Zillow Charging for Mortgage Leads

Just saw this news today – Zillow has started to charge for mortgage leads, just like LendingTree, LowerMyBills, or the number of other companies in the space.  Zillow had entered the real estate space saying that Zillow will only charge for advertising and not enter lead generation or become part of the transaction.  The challenge is that the revenue opportunity for local advertising on a CPM basis is pretty small.  Zillow has done a great job at growing traffic to more that 10 million UU per month.  Assume that they get 20 page views per UU and a $3CPM.  That puts Zillow at a $600,00 per month in revenue or $7m in annual revenue.  The problem is that there is a finite number of in-market customers at any point.  In order to become a bigger business, Zillow needs to decide whether they go broad or deep.  i.e. Do we try to attract 20m UU who may be interested in a broader variety of home related services or go deeper with the advertising customer providing leads or becoming part of the transaction like Redfin.  Based on the below, it looks like Zillow finally decided that the market of mortgage advertisers is actually efficient and it is a bette rbusiness for them to sell leads.  Check it out.  Would be interested in hearing people thoughts.

http://blog.leadcritic.com/company-news/zillow-company-news/zillow-to-charge-for-leads

 

 

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