don’t want to put the cart before the horse but you can be sure that this point is not lost on us. We have to solve for building the best real estate website platform available anywhere on the web first. There’s no second step without creating value first. Cheers

          • Never done any investing, aside from my personal money into my own company. But, I’ve been talking to investors a lot over the past two years and learned how they think about businesses –> and been applying that thinking to Horizon (formerly Oh Hey World).

          • We’ll you’ve certainly picked up some of the critical thinking. Thanks for the Q&A

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  • There is probably a place for the $5.00 website, especially used as a digital business card. However, creating an enduring online presence requires much more than a cut-rate website. I do think Placester has it right in understanding who the customer is….the quote in regard to portals kind of says it all…. “it just so happens that they focus on trying to connect directly with
    buyers and sellers, then they monetize that connection with the highest
    bidder.”

  • Chris Gallatin

    As a user of both Wix and Placester, I am one frustrated pup. I love the power that Wix gives me to make striking landing pages, and the ability to place elements on the pages anywhere I like. But they have no way of directly implementing IDX, which is what I believe drives SEO juice and customers. The Placester site is simple, but annoyingly scaled back, so that yes, an absolute moron can have a site up in 5 minutes, but it will likely never see a visitor a second time, as it is too basic. (Try to create a custom search page for homes over $500,000 in more than one neighborhood simultaneously (as in the CITY of Denver, not some neighborhood of Denver) You can’t. Support people will tell you to build your landing pages AT OTHER websites, and point them back to your Placester site. The Landing Page is EVERYTHING, and they don’t have any powerful tools there at all. If I could merge Wix and Placester… now we’d be cooking with gas.

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