Nationstar acquires Real Estate Digital (RED) for 18 million in cash.

We’ve all heard the “hard to believe” user metrics the portals publish each month for monthly “unique users”. It seems that some of them have no problem stating publicly that unique users is the same as unique PEOPLE, which of course it is not.

This type of reporting to me has major implications as the average agent and investor don’t understand the material differences between unique users (IP addresses) and unique users (People) but spend money and invest based on this critical information. I would like to see the portals clear up this confusion in the marketplace.

For example, at a recent conference the CMO for Zillow stated several times to the audience that Zillow had 62 million PEOPLE visit their site in a single month. Then just this week, Zillow claims an average of over 70M unique users/month in the quarter. The statement by the CMO cannot be truthful and the statement by Zillow in their SEC filing, although technically may be true (if you count IP addresses), doesn’t paint an accurate picture of the number of PEOPLE that actually use the site. The two metrics are not interchangeable. Unique people visits are all that really matters. You can’t sell houses to IP addresses.

Zillow uses Google Analytics to measure visits which measure unique IP addresses only, NOT unique people as comScore, a company they use to use for metric reporting, claims they can deliver. From Zillow’s May 5 Q1 filing:

“Unique users source: We measure unique users with Google Analytics.”

comScore and Google Analytics is not an apples–to-apples comparison. One measures unique people visits, the other unique IP address visits. Reporting IP Uniques and making them appear to be actual people is tantamount to a shell game (or worse) and billions of dollars are being spent on it by unsuspecting agents and unknowing investors.

Zillow once used comScore, but apparently didn’t like the numbers so it stopped using them, at least from a public reporting purpose. When Zillow touted they had overtaken Move in 2009 as the #1 trafficked site, they were using comScore at the time. ComScore refuted Zillow’s numbers stating they had used the incorrect metrics for comparison.

Zillow later corrected their statement by saying this in their blog: “After discussions with comScore, it appears that the comScore data we cite below may be unreliable and it includes a different approach to Zillow’s measurement than other sites.” For a detailed discussion, please refer to this Inman post. If this sounds confusing to you, trust us — it is to us too. We will certainly think twice about publishing comScore data moving forward.”

And they stopped using comScore and started using Google Analytics for public reporting, as far as I know.

An why not? The numbers are exponentially higher and it looks better to the market AND to potential customers (agents). Fast forward to today. Who do they quote as the source of their metrics? Google Analytics, that’s who.

For more information about this exchange, go to the archived Inman article here: http://www.inman.com/2009/12/18/realtorcom-still-no-1/#.U2uAXVfxz_w and the Zillow blog post: http://www.zillow.com/blog/pro/zillows-spectacular-november-15731/

One could argue that 6M unique people were “recorded” by Zillow 10 different times during the month which equals 60 million unique users in Zillow’s vernacular. BTW, that is still a significant number, but it’s not 60 million people. Visitors could have used different computers, devices, browsers, ISPs and locations. They could have loaded a third party website page that happened to have a Zillow widget on it (and the user not even know about Zillow) and been recorded by Zillow as a visit. They could have visited an agent website (where ads are not sold) provided by Diversified and been recorded as a visit. When an agent check’s their account on the site, they are recorded as a visit. The list goes on and on.

For more information about the definition of “Unique User”, visit http://en.wikipedia.org/wiki/Unique_user

We will likely never know the real answers to this winner-take-all metric as reported by the portals each quarter. They certainly don’t want us to see their OZ behind the curtain as this would materially affect revenue and market cap.

Some would rather keep selling the illusion for as long as possible. IMHO.

Greg, please see if you can get some concrete answers or least some clarity to these issues. Thanks!