Domain has gained significant ground on its competition in the last 12 months with a 65 per cent year-on-year increase in audience.
So I am very keen to learn more about how they are raising the bar against strong competition.
One of their strategies is allowing agents participation, or equity, rewarding them for advertising based on value and volume.
Desire vs execution
In terms of agent participation in the portal space, one only has to pay a quick visit to some of the real estate groups on social media or read agent blogs to know that there is a strong desire to get involved.
But most attempts in the past few years, and even in the last 12 months, have not been that successful.
Catalano is clear on why the equity model is something more agents should consider.
“One of the key outcomes is that it gives agents something that they have long wanted, which is that involvement in the digital media space.
“This is not a new concept; the market leader even started by issuing shares to agents in its pre-IPO days.
“It is something that agents continue to talk about, and any dissatisfaction they may have with the market leader is always countered by the desire to have the industry come together to create an alternative.”
The problem of industry models not being able to gain traction, Catalano muses is it generally lacks core publishing expertise, which traditionally requires very deep pockets and requires a focus on the job at hand.
“[Publishing] It requires agents who have a core business of listing and selling real estate to distract themselves from their day-to-day operations to become publishers,” he says.
Catalano has been CEO of Domain since November 2013, and prior to that was Chief Executive and Publisher of Metro Media Publishing (MMP).
MMP was created to address this exact gap in the market, pioneering a partnering model with a group of agents to create a magazine (Review Weekly, which has now expanded to 32 magazines) and an online ‘hyper-local’ presence in the portal reviewproperty.com.au.
Catalano himself also had a long career at Fairfax, starting as a journalist and working his way up to being appointed Director of Real Estate, and he knows the publishing game well.
“When we started MMP we already had a deep understanding of publishing and the industry, and what we did originally did was to partner up with agents to deliver a better product to market.
“That success was immediate.
“The agents we were working with could focus on being agents, we focused on being publishers and together we focused on building a publishing business.
“Doing it together works; doing it on your own, as history has shown, is problematic.”
In July 2012, the CEO of Fairfax (Greg Hywood) announced there would be a 50 per cent acquisition of MMP, and at the time stated that Fairfax was ‘buying’ the Equity Model and was keen to roll out that model nationally.
The Domain agent equity model
Today, Fairfax owns 100 per cent of MMP and it is this model that has formed the basis of Domain’s ‘Equity Model’.
“We have now spent the last two years perfecting the model and ironing out any ‘bugs’ to ensure it was road-tested appropriately.
“After two years of trialling it in the Victorian market, we went live with equity models in SA, WA and simultaneously rolled out QLD and NSW. We are now in the process of doing it in NT and Tasmania.
“So this hasn’t been an overnight thing; MMP and the model are five years old now.
“In the digital sphere it’s approaching three years in July.”
And the model is growing in popularity based on a steady increase in numbers.
“We have hundreds of agents who are participating in the Victorian Market, and we have something in the order of 2,200 estate agents in the residential space that are either already active participants or have pledged to be participants through our Expression of Interest campaign,” says Catalano
But the ultimate benefits are both partnerships and competition.
“MMP from day one took a collaborative view of this business; we’ve had weekly and monthly meetings with our agents since we launched in April 2010.
“We don’t see ourselves as standalone publishers dictating to our client base what we think is good for them.
“We work with the industry to develop the products, and we take a very collaborative approach to this.”
The benefits of competition
“We first conceived the digital model in February 2012. The market leader was in the market with their most expensive product at $2,300,” says Catalano.
“At that time, it had never ever responded to the market as far as pricing was concerned.
“However, the immediate impact of industry participation in the Victorian market was for the first time the market leader dropped their price.”
“Agents need to embrace this for their future because the alternative is that they have one dominant player and no say in price.
“Domain can already take credit for helping the industry fight back. At one point, the market leader was charging $8,000 for a digital ad in Toorak; 12 months later it has come back to $2,500.”
Investing in the future
Domain has also invested approximately $150m of capital over the last 12 months into acquisitions and another $15m in increased expenditure, adding 140 staff (a 216 per cent increase) since January of last year.
Added to that, Catalano says, there has been a 65 per cent increase in the audience year on year, giving the industry real choice.
“We will fight it out with our competition for market relevance and we will continue to invest heavily; we’ve got more staff coming in, millions of dollars more being invested in the product and it’s a win for agents.
“This has given the industry a genuine alternative and with this comes a choice to have around the marketing schedule, or importantly push back against what could be a monopoly operation.
“The industry gets a better product and at a better price.”
“Those who don’t embrace Domain are doing the industry and themselves a disservice because yes, we are absolutely in it for commercial benefit and profitability, but our very existence and our competitive stance brings about benefits for the industry and that is inescapable.
“It would be an ugly world for agents without competition.”
