In a market space where it's usually winner takes all, marketing company Market Leader is positioning itself to take on Trulia with two recent acquisitions, ActiveRain and RealEstate.  

ActiveRain has been around since 2005 and mostly functioned as a social networking forum for real estate professionals.  After an initial torrid growth spurt driven by its passionate founders, ActiveRain was taken over by Market Leader which bought up a controlling 55% stake.  Then, the company basically stalled for the past 2 years as the new owner was unable to drive a successful transition into a media company.  ActiveRain lacked a clear brand identity and existing member contributors were charged for making their own content available to the public.  It became a lose-lose situation and most members just became disillusioned and inactive.

In late September 2011, Market Leader doubled-down and bought up the remaining 45% of ActiveRain.  Since then, only a few cosmetic changes have been made while the stream of defections continue as members see little value.

At the same time, Market Leader bought up yet another property, RealEstate.com from LendingTree (NASDAQ: TREE).  LendingTree had been badly hemorrhaging during the real estate downturn and sold off assets to raise cash.  So, while LendingTree continues with its loan matching business, it sold a much neglected RealEstate.com.  The site had been abandoned in late 2010, but Market Leader still paid an eye-popping $8.25 million for the defunct site.  

Then, starting in late 2011, Market Leader started to milk its ActiveRain holdings by bombarding the remaining loyal members with emails and calls.  ActiveRain members were urged to sign up for a new service with promises of an amazing new RealEstate.com website to be launched in February 2012.  The approach is totally inexplicable since few ActiveRain members saw any value from their existing $69 monthly memberships and now the same company wanted to charge $500 a month for an unknown service.  

As the launch deadline approaches, the team at RealEstate.com has been redoubling its efforts to drum up interest.  It's quite telling that the launch date has just been pushed back into late March.  I guess few real estate professionals are gullible enough to front the money to help Market Leader pay for the development of RealEstate.com just so that they can later be charged $500 a month.  

From my prior experience in private equity, I've seen time and again that success is all in the execution.  There is a definite vision at Market Leader in taking on Trulia, but several key management elements are still missing.  Meanwhile, Market Leader's stock continues into its eighth year trading near its lows.  I'll be following to see if they pull off this strategy.

UPDATE (March 8, 2012):  The redesigned RealEstate.com has just launched.  It's much improved in that it's a cleaner design.  Feature-wise it doesn't seem much different.  Unlike Trulia's cheaper crowdsourced model, RealEstate.com has a pricey walled-garden approach.  

So far, they're still having difficulty getting broker agents and salespersons to pony up the stiff monthly fees to join an unproven service.  Even the RealEstate.com sales agent admits it's a very risky proposition to sign up with them right now.  I found that bit of honesty rather surprising.  

For their pricing model, it's entirely based on the potential size of the market, not on actual traffic delivered.  So, if you signed up for a city like Palo Alto, where prices are notoriously high but turn-over is low, you'd still be charged a lot, even if RealEstate.com doesn't deliver a single lead.  

At the moment, they're still offering plenty of cities for $79-$499/month with many of the prime cities still unspoken for.  They don't have any metrics on what kind of traffic you'll be getting, just their word that "it's a lot", since the RealEstate.com domain name is preferentially placed in search results for "real estate".  Market Leader (LEDR) claims that RealEstate.com had 1M visitors a month when they bought it last year.  But, compared to sites like Trulia and Zillow, that seems to be a drop in the bucket, at best. 

Still, LEDR has been doing very well in the past month, going up by over 40%.  Apparently, there are real believers who can stomach the continued hemorrhaging of cash at the company.