Zillow Pays $3.5 Billion for Trulia

Online real estate companies prioritize mobile growth

Zillow has acquired Trulia for $3.5 billion in stock, which could trigger a string of similar consolidations within the online real estate industry. 

Zillow and Trulia are two of the biggest third-party sites in online real estate, and as partner sites they aim to help established real estate players like Re/Max, Coldwell Banker and Century 21 advertise listings. Even after the deal closes, Zillow and Trulia will maintain separate consumer-facing sites and apps.

Like other online real estate companies, mobile is a big focus for Trulia and Zillow as more home buyers begin their searches on smartphones and tablets. Trulia claimed 54 million unique mobile users in June (after running a $45 million mobile-focused national campaign in March) while Zillow said it had 83 million unique mobile users.

While consumers have shifted to mobile, real estate marketers have not. Trulia and Zillow cite a combined revenue of less than 4 percent—or roughly $480 million—of the real estate industry’s total $12 billion annual spend. The companies make the bulk of their revenue from charging advertisers to post their listings on the site.

Interestingly, the two online players have distinct audiences, which could give advertisers an opportunity to hit different sets of consumers with similar messages. Two-thirds of Trulia’s monthly traffic doesn’t access Zillow, and two-thirds of Zillow’s users don’t go to Trulia. While the sites will remain separate, advertisers could potentially have a reach across both platforms. The goal is then, of course, that advertisers will bump up their digital spend.

The deal is expected to close in 2015.