Extinction of MyHome

Last month we saw the collapse of MyHome the 4th largest real estate portal in Australia. Some may say this is an insignificant event as MyHome wasn’t the most easiest website to navigate but in actual fact it isn’t great for the real estate industry and its stakeholders including agents, private sellers and people who use the internet to search for property.

The loss of MyHome now means there are only three major portals left in Australia REA, Domain and Homehound. REA is the outright market leader, Domain is half as big as REA and Homehound is 10% the size of REA. This is not great for agents as it further strengthens REA’s position, it is bad for private sellers as they can’t list on REA and it isn’t good for proeprty searchers as it means they have to keep using REA to search for property while being bombarded with advertisements.

MyHome launched in early 2007 and was a joint venture between Microsoft and PBL. By joint venture Microsoft provided PBL with some software and support but even to today I don’t think a Microsoft representative actually stepped foot through the doors of PBL.

From its inception MyHome looked like a real estate portal which was already struggling and was well behind the eight ball. Their website showed very little research & development had been performed, their business and profit model was flawed, their senior management was made up of PBL suits with no real estate experience and most of all, they entered a fiercely competitive market with arrogance and no respect for the dominant market leader REA.

I am now going to discuss each of the short comings displayed by MyHome in a little more detail.

Research & Development - Most new entrants into a competitive market will analyse the short comings of the market leaders and eliminate them from their model and focus development on innovative new products. MyHome simply copied the websites of REA and Domain and amazingly added more non-functionality user features. They branded themselves as another not quite there copy cat real estate portal.

Business Model - There business model was based on charging real estate agents a monthly subscription fee while receiving other revenue through advertising placed within the website along side property listings. Two things are wrong with this business model, the first is that real estate agents despise REA because they charge agents a monthly subscription fee and these fees are constantly rising. Its simple agents do not and will not pay to list their properties on real estate portal, especially one that does not provide them with results.

They tried to overcome this hurdle by offering the major real estate portals a small percentage equity stake in MyHome, this was flawed as all the major franchises wouldn’t get on board as they wanted to compete with one another and some had an existing agreement with Homehound which prohibited such behaviour. They also failed to recognise the impact this will have on independent agents who all turned their backs on MyHome as they were left out in the cold.

Advertising revenue is a great because it does not come from the pockets of agents but it really upsets browsers of your real estate portal as they constantly have to sift through advertisements to view proeprty listings they are after.

Inexperienced Senior Management - The executive team at MyHome had no real estate industry experience and attempted to use a PBL model in an industry where the major competitors had a wealth of experienced real estate professionals.

MyHome’s Arrogance – This was a result of the lack of real estate experienced senior management accompanied with the arrogance which comes along with being backed by PBL. They completely underestimated their competition, they did not understand real estate agents and they failed to recognize the importance of internet traffic.

Their marketing strategy was to spend millions of dollars on billboards, buses, magazines and advertisements through Channel 9. They threw money down the drain, as this type of marketing was ineffective. What they should have done is spent this money on improving their product and making the product free to agents for a longer period of time. This would have allowed MyHome to build up the number of listings on their website improving the chances that users will return to the site.

Any money spent on marketing should have been spent across the internet targeting people who are searching online for property. They didn’t even have a blog attached to their website, which is in the top 3 Search Engine Optimisation (SEO) techniques used to maximise organic search results.

Lets hope that the 16 month long MyHome saga which kept the real estate industry entertained provides a healthy warning about complacency, inexperience, and flawed product to any other real estate portals who are planning to launch in the next 2 years!