Primelocation, a residential website, has now entered the cut-throat world of ad-based magazines. Lucy Barnard talks to its founder, Ian Springett.
Ian Springett, the man behind residential website Primelocation.com, is a brave man.
Not only has he convinced such large residential agents as Chesterton, Cluttons, DTZ, FPDSavills, Knight Frank and Strutt & Parker to plough up to a million pounds each into the internet venture, but his next plan for the company is to break into the cut-throat residential property magazine market.
This autumn Springett’s Primelocation launched its own monthly free distribution Primelocation magazine available only for Primelocation members that will advertise in central, west and south-west London, undercutting its competitors’ advertising rates. It intends to roll out other magazines covering different areas in the near future.
The move brings the company into competition with the two agent-owned glossies, the London Magazine and Fabric as well as with News International’s London Property News, the privately owned London Agents and Foxton’s new weekly magazine.
Not targeting Fabric’s ad market
“We’re positioned just below Fabric in terms of print quality and number of editorial pages, so we don’t anticipate taking their ad revenue,” says Springett. “We’re really anticipating that agents will switch to us from London Property News and London Agents.”
But Primelocation has already made enemies with Associated Newspapers, publisher of the Daily Mail and the Evening Standard, which refuse to carry Primelocation adverts because they compete with its Fish4homes and thisislondon websites.
And, with house sales volumes falling by 16.27% in the second quarter of 2003, according to figures from the Land Registry, and interest rates likely to remain low meaning that owners find it quite easy to retain their property the idea of launching an advertising-dependent magazine seems ill-timed.
Not so, says Springett, who says: “We think this is actually a very good time to launch. By offering cost-conscious agents advertising that is cheaper than anything they are already in, we think we can attract more.”
“In fact,” he adds, “our primary role with this magazine is not to make a profit but to increase the awareness and visibility of the brand, which will increase visits to the site, and to benefit our agents by adding to the diversity of the marketing tools on offer, which we hope will attract more agents.”
The clever marketing is typical of the company which, on the back of the internet boom of the late 1990s, promised shareholders a “winning lottery ticket”, and persuaded big agents to pile into it partly, cynical onlookers suggest, for fear of being left out.
But some agents that put their money into the venture and allowed their prestigious names to be connected with it are unhappy that smaller one-office firms can, in effect, live off the larger firms’ marketing campaigns and steal market share.
Dick Ford, head of London residential at Knight Frank, said: “No-one says we are dissatisfied with Primelocation but it is undeniable that the big boys pay, pro rata, more than anyone else and this needs further investigation. Everything can be reviewed.”
But Springett says: “FPDSavills advertises in newspapers and magazines in which smaller agents also advertise. Primelocation is similar. All the firms took the view that the internet was an effective medium. Knight Frank and FPDSavills are pleased with the business benefits and have been good supporters of everything we have done subsequently.”
But the real problem with Primelocation is the question of what will happen to the business in the long term.
More a threat to agents than to other sites
Simon Agace, managing director of Winkworth Franchising, one of the agents that did not join Primelocation, says: “Primelocation was created as a site to protect agents against other portals. It has ended up as a site more threatening to agents than to other sites. As a business, Primelocation will always be seeking to be a monopolistic portal. What I think agents want is a non-profit-making portal, more like a national register.”
Springett says: “We have always said we will float or whatever we do when we are ready. We are looking at the venture as a medium-term investment. Right now, market conditions are not favourable. It is likely that we will be making a decent profit within five years.”
But if Primelocation is floated and each shareholder firm is able to sell its stake, the problem still remains that the venture really has any value only if the agents listing on it guarantee to continue to do so.
Springett says: “To have value, the website must deliver something worthwhile to agents. I think the fact that we have twice as many ordinary members as we do shareholder members shows that we are offering that service. “But also having shareholders linked into the website is one of its strengths. We have always said that, on flotation, it would be unlikely that all of our shareholders will simply be able to sell all of their shares. It is more likely that they would be able to sell a proportion and then get rid of the rest over time.”
