Zillow's (Z -1.5%) purchase of Trulia (TRLA +13.3%) signals Zillow plans to create a portfolio of online real estate assets much as InterActiveCorp has created a portfolio of online dating assets, says CEO Spencer Rascoff. "What's taking shape is the creation of a real estate media company." Move (MOVE +8.9%) investors might be pleased to hear that.
Though Trulia's brand will stay independent, Zillow and Trulia predict the deal will yield at least $100M/year in cost savings by 2016. Other expected synergies include: 1) Better real estate data for consumers thanks to data-sharing between Zillow/Trulia. 2) Common ad services/marketing platforms that can yield a better ROI. 3) Broader listing distribution.
The companies note they still only account for 4% of estimated U.S. real estate marketing spend of $12B/year. Zillow has 83M monthly unique users, and Trulia 54M (some overlap exists).
Street commentary has been quite positive. Macquarie: "This could pave the way to these companies becoming more profitable more quickly." CRT Capital: "At the end of the day, this provides scale. And scale ultimately leads to more advertising on the overall network."