Google flushes its property portal down the loo.
After much media fanfare, Google appears to have abandoned its ambitions in the property portal space less than two years after first experimenting with the idea.
The search giant announced last night that it will remove property listings from Google Maps where this option is currently available in the US, Australia, New Zealand, the UK and Japan.
As part of the change, Google is phasing out the facility for agents and developers to upload properties directly to its classified site, Google Base which is being replaced by a new service named Google Shopping.
Unprofitable business model
In its official statement Google cites low usage, fierce competition and high infrastructure costs as the main reasons for its change of heart:
“In part due to low usage, the proliferation of excellent property-search tools on real estate websites, and the infrastructure challenge posed by the impending retirement of the Google Base API (used by listing providers to submit listings), we’ve decided to discontinue the real estate service”
Shortly after launch, we outlined the hurdles Google had to overcome to succeed in its real estate venture. What has become clear is that it failed to find answers to two key questions:
• How do you increase Adwords revenue at the same time as promoting your own portal?
It could not square the circle of sending searchers to a site (Google maps) where the adverts are less prominent and therefore users are less profitable than in the main search results.
• How do you build a cost-effective infrastructure that presents clean, up-to-date listings in a compelling way for the property searcher?
Google cites low usage as a key reason for its exit but the main reason for failure is it never prominently promoted its listings within the main search results.
It tested this but failed to find a way to make the economics stake up so its real estate results always remained relatively hidden.
Google also arguably underestimated the time, skill and resources it requires to run a modern-day, cutting-edge property portal. If the revenues had been there, it could have bought in the expertise but the numbers just did not stack up.
Limitations of map-based search
One factor which many, including Global edge, failed to anticipate is the limitations of map-based search. A number of prominent portal owners have recently cited tests that show most consumers prefer a list of properties to quickly compare images and property features to searching on a map.
Ultimately, Google could not provide a consumer experience comparable with the best portals, in the markets in which it operated, at a cost that made the excercise worth while.
Portal owners around the world will be smiling today. It's not as good news though for agents, as Google's departure will only discourage further new entrants and raise the price of lead generation over the longer term.