Icon

{ random thoughts about startups, social media, and technology }

Dull thoughts in a sharp world.

Nov 3, 2008

Revenue models in the industry

In recent weeks, a couple of companies have announced the entrance of the pay-per-lead model in the apartment industry. ApartmentMarketer.com was an early announcement, followed by MyNewPlace, and now Rent.com. I wanted to recap the three models, who’s using them, and the advantages and disadvantages of each. So the three current revenue/payment models available for apartments are pay-per-lease, subscription, and pay-per-lead.

1) Pay-per-lease – apartments pay only if a resident signs a lease. The resident is responsible for reporting the lease back to the website, usually providing a monetary incentive to do so.

Pros:
- Pay for performance – no monthly fee
Cons:
- Tracking is very difficult – residents incorrectly claim the source
- Difficult to estimate monthly budget
- Expensive

Major websites include:
Rent.com – $389 per lease
MyNewPlace.com – $375 per lease**
HubBuzz.com – Anyone know?
LiveByCampus.com – $100 per lease minimum
ApartmentSearch.com – ?
ApartmentHomeLiving.com – ?
RentMoney.com
*There are a slew of regional ones, so let me know and I’ll add them to this list.
** No longer offering pay-per-lease

2) Subscription -Apartments pay a monthly fee to list their properties.

Pros:
- Monthly budget can be estimated
Cons:
- No guarantees on leads or leases

Major websites include:
Apartments.com
ApartmentGuide.com
RentVine.com
Rentals.com
HotPads.com
Move.com (Also a pay-per-click model)

3) Pay-per-lead – Apartments pay for only leads (email or phone calls).

Pros:
- Least expensive model
- Pay for performance – no monthly fee
- Budget control – you can set the number of leads you want.
Cons:
- Necessity for high quality leads

Major websites include:
MyNewPlace.com – $18 per lead
Rent.com – $15 per lead
ApartmentMarketer.com – $25 per lead (max of $100)
RentWiki.com – $10 per lead

From what we can tell so far, apartments are very receptive to the pay-per-lead model. Apartments should be paying for performance, will be able to budget properly, and can track the performance of the vendor. However, the lead quality is a must.

No TweetBacks yet. (Be the first to Tweet this post)
  • Steve, you are right in that the lead model does not account for walk-ins, which are the highest conversions. However, the lead model does account for phone calls, tracked through Call Source. One major fault of the lead model is similar to what Orbitz faced; consumers bouncing off the vendors site and going directly to the supplier.
  • Joe
    Eric, good writeup. A couple notes for you. First, you put pay-per-lease instead of lead on #3. Secondly, I find it very telling that MyNewPlace has given up on the Lease model. It's always been a very difficult one to execute correctly, for some of the reasons you've given, and the fact that they couldn't make it work tells me they just couldn't overcome some of those issues. Seems that it gives Rent.com a clear product differentiation factor again.
  • You comment on how apartment managers are receptive to the pay-per-lead model, but that doesn't cover phone leads or any other lead contacts. Advertisers will often capture a vast majority of their leads from the phone. And as many apartment managers know, turning a lead into a renter is often better handled either in person or on the phone. It just makes it easier to close the sale.
blog comments powered by Disqus

About Me

I'm a twenty something entrepreneur living in San Francisco. I'm the founder of RentWiki.com, I've spoken at NMHC, AIM conference, Harvard Entrepreneurship Conference, and Multi-housing World, and was named one of BusinessWeek's Top 25 Entrepreneurs Under 25. I enjoy great design, all relevant and irrelevant technology, reading, and good people.