The Motley Fool recently paid a visit to online home and real estate marketplace Zillow (NASDAQ: ZG ) . We chatted with Chief Revenue Officer Greg Schwartz about Zillow's revenue streams, monetization strategies, and what lies ahead.
Greg discusses Zillow's revenue streams and why the online marketplace recently updated its pricing model for display ads.
To view the full interview, click here.
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Brendan Byrnes: Hey Fools, I'm Brendan Byrnes and I'm joined today by Greg Schwartz. Greg is the chief revenue officer at Zillow, so first of all thanks for your time.
Greg Schwartz: Yeah, great to meet you. Thanks for coming.
Brendan: I was wondering if you could just start off with giving an overview of Zillow's different revenue streams and how they contribute to the top line?
Greg: Sure. We've got a few different revenue streams. The first and largest revenue stream is our Marketplace revenue stream -- which includes local advertising from real estate agents, from mortgage brokers, banks, and brokerage firms -- which is our largest and dominant revenue stream.
Then we have what I'd call a more well-known display advertising revenue stream, primarily from advertisers who are adjacent to the transaction of moving, so wireless companies, telecommunications companies, and the like.
Brendan: I wanted you to explain something. The new transition that you went through now, with doing a fixed number of impressions; why did you decide to do that, and how is that going to impact your revenues?
Greg: Yeah, you bet. We converted our unit of sale, which is something we focus quite a bit on, to one that was directly correlated to the benefit that we provide to our real estate agent and brokerage customers.
Our traffic's been growing quite rapidly, as you know, over the last number of years. It is important that we adjust our charges commensurate with the benefit that we're providing. That was the driving purpose of it. We've converted all 30,000-plus of our customers to the new impression-based business model.
We'd been on share of voice prior to that, which was a relatively illiquid manner in which to charge for advertising services. We're pleased with the transaction.
Brendan: A big part of that was based on big cities, correct, as far as where you get revenue from?
Greg: Yeah, you know what's interesting about our business is we've always operated a national footprint and we've got a scaled sales force that allows us to sell into virtually every corner of the country.
We set our advertising rates based on every individual zip code in the country, so it's quite varied and it's commensurate to the opportunity and the profits that are available to a broker or to a real estate agent.
It's truly a national footprint.