June 1: 2007: I was skeptical at first of LoopNet doing an IPO (Initial Public Offering), but my attitude changed when they actually came within range of their desired public investment. Now their stock is way up ($20.49) and investors across the board are saying “buy”.

Let me explain the concept behind LoopNet. LoopNet is a commercial real estate listing website where people can list their commercial real estate listings on a month to month basis. Basic listing service is free, but advanced listing service costs 49.95 per month. They now have over 479,000 listings. And while most of these listing are free listings, they also have a base of 84,483 paying monthly subscribers. This paying user base accounts for almost 80% of LoopNets revenue which increased 52% to 15.5 million dollars in the first quarter of this year.

2 Million Registered Users. 880,000 Unique Visitors / Month

With 2 million registered site users and over 880,000 unique monthly visitors this site has the investors excited and others with real estate websites wondering how they can learn from the success story that LoopNet is.

So with so many free listing and free searching capabilities why do people sign up for premium accounts? Well, while basic members can list and search for properties, they can only see the properties that are listed by premium users. Therefore basic members cannot view other listings from basic members. Similarly, premium members can view all listings and also have their listings viewable to all users. This strategy has aided LoopNet in posting higher and higher profits each year. Their premium member base is growing, and their  traffic is way up.

Watch Out! Low Barriers to Entry.

Seems like LoopNet is destined for fame amongst real estate sites right? Well maybe, but let’s not bet it all too soon. Essentially LoopNet is not offering anything which couldn't be duplicated. Right now they have the lions share of the traffic and reputable brand, however, it’s not a strategy that other sites couldn’t duplicate and offer the same services at lower prices. Sites such as Craigslist, Cityfeet and Yahoo are all offering commercial advertising space on their websites. However, none seem to have the scope that LoopNet has. I guess time will tell.

In fact we even have a new client who is getting into the commercial real estate business. The website is currently just starting out, but it will be fun to see where mybizfootprint.com ends up in the fight for commercial real estate listings.

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