updates, page-6

Of course they need to dominate to get any real value. And based on the current valuation of $30m they need to become huge to generate an appropriate return for investors based on the risk.

To get an idea of the value difference and that it isn't just down to getting a certain number or percentage of listings, compare REA and Domain. Domain pretty much have almost the same number of agents, almost the same number of listings, yet REA absolutely dwarfs Domain. On all the metrics that matter - traffic, revenues, profits and valuation.

To win in revenue, they need to be the biggest. Most traffic, most leads. If they don't get this, they will be bit players.

They probably need to spend $0.5m to $1m a month in advertising to get real traction. They need brand awareness for both rental property owners and rental property searchers.

Two sided markets are very hard to break into. They are competing with 2 players with substantially more traffic and substantially more dollars and relationships.

Just put some searches into Google for rent property perth (or any other suburb). In Perth, for organic they are the 10th listing. Once someone clicks on the first listing (something like 80% of clicks are on the first listing) the people will stay there with their searches.

Unless they start getting some serious revenues (unlikely) they will burn money fast. But they probably need to burn money fast to get some traction. That is a risky position to be in.

And remember, the largest site (REA) gives rental listings to agents for free. And the agents HAVE to use REA because they need them for their SALES listings. That's right, RNT is competing with a competitor that provides a better offering (more traffic) for FREE.

There is plenty of information on 2 sided markets out there. People need to do some research into breaking into them and strategies required for execution and monetisation, rather than just think "hey, that is a good idea". Do some research about other people who have tried to break into 2 sided markets when there are dominant players (have a look at PBL/Nine when they tried to do it to REA, and that was when REA was still in the early stages.)

Cheers
Marv