Zillow has entered into a definitive agreement to acquire Trulia for $3.5 billion, forming what may be the biggest player in digital home search and laying the groundwork for a more aggressive push into digital real estate advertising.

Both Zillow and Trulia are primarily media companies, generating the majority of revenue through ad sales to real estate professionals. Despite continued growth as public companies, significant opportunities of scale remain as the majority of advertising dollars in the real estate sector have yet to migrate online or to mobile.

?When the largest real estate website acquires the second largest website, it means a broad opportunity for ad sales,? said Melody Adhami, president and COO of Plastic Mobile.

?Having a cross-brand reach creates better value driven and smart ads. Zillow and Trulia will also have a better control on the market, streamlining web experiences and creating higher standards.?

?Since both websites have target audiences that are consistent, it not only enables ads to reach a broader audience, but it also encourages more user experience and interactivity,? she said.

Closing the loop
The deal, once approved by both companies? boards, is expected to close next year though each brand will continue to operate under its individual name.

The two companies' combined revenue currently represents less than 4 percent of the estimated $12 billion real estate professionals spend on marketing their services to consumers each year, according to Borrell Associates Real Estate Advertising 2013 Outlook.

Zillow and Trulia are two rapidly growing real estate sites on mobile and the Web, enabling advertisers to reach a large and expanding consumer base. In June, Zillow reported a record 83 million unique users across mobile and Web. For the same month, Trulia reported a record 54 million monthly unique users across its sites and mobile apps.

The two brands have limited consumer overlap ? approximately half of Trulia.com's monthly visitors do not visit Zillow.com, and approximately two-thirds of Zillow.com's monthly visitors across all devices do not use Trulia.com, according to comScore. Maintaining the two distinct consumer brands will allow the combined company to continue to offer differentiated products and user experiences, attract more users and maximize the distribution of free content across multiple platforms, apps and channels.

Expected benefits of the deal include an accelerated innovation on mobile and Web tools, greater access to free real estate market data by sharing housing trend analysis and forecasts and broader distribution for home sellers and their agents, brokerages, and participating MLSs.

The companies are also predicted to offer shared services and marketing platforms for advertisers that enhance agent productivity and marketing to deliver greater return on their investment.

The problem with ad sales
In 2005, print real estate advertising had just begun its demise as a red-hot housing market cut newspapers out the picture due to the fact that homes were selling so fast in select markets that they were never advertised.

Consumers wanted more information up front in the buying process and the Internet offered more control and purchasing power than ever before.

In 1999, four percent of buyers found their home through the Internet and 11 percent in 2003. The Internet surpassed print newspaper ads in 2002, according to Borrell Associates, and print ads have steadily fallen into the single-digit category ever since.

The National Association of Realtors' Profile of Home Buyers, completed in 2004, showed that the Internet was almost as powerful a marketing tool in selling homes as yard signs. Sixteen percent of the respondents said they found their home through signs, 15 percent through the Internet.

Consumer demand for interactive access to product information has not wavered since, and companies such as Trulia and Zillow who were able to capture and disseminate that information were expected to retain billions of dollars in advertising, but that is not yet the case.

A report by Clariety, an Arizona-based real estate industry information technology consulting firm said that Zillow and Trulia?s real estate networks? Web traffic totaled 84.6 million unique visitors this past May. That compares with the 40.2 million combined unique visitors in the same month of three other online real estate networks.

Even with that dominance, not all local real estate brokers are convinced of Zillow and Trulia?s benefit because the information is not always accurate. Sites such as Realtor.com are perceived to be more accurate and timely because of their marriage with MLS databases, which have stringent requirements about the input of data.

App happy
Trulia and Zillow both offer mobile apps which extend the convenience of search and allow for an even faster transmittal of communication between buyers, agents and lenders .

In a joint study by National Association of Realtors and Google entitled The Digital House Hunt: Consumer and Market Trends in Real Estate, it was discovered that 89 percent of new home shoppers used a mobile search engine and that 68 percent used a mobile app throughout their research process.

?Trulia and Zillow will be creating the ultimate database for home search. And while this may scare other players, this move won?t necessarily create a permanent dominance for the two companies,? Ms. Adhami said.

?Rather, this will nudge the entire industry into higher engage experiences within their digital platforms, whether through responsiveness to mobile-web or an app.? 

By 2017, online is expected to be the medium of choice for real estate, with nearly 41 percent of the advertising pie, according to Media Ad View Plus. Meanwhile, newspaper?s share of the real estate advertising pie is expected to decline, reaching less than 7 percent by 2017. Mobile is also expected to benefit from the newspaper industry?s continuing decline, as its share increases from 1 to 12.6 percent.

The industry?s shift from traditional offline marketing to online marketing has reached new levels of disparity because while real estate professionals control a large portion of ad dollars, they prefer to spend it on digital marketing products and services that are native but sometimes poorly run, exist on fragmented platforms with publishers, or lack accountability and support which does not translate into new relationships.

And as social media, mobile and video continue to develop, it is more important than ever to deliver contextualized advertising. 

The Borrell report cites that future growth rates in real estate advertising are directly correlated with the number of planned purchases by consumers, which is expected to increase for every home type into 2014. Economic indicators are calling for consistent market growth and are married with a substantial shift of cash moving from traditional into online advertising. There will undoubtedly continue to be unprecedented digital marketing spend from the industry. Trulia and Zillow are aiming to zero in on attaining more ad dollars, and it really is a no brainer for brokers and agents, should they realize that the couple attracts and represents more than two-thirds of all Internet home search traffic.

?The ideology and acceptance of ad sales on mobile and web haven?t quite reached mass acceptance. This is especially true with real estate since it is a very traditional business that?s been later to adapt to the digital and mobile game,? Ms. Adhami said. ?Since most ads don?t contribute to the content and context of a mobile experience.?

?That said, ads do have a place in the digital realm, as long as brands know how their consumers are using and engaging with them, they can effectively reach them meaningfully.?

 Final Take
Michelle is editorial assistant on Mobile Marketer, New York