Realtors are an interesting segment of the small business market. Of quintessential small businesses (SMBs) and entrepreneurs, in some respects, realtors are atypical. One of them is marketing; realtors tend to be more aggressive and creative than other categories of SMBs. Accordingly, this LA Times article talks about how the mood has shifted and local realtors are now embracing the Internet with enthusiasm (but also out of necessity).
Real estate ad spending is worth approximately $12 billion in the U.S. annually, according to the National Association of Realtors. And a host of websites are trying to grab chunks of that, from Move.com to Trulia and Zillow.
Borrell Associates estimates that online real estate spending is currently worth $2.9 billion but that the category will also see slowing growth ahead. Traditional newspaper real estate spending was up in 2006, representing just over $5 billion in advertising according to the Newspaper Association of America. However, this year classifieds are off in double digits (down about 20% for real estate). Part of this is due to the housing slump and “sub-prime” mortgage crisis. But some of the explanation has to go to a structural shift in real estate sector advertising.
In late 2006 newspaper analyst firm Classified Intelligence conducted an in-depth survey of realtors about their advertising spending and attitudes toward print and online media. Among the findings of the survey were the following:
–36% of surveyed realtors spent 10% or less of their total budgets in their local newspapers, 19% spent less than 20% of their total budgets on newspaper print ads, and 17% didn’t advertise at all in print newspapers –52% of survey respondents reported promoting their services on free classified sites such as Craigslist (67%), Google Base (45%), and MSN/Windows Live Expo (33%) –61% of respondents said they weren’t spending any marketing dollars on newspaper websites
In July, 2007 Inman News conducted a similar realtor survey, which found:
–40% of respondents said they planned to spend $1,000 to $5,000 on [online marketing] in the next year, while approximately 20% planned to spend less than $1,000, and 18% planned to spend more than $10,000
–The most popular category of online advertising was search engine keywords, which 52% of respondents said they planned to buy in the next year. Featured listing ads ran a close second with 48% planned buys. Search engine optimization (SEO) services were a priority as well with 42% planned buys. Dollar amounts budgeted for keyword advertising in the next year ranged from zero to more than $5,000
There are ways in which the findings of the Classified Intelligence survey and the Inman data contradict each other. For example, Classified Intelligence found that geotargeted search was in the minority for realtors, with only 26% spending anything on local PPC. (The numbers would likely be higher today in the same survey.)
Yet, directionally, the data are consistent, indicating that more real estate marketing dollars are flowing to the Internet and search, following consumer adoption. But more than search, sites like Zillow and Trulia stand to benefit in particular because of how targeted they are. And Zillow is doing some very innovative things with advertising on its site, while both destinations have developed strong consumer followings.
It would be a mistake to predict the death of real estate advertising in traditional media, as some might be inclined to do. Certainly it will never again be what it was. But the future will include both traditional media as well as the Internet because audiences are quite fragmented now. In addition, as Classified Intelligence discovered, “Realtors [are] still buying print – not because it works better than other ad choices, but because sellers expect to see their listings in the local paper as proof that their agents are working for them.”