Tag Archives: web users

Zillow makes the majority of its money from real estate agents

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Zillow changed how many people find and view real estate but it makes more of its money from real estate agents:

Photo by Kindel Media on Pexels.com

Not everyone agrees Zillow is good. Like Uber, the company has weathered a barrage of industry resistance, naysayers and litigation in its conquest. But its dominance is unquestionable. Arizona’s Kris Mayes, one of five state attorneys general suing Zillow over alleged anticompetitive practices, has called it “a gorilla-sized company.” In 2024, Zillow reported annual revenue of $2.2 billion; analysts estimate it will be even higher in 2025 and 2026.

People associate Zillow with homebuyers, but it actually makes around 70% of its revenue from agents, who pay the company for customer leads. Wacksman thinks a lot about how to keep the agents happy (hence tonight’s Musgraves concert). He knows many of them have reason to loathe Zillow, which has empowered consumers with market data and property history previously known only to licensed agents. Many of these “information arbiters,” as Wacksman describes pre-internet agents, were ruined during Zillow’s rise. “Our original mission statement was ‘power to the people,’ because it was about giving the nonprofessional access to data that only the professionals had,” he says. “It obviously worked.”

So Zillow opened up possibilities for potential homebuyers but then makes its money by providing their information back to the people who used to exclusively have this information? I am trying to think how this might work in other industries. Car listing sites that then provide leads to dealers looking for buyers or sellers? Ride sharing companies selling info to taxis for riders? Online marketplace sites selling user info to sellers?

If anything, this is a reminder of one of the revenue drivers of the online/social media world: data and information about users. Websites and platforms have information about users. What they see and linger on. What they engage with. Personal information they offer as part of accounts and profiles. How they interact with other actors. This is valuable for companies and organizations who have products or services to offer.

At the same time, is this revenue model similar to how other real estate websites operate? Does realtor.com make money off customer leads? Or Redfin? Are there other ways to make money off real estate listings available to a broad audience?

No surprise: Facebook wants to make money off advertising!

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The current economic engine for much of the Internet is advertising. This includes Facebook:

Facebook’s first experiment with paid ads was a flop. In 2007 it rolled out Beacon, which broadcast information on Facebook about users’ activities and purchases elsewhere on the Web without their permission. Facebook pulled the program after settling a lawsuit brought on behalf of Facebook users.

This time around, company officials appear to be proceeding more cautiously. David Fischer, Facebook’s vice president of advertising and global operations, says Facebook delivers ads that are relevant to users’ lives.

“This is an opportunity for brands to connect with you,” Fischer said. “When someone likes a brand, they are building a two-way conversation, creating an ongoing relationship.”

A lot is riding on getting it right. Last year, online advertising in the U.S. grew 15% to $26 billion, according to the Internet Advertising Bureau.

People familiar with Facebook say its ad revenue doubled to $2 billion in 2010, and is expected to double again this year as more major advertisers including American Express, Coca Cola and Starbucks climb aboard.

In February, more than a third of all online display ads in the U.S. appeared on Facebook, more than three times as many as appeared on its closest competitor, Yahoo, according to research firm ComScore Inc. Facebook’s moneymaking potential has wowed investors. Its market value is estimated at $55 billion on the private exchange SharesPost.

This should really be no surprise to anyone. As others have noted, the real magic of Facebook is not in the personal connections people can maintain but rather is in the information that users willingly provide. Moving forward, the trick will be for Facebook to do this in such a way that a majority of users don’t become upset.

I find the language here to be particularly interesting: users are entering a “two-way conversation” and an “ongoing relationship” with corporations. This is what corporations want but if users/consumers really thought about it, is this what they desire as well? While the user pays for particular products (and perhaps is willing to advertise a product for free), the corporation provides functionality but perhaps even more importantly, status and prestige.

I’m also struck by another thought: this article suggests that Facebook still has a lot of financial potential due to advertising. At what point does Facebook hit a wall or lose its momentum? In a short amount of time, Facebook has become a daily feature in the lives of hundreds of millions but there is little to suggest that their growth is unlimited.

Users spend more time on Facebook than Google’s sites

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According to figures from August, web users in the United States now spend more time per day on Facebook than Google’s sites (which includes YouTube). This can’t be good news for Google – but it shows the power of Facebook:

In August, people spent a total of 41.1 million minutes on Facebook, comScore said Thursday, about 9.9% of their Web-surfing minutes for the month. That just barely surpassed the 39.8 million minutes, or 9.6%, people spent on all of Google Inc.’s sites combined, including YouTube, the free Gmail e-mail program, Google news and other content sites.

U.S. Web users spent 37.7 million minutes on Yahoo Inc. sites, or 9.1% of their time, putting Yahoo third in terms of time spent browsing. In July, Facebook crept past Yahoo for the first time, according to comScore.

Facebook appears to be growing more and more popular. Google can’t figure out a way to introduce social connectivity throughout their sites – whatever happened to Google Wave?