Is Advertising Going to be Zillow’s downfall?

Is it just me or do the ads on Zillow run the risk of compromising its usability?

Zillow launched to great fanfare a couple months ago and grew quickly to become what's arguably the 800lb gorilla in the Real Estate 2.0 space right now. Now, depending on who you talk to, its Zestimates are either wildly off base or surprisingly on point. But there’s no doubt that Zillow's arrival on the scene shook up this industry.

What’s been questionable all along is not Zillow’s technology but rather its business model. The folks over at Zillow HQ remain bullish on their advertising model but I’m starting to have my doubts.

When all Zillow had was some tastefully unobtrusive Google ads I was ok with that. Heck, I even clicked through a few of them from time to time. I sympathize with their need to recoup some of their massive capital investment and startup costs. Unfortuntely, those VC dollars don’t last forever. (Believe me, I know… I was a dot-com casualty at one point myself).

However, I’m noticing more and more obnoxiously placed ads on their site these days. Now, even animated ads and ads with sound. This is a colossal misstep in my opinion. (I wonder how long it’ll be before the Punch the Monkey-type ads start showing up?)

This move into more in-your-face advertising (while good for their bottom line I’m sure) runs the risk of alienating the very people they want using their site. This is a real thin tightrope they’re walking.

I’m with Dustin when he said that the folks at Zillow need to be worried. There’s a lot of competition growing in this space, with even the mainstream brokers jumping in the game.

Zillow can’t afford to be pushing people away right now.

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