The MyHome real estate website will be shutting its doors this Friday, proving that the top players in the Australian online market are harder to dislodge than even the biggest and richest wannabees thought.
For the past 15 months, owners of MyHome, giants Microsoft and PBL, have spent tens of millions of dollars in an attempt to snatch a share of the $140 million online property advertising market. Smaller players watched enviously as it leveraged the promotional might of PBL’s old media, which included a weekly program on Nine Network plus an aggressive advertising campaign that used print and outdoor advertising.
But money is no substitute for business nouse and first-mover advantage. Critics of MyHome say the management was inexperienced in real estate and that developers created a site that offered nothing new and was difficult to navigate. MyHome was also taking on the RealEstate.com.au website owned by REA Group (57% owned by News) and Fairfax’s Domain.com.au, that had many years’ experience selling real estate and knew how to build face-to-face relationships with agents.
MyHome increasingly found that it could not attract the unique browsers of its competitors. It barely reached half a million per month, while Domain had two million and RealEstate.com.au, more than four million unique browsers. The costs were too high and the cash burn rate unsustainable.
From Marquette Turner’s point of view, MyHome was a non event: it failed to remove old listings and we found that the only unique enquiries we received through MyHome were for properties long since sold or leased.
MyHome did try and slow down the cash burn by getting real estate chains to take equity. But many chains were already tied up with established players. And while the franchisor might take a stake, it didn’t mean the franchisees were going to support MyHome.
Real estate agent Harcourt bought a small part of MyHome last month, but plans last week for LJ Hooker to buy part of the business fell through and proved the death knell. LJ Hooker’s known disdain for realestate.com.au has once again left it right back where it started.
Its closure also provides a leg up for Sydney entrepreneur Michael Hannan, who is battling to become a major online player after selling out of print media. Homehound, no solidly in third place, is owned by Independent Digital Media (IDM), which was created two years ago when the Hannan family sold Federal Publishing Company community newspaper and consumer magazine assets to News for an estimated $340 million. Entrepreneur Michael Hannan immediately appointed David Burkett, who headed Time magazine’s Asian division, to run IDM.
Hannan’s goal is to build IDM (the digital media business of the Hannan family’s Independent Print Media Group) into a significant online player through organic growth and acquisition within the next five years.
Burkett says that Homehound stole third place from MyHome earlier this year, assisted by Homehound’s partnerships with major retail franchises including LJ Hooker, Ray White, and Raine & Horne.
After those top three, the market is very fragmented, with a plethora of smaller companies focused on a single state or niche part of the market. Many of those smaller players have been around a long time but cannot get the scale to mount a serious attack on the big players.