Among the big U.S. portals, there are significant differences between the amount of leads generated, how those leads convert, and the number of customers willing to pay for those leads.

Why it matters: Behind headline traffic numbers lurks these real metrics of success – which are a reflection of value, business potential, and product/market fit.

• Data on over 2.5M portal leads from my friends at Inside Real Estate, which operate one of the nation’s largest CRMs used by over 400,000 agents, reveals the proportion of leads generated per portal since 2021.
   

• In 2024, Zillow comes out as the top platform with 50x more leads generated than Homes.com; realtor.com sits 15x higher.

Lead quality is difficult to measure, but perhaps the most accurate measure is “lead conversion” – the percentage of raw leads that turn into a transacting customer.

• This metric is measured within Inside Real Estate’s CRM platform, across over 300,000 portal leads in 2024.
   

• Zillow is once again the leader, with leads that convert at 2x the rate of Homes.com.

The number and quality of leads should, over time, roughly correlate to customers and revenue.

• Homes.com signed a flurry of new customers – over 10,000 – in the first half of 2024, but that growth dramatically slowed in the most recent quarter with a net gain of only 800 paying customers.
   

• The result is relatively flat revenue growth between Q2 and Q3.

The resulting revenue for Homes.com stands at $17 million for the quarter, magnitudes lower than Zillow and realtor.com’s comparable lead gen businesses.

• Revenue is a reflection of product/market fit and comes from delivering a valuable service to paying customers: more value -> more customers -> more revenue.

There’s a matter of timing: CoStar acquired Homes.com in 2021, relaunched it in 2022, began its advertising campaign in 2023, and started selling subscriptions in February 2024. 

• Meaning the business is still in expensive growth mode, which is why the recent slowdown is concerning.
   

• With a $1 billion investment in the “biggest marketing campaign in history,” $60 million in annual revenue clearly isn’t good enough – it would take 16 years to recoup one year’s investment.

The counter-argument is that it’s not about leads, but visibility.

• Homes.com appears to be focusing more on listing and agent visibility, a benefit similar to billboard, radio, or TV advertising.
   

• But even if that’s the case, success is still measured with paying customers and revenue.

The bottom line: It’s all about product/market fit, baby.

• We can exhaust ourselves arguing about traffic: how it’s measured, the value of organic vs. paid, or the size of marketing campaigns.
   

• But in the end, these portals are in business to make money, and that comes from delivering a valuable service to paying customers.