MyNewPlace Feels at Home in Online Rentals

Like everything else in the consumer universe, the search for a good apartment is getting more digitally rich with every passing moving day.

One of the most innovative, MyNewPlace.com, launched in beta form almost a year ago, co-founded by current CEO John Helm and technology vice president Kenneth Cluff. Helm was the entrepreneur who started AllApartments /SpringStreet in the mid-‘90s, one of the first online apartment-locator services; Cluff served as that company’s software development director. The concern was sold to real estate site Homestore in 1999 and now does business as Move.com. (Homestore itself changed its name to Move Inc. last September.)

That early site was an ad-driven business model in which property owners paid SpringStreet monthly fees to have traffic driven to their Web sites. But the online rental-locator business underwent a change in 2001 with the arrival of Rent.com, which introduced a pay-for-performance revenue model, charging property owners for each lease signed through the Web site.

“The performance-based model had always existed in the rental space, but Rent.com were the first to really take it online, and the apartment management companies really liked it,” Cluff says. “They felt it was better value and more predictable to pay only for the leases they got.”

When Rent.com was sold to eBay in 2005, Helm started talking to industry figures and realized they felt the competitive need for another pay-for-performance site. So he and Cluff began to plan another entry into online rentals—with the aim of using Web 2.0 tactics to provide a better experience for users.

“We felt that by being small and having a strong technology background we could be innovative and drive products that both consumers and property managers liked,” he says. “We also felt we could have a tighter audit trail that would make the management companies feel very comfortable that we were actually doing what we said we were doing for them.”

That audit trail was important because of a perception among property managers that other performance-based systems in the past had put in claims for signed leases that hadn’t gone through their sites. It was also important because MyNewPlace.com offers a signing rebate of $100 to visitors who view selected properties on the site and then go on to take out a lease on one of those apartments.

The rebate is part of MyNewPlace’s More Cash Back service, in which the company takes care of the fulfillment end of the rebate for the property lessors. Users can only qualify for the rebates if they’ve registered with MyNewPlace, if they have logged in and viewed the specific property before signing a lease, if the lease is a new one, if they wrote “MyNewPlace” on any guest card filled out during the viewing and (if possible) on the lease, if they notify the site within 60 days of signing—and of course, if they actually move into the property.

That rebate—which Rent.com also uses online and which managers themselves commonly offer in their offline ads—serves as a self-reporting system that leads consumers to let MyNewPlace know they’ve aided a successful rental. “Not too many consumers are going to bother to come back to the Web site and do that out of the goodness of their hearts,” Cluff says. “So we offer them this carrot to get them to self-report.”

The company is currently testing a feature that will let property managers using the service raise that rebate on the fly and thus elevate the rank of that listing in a user’s search results page. The rebate amount factors into the rankings of property listings on the results pages of user searches: the bigger the rebate, the higher the ranking.

“We encourage managers to up those rebates,” Cluff says. “It doesn’t put any more money in our pockets, but it makes the consumer more likely to come back and claim it, making our site more successful. There’s a big difference between getting $100 cash back and getting $500.”

As part of the More Cash Back service to managers, MyNewPlace also sends out targeted e-mails that advise users when properties fitting their requirements and in markets they’ve searched increase their rebates.

Users can find a place that meets those requirements in MyNewPlace’s database of more than 25,000 properties containing 6 million total units by setting up to 20 different search criteria. They can set the search range by specifying the distance from the center of a ZIP code area, specify the number of bedrooms and baths they need, set a rental price range, search for properties that allow cats, dogs or both, and check off desired amenities such as gyms, pools and parking.

The results page by default lists the rebate properties first, but users can sort their search results by rents (low to high or high to low), distance from the ZIP code center or alphabet. Listings include basic information about price ranges, bedrooms and bathrooms available, and links where registered site users can see more details including detailed photos and availability. An interactive Google map shows locations of all the properties, with the apartments offering rebates highlighted.

MyNewPlace also collects data about users’ projected moving dates and uses an e-mail platform from StrongMail to set up triggered communications at different stages in that search. “In the early stages, we try to suggest other properties that fit their search criteria to jumpstart them to come back to the site,” Cluff says. “That’s a complex communication, because a single apartment building can have wide rent ranges from studios to penthouses, and various floor plans. But even if they didn’t specify those things in their search criteria, we can deduce from someone’s behavior on-site that they investigated a specific rent range or opened floor plans for a two-bedroom apartment.”

Later on in the cycle, users receive e-mails that remind them of the properties they’ve already viewed on MyNewPlace. And if the move date passes without any attempt to claim a rebate, users get a further reminder to come back to the site and let the company know if they’re eligible for cash back—or if they’ve pushed their move date further out.

As a relatively new player in a highly competitive portion of the Internet, MyNewPlace.com also values e-mail contact as a branding tool, to help keep their name top of mind with users, at least when it comes time to sign on the dotted line.

“It’s key for us to be able to get the credit for a lease,” Cluff says. “Even if we do everything right on our site, if the property management company doesn’t have on their intake form that the person was sourced from MyNewPlace, we can still lose credit for that sale. We’re not a hugely brand-driven company: We know every user is going to be cross-shopping, using us and at least two other sources. We just need to keep our name in their heads so that when they go into that leasing office, they’re going to put down MyNewPlace. That’s one of our main reasons for keeping the dialogue going with users.”

E-mail may also provide a future insertion point for ads from marketers interested in reaching consumers at the key life event of moving households, such as moving companies and home repair contractors. For now, though, MyNewPlace is holding off on those ads, and also on the introduction of sponsored “feature property” slots in search results.

As for driving traffic to the site, Cluff says that’s a matter of old-fashioned search marketing, through both paid search ads and optimization. “Our business model is predicated on being able to buy enough traffic through traditional keyword buys at good enough rates so that if we’re doing everything right and converting properly, it works and scales,” Cluff says. “That should get us most of the way there. After that, we’ll build out affiliate programs.”

In the year since its launch MyNewPlace has been attracting three things every Web start-up likes to see: advertisers, investment capital and press attention. Of the 6 million properties listed, more than 10,000 are pay-for-performance listees—big by industry standards, Cluff says, and fast in terms of how quickly that mark was reached. The company has completed two rounds of venture funding, for $8 million and $12 million. And last September it was named to a list of leading real estate Web sites in BusinessWeek’s “Best of the Web” reader poll, alongside Trulia, Craigslist and Zillow, among others.

And Cluff thinks the market is open for an online rental site with an eye for technology and a business model geared to performance. That market currently falls into three large categories: print-related directories with an online presence, such as ApartmentGuide.com and Apartments.com, owned by five media companies under the Classified Ventures banner; pure-play ad-supported sites such as Move.com; and the performance-based enterprises Rent.com and MyNewPlace. The print-connected sites are feeling the constraints of their media links, he says, while Move.com has undergone several reorganizations and management changes in the recent past.

“Rent.com has the muscle of eBay behind it, but that also means they’re a big company—I’d say big and slow—whereas we’re still a pretty small company, and I feel our pace of innovation is pretty high,” Cluff says.

And what about competition from another eBay property, Craigslist? “Craigslist is great, but you don’t get all the photos, floor plans and rich information that we provide,” he says. “Buildings with more than 50 units are almost always going to have some vacancies, so they’re continuously advertising. Those accounts are our bread and butter. Craigslist is more about periodic vacancies, say if a unit in a three-unit building opens up. In the highly fragmented small-building urban market, the Craigslists of the world are always going to be with us.”