Both Zillow (Z) and Trulia (TRLA) have been in a war for the multibillion-dollar online real estate market. However, so far, Z stock has been the clear winner, up about 79% during the past year. TRLA stock, on the other hand, is up a mere 9%.
But TRLA certainly hasn’t given up. In fact, it has launched an aggressive national ad campaign.
I think it’s a pretty good effort (the theme is finding your “Moment of Trulia”). Yes, it has a big-time focus on mobile, but it also plays up the fun and excitement of buying a home. There’s a smart call-to-action at the end of the commercial, with a mention that you can download the Apple (AAPL) iOS or Google (GOOG) Android versions.
The timing of the new campaign is also important. After all, we’re about to kick off the home-buying season, which is crucial for TRLA stock.
Such national ad campaigns have been important for other online operators wanting to create or strengthen brands. Just look at the success of companies like Priceline.com (PCLN) and Expedia (EXPE). If Trulia can find anything close to the kind of success those brands have had, TRLA stock will be in good shape.
Trulia has budgeted $45 million for its own national campaign. Interestingly enough, the target is primarily women between the ages of 25 and 44. The company says this targeting is based on intensive analytics on user data.
Trulia is taking big strides, but the company is still playing catch-up. Keep in mind that Zillow has already been working with television advertising, with its first commercial airing in the summer of 2013. That first-mover advantage could help explain why Z stock has so powerfully outperformed TRLA stock recently.
Let’s face it, it seems that Zillow has the edge in creating brand awareness, reflected in the performance of Z stock. That success has forced Trulia to quickly jump into the new advertising campaign.
But the good news is that this competition is still in the early stages. Besides, TRLA stock is definitely trading at a much more attractive valuation, with a multiple of 8 times sales. The valuation of Z stock is much higher — about 18 times sales.
In other words, if the TRLA campaign can get traction — and strong momentum with app downloads — TRLA stock could be poised for upside over the next few quarters.
Tom Taulli runs the InvestorPlace blog IPO Playbook. He is also the author of High-Profit IPO Strategies, All About Commodities and All About Short Selling. Follow him on Twitter at @ttaulli. As of this writing, he did not hold a position in any of the aforementioned securities.
