Zoopla proposition could be more attractive… is this good news for onthemarket?

Thursday 30 April 2015  / Ruth Montia

Zoopla Property Group has made the announcement that it will buy the price comparison website uSwitch. They are looking for more potential purchases following its surprise declaration.

The ZPG founder and chief executive Alex Chesterman, has told the Financial Times that he is watching out for other acquirement opportunities although there are no immediate plans for further expansion. uSwitch is regarded by many in the consumer press as the most authoritative of the price comparison websites

The combination of the two businesses would give consumers the ability to research, find and manage their homes on a single platform.

The purchase of uSwitch puts Zoopla into competition with other rival services such as Moneysupermarket and Gocompare, as well as the pure property portals such as Rightmove and OnTheMarket.

Zoopla’s share price closed up 16.76% last week, on a day when the FTSE dipped slightly overall. It was the market’s biggest increase throughout the day and at one time in the early afternoon the Zoopla share price showed a 17.82% increase. Zoopla has released its results for six months ending in March and this showed a 23% decline in the number of estate agency members to 12,449. There was an 89% increase in overseas members and a six% rise in new-build developer members.

Rather than merging the two (ZooSwitch?), the two brands will continue to operate independently, but their websites will presumably be combined, so that homebuyers are also offered utilities, quotes and people looking for a gas tariff can be lured across to Zoopla with some property porn.

uSwitch is Britain’s biggest comparison site for ‘home services’. It made £16.2m in underlying profits last year on revenues of £62.9m, so Zoopla’s at least investing in a company that’s making a decent amount of cash. But it seems the real reason behind the deal is a strategic one.

Zoopla is currently occupying the precarious middle ground in its market. It’s not got the clout of the enormous Rightmove, but also faces competition from a new property portal OnTheMarket, which was launched by estate agents unhappy about paying the bigger portals’ fees.

Gareth Helm, brand director of Moneysupermarket, is responsible for brand marketing across Moneysupermarket, Travelsupermarket and Moneysavingexpert and he will report directly to Alex Chesterman and be responsible for Zoopla’s overall marketing strategy. When Zoopla lost severe 23% of its estate agent members it was said that it was because many have left to join OnTheMarket, which only authorises its members to be part of one other portal, but buying uSwitch could give Zoopla the edge it needs to compete against rivals.

Zoopla says the UK agency member blend is returning to normal levels.