Roost gets $8 million: I have a few questions

I like Roost. The search experience is really good — at least until the user is redirected to a brokerage site, which is, in most cases, pretty jarring. The company also provides a nice example of what can be done with IDX when serious UI talent is in the picture.

Congratulations are in order for Alex Chang and his team.

But I have some questions.

First, is now a good time for brokers to make CPC/CPA buys?

The latest research from CAR and NAR show buyers are taking a lot longer to browse for homes before contacting an agent. That’s months of paying for clicks with a fairly low conversion rate. With syndication to the point of ubiquity nearly free, selling clicks that are no more qualified than referrals from listings aggregators — even through an IDX site that is technically the broker’s — may be a tough sell.

Unless the volume is tremendous.

Which brings me to my second question:

Does Roost have the ability to drive the traffic needed to expand the network both horizontally and within markets to a point where they become a market-leading solution?

The company has talked a lot about the coverage benefits of their IDX-based solution versus broker feed-based sites, but said almost nothing about traffic. But I think it is safe to assume they lag far behind the category leaders.

HomeGain did well selling clicks. They grew to be a large, profitable company and had a successful liquidity event. But they had 5 million uniques each month. It is unclear to me how Roost gets here.

Last question: Will the limitations of IDX ultimately outweigh the benefits?

While the upside of an IDX search experience is clear (I’ve written many times about its benefits), the limitations from a business perspective are pretty daunting. Fields are limited. The content that can be displayed with it is too. There’s a reason Trulia and Zillow went the broker feed route. Avoiding these impediments is one of them.

Practically speaking, this limits what Roost might do to address the traffic question. The widgets, content and link structure that have been key to Trulia’s kick-ass search engine effort are largely off-limits to the company.

Moreover, the tension between stickiness and referrals most online real estate sites face (meaning, the judgment as to how long a site keep can or should keep the visitor engaged before sending them off to the listing partner) is very taught. Unlike Zillow, for example, which offers basic listings display for free, and thus has wiggle room to monetize the user through ad impressions, Roost is getting paid for clicks. That means traffic-building content and fora don’t make a lot of sense.

That’s what comes to mind for me. I would love to be convinced that I am off base on all of this because, lord knows, we could use a few happy real estate stories.

— Brian Boero