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Shares of U.K. property portal Rightmove leapt this week on news that the company had successfully increased the fees it charges estate agents.
Rightmove announced that it expects 2010 earning to beat forecasts, in large part due to a boost in advertising revenue from agents. Some agencies are paying as much as 20 percent more in exchange for new services, the company reports.
Agencies were offered a choice of rate increases or the chance to stay at last year’s rates if they agreed to buy at least £200 (about $314) worth of extra products per month, Estate Agent Today reports.
Rightmove’s share price increased by more than 4 percent in the wake of the news.
The surge provides an interesting update to the IPJ report on Google’s impact on the industry. Rightmove’s shares fell after Google expanded its property plans in the U.K., a move hailed by estate agents who see Google’s emergence as an alternative to the fees charged by Rightmove and other portals.
But Rightmove says revenue soared in January, due to a cyclical jump in consumer traffic and a “healthy uptake” in new advertising products. The company board announced it was “confident” the company would beat initial estimates for 2010, “subject to no significant change in market conditions.”
“This is based on the higher average spend per advertiser achieved in January, evidence from our customers of our continued value for money, and the predictably of our subscription model,” the company announced.
While many took the news as a good sign for the U.K. housing market, it was also a good sign for Rightmove’s business model, and the mega-portal business in general. A spokeswoman for the company’s joint broker, Numis, said the update “reflects both Rightmove's strong market position, value proposition as a property marketing tool and subscription business model.”
Several portals reported a significant rise in activity in January. But it’s Rightmove’s ability to raise prices that undoubtedly caught the eye of investors.
"We suspect that the number of property developments has increased and that estate agents are (reluctantly) paying up for Rightmove Choice products," Collins Stewart analyst Robin Savage told the Telegraph.
