The long-anticipated merger between the two largest U.S. real estate search portals has finally closed after a six-month review by the Federal Trade Commission. Announced last July, the merger of Zillow and Trulia begins the next chapter of a fierce competitive battle with News Corp. and its Move and realtor.com properties.
“This is a pivotal day in online real estate and we couldn’t be more excited to welcome Trulia to Zillow Group,” said Spencer Rascoff, CEO of Zillow Group, the new firm Zillow created to house its suite of consumer and business divisions.
The $2.5 billion all-stock deal gives the merged entities new market clout in the real estate lead generation, advertising and software business, combining two deep technology teams with significant revenue and a lead against its closest competitor, realtor.com.
The deal dragged on for months because of the FTC review. During that time, the competitive landscape changed with News Corp.’s entry into the online real estate market.
Screen shot of Zillow Group’s homepage.
Trulia Co-founder and former CEO Pete Flint will not be involved in the day-to-day operation of Zillow Group or Trulia. He, along with former Trulia board member Greg Waldorf, have taken seats on Zillow Group’s board of directors.
Former Trulia Chief Operating Officer Paul Levine has been named president of Trulia and will report directly to Rascoff.
Zillow Group will eventually be one entity as far as brokers and agents are concerned, Rascoff told Inman.
The firm will create ad products that show up across both Zillow and Trulia as well as its New York City-focused portal, StreetEasy, and its rental site HotPads, he said.
Zillow Group will also take steps to create one listing database that will be shared between Zillow and Trulia, but that will take some time, Rascoff said.
Trulia has agreements to receive listings directly from more than 125 multiple listing services and thousands of brokers. But Zillow Group will have to go through many of them on a case-by-case basis to seek out permission to display them on Zillow and other Zillow Group sites, Rascoff said.
The descriptions of Zillow and Trulia on Zillow Group’s new site provides a window into how the two brands may be presented distinctly to consumers.
Zillow.com apparently will focus more on providing information specifically relating to homes to consumers while Trulia will specialize in helping consumers get a feel for where to live with information on schools, crime and neighborhoods.
The newly merged Zillow and Trulia faces many challenges but remains the definitive leader in consumer traffic and continues to expand its industry footprint with 62,000 subscribers to its advertising offer and hundreds of partnerships with brokers and MLS organizations.
Zillow grew its full-year revenue to $325.9 million in 2014, a 65 percent increase over 2013’s revenue total and nearly three times its 2012 revenue of $116.9 million. The company posted a net loss of $43.6 million for the year, but it attributed $21.5 million of that to costs related to its acquisition of Trulia.
The real estate agents who paid the company to promote themselves on the site during the fourth quarter spent an average of $359 each during the three months ending Dec. 30, up from $271 during the same period a year ago.
Trulia brought in nearly $144 million in 2013 — more than double the cash it generated the year before — and was on track to see more than $250 million in revenue in 2014.
Zillow and Trulia both get more traffic than the third-biggest national portal, realtor.com, but capture only a fraction of the more than $10 billion real estate brokers and agents are thought to spend to market their services online. So the upside for growth is significant.
Zillow is also expected to reap millions in cost savings, largely through spending cuts that will be achieved by cutting workers in areas where the two companies have redundancies, such as general administration, sales and marketing, and research and development.
The merger was announced in July and approved by shareholders Dec. 18. The FTC made second requests for information from the companies in early September, and Zillow had agreed to hold off on closing the deal until Feb. 15, unless regulators wrapped up their review before then.
The divisions within Zillow Group include its consumer-facing divisions Zillow, Trulia, StreetEasy and HotPads, and its business divisions ActiveRain, Diverse Solutions, Market Leader, Mortech, Postlets and Retsly.
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