Zillow Group Inc. shares fell more than 5.5% on Monday following news that Google is testing a new real estate advertising format that could compete with Zillow’s services.
The new mobile-focused ad format provides detailed property information, allows users to request home tours, and displays similar listings directly in search results. Users can schedule showings with “top-rated” local agents via a “Request a tour” button, with an expected response within 15 minutes.
Goldman Sachs analyst Michael Ng noted that the immediate effect on Zillow may be limited but cautioned about potential long-term risks. “While most of Zillow’s traffic is direct and Google’s product is currently limited to select markets and mobile browsers, this represents a long-term risk for real estate portals like Zillow,” he said, maintaining a Neutral rating on the stock.
Google developed the format in collaboration with real estate analytics and brokerage firm ComeHome, which sources listings from the Multiple Listing Service rather than directly from agents. The feature directly competes with Zillow’s Premier Agent program by generating leads for buyer-side agents.
The new Google ads include typical portal features such as filters for bedrooms, bathrooms, square footage, price, and new listings, potentially challenging Zillow’s role as a leading destination for home searches.
