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It seems like just yesterday that classified advertising in the local newspaper was the preferred media for real estate marketing all over North America. In fact, that is the case. Between 1974 and 2008, the pages of the local or regional newspaper were where the action could be found for the vast majority of brokerages.
Well goodbye fading daily, and good riddance Sunday flyers. The forces of social media technologies are now taking over what may have been the most loyal customer in the long history of print media.
The down market environment of the past three and a half years alone was certain to have changed the overall industry marketing expenditure. Industry experts suggest that marketing expenditures over 2007 and 2008 dropped by some 26% in all media.
But this trend is more than just a reflection of reduced industry revenues. Industry players, large and small, have taken notice that the North American real estate consumer long ago abandoned print media in favor of the Internet. The current trends simply reflect the frequent gap between consumer behavior and industry response.
Realogy Corporation, the world's largest real estate marketer, has been hard hit by the down market. Its election of alternative marketing venues is being driven by both reduced revenues and the overall migration of the real estate consumer to the Internet and social media. According to a recent edition of Advertising Age, in 2008, Realogy spent 31% less on print media than in 2007. This represented print media spending of $129 million in 2008 compared to $189 million in 2007. During the same year, Realogy expanded its Internet marketing expenditures 29% by $8.6 million. These expenditures are more impressive than they might first appear, given the significant difference between the costs of print media and Internet marketing efforts.
The natural question for industry executives and brokers, who are considering whether to follow this trend, is whether or not these trends are permanent or merely a reflection of a down market psychology. While only time will tell, it is a pretty good bet that by the time the market returns to sustaining levels in 2010, there will be far fewer newspapers left to advertise in, and even fewer consumers reading them.
Perhaps the most important statistic that brokers might consider in making these decisions is the annual California Association of REALTORS® consumer study that, over the past eight years, has tracked the percentage of consumers who indicate that the Internet plays a major role in their real estate experience. For 2009, that number is likely to exceed 90%. More over, Internet-based listing aggregators like Trulia.com and Zillow.com have become more effective in drawing real estate consumers to their sites with increased inventory and smart tools such as home value calculators. Driving these trends even farther are the big search engines like Google and Yahoo who report that significant percentages of their search traffic is real estate related. Given the success of the Internet-based players, it is unlikely that they will play a less influential role in the future of real estate marketing.
Other readers might suggest that, given the current level of the market and predictions moving forward, there aren't very many consumers out there to make a difference. Wrong again, oh negative ones. The following graphic combines data from both the National Association of REALTORS® and real estate financing giant Fannie Mae.
The graphic, above, demonstrates what most experts have been predicting. That is, while 2009 doesn't mark the end of the real estate crisis, it will mark the turning point for sales volume. Depending upon who one listens to, predictions for 2009 existing residential sales are somewhere between 4.7 million unit and 5.3 million units. 2010 sales are predicted to rise to somewhere between 5.4 and 5.6 million units. Real estate professionals, real estate consumers and economists will greet, as good news, any 2009/2010 market performance statistics within these ranges.
In the mean time, the leading edge real estate players are, at least from a participation perspective, plunging full speed ahead into all aspects of Internet and Social media based marketing. New websites, Facebook, Twitter, Linkedin, YouTube and Flickr are all feeling the presence of these new arrivals. Each is attempting to bend these media to their message and focus.
But the ultimate determination, with respect to the success of this Internet-bound industry marketing transition, may be whether or not the real estate industry message and marketing behavior transitions as well.
Traditional print and electronic media were, without question, the domains of the advertiser. Programming of all types, from movies to the news, church services to sporting events, music to talk radio, were clearly designed to meet the needs of the marketing sector. This was one of the commonly accepted rules of traditional marketing engagement. The only barrier, between the advertiser's wildest dreams and the messages that were actually distributed, were government regulators, and then, only when they chose to enforce the rules. Whatever impression, fantasy or daydream the advertiser wished to put forward, was accepted and distributed with little or no relationship between the message and the truth, actual practice or social priorities.
It is safe to say that the Internet is not just another media. It is another state of mind; a system of social consciousness and a world of immediate feedback. It is increasingly subject to a whole different set of rules with respect to what variance from the truth or social priorities are acceptable. The emerging rules of social media take this extension even further. The book Groundswell reports that over 60% of American adults are engaged in one form of social media or another. But it also reports that at any given time within this mass, 18% of participants are involved in creating and contributing content while 25% of participants are engaged in criticizing, monitoring and reviewing the work of the 18%.
In other words, the "freedom rules" and "anything goes" reputation of the Internet and Social Media spaces are actually conducted under a very precise set of rules. Players who fail to comply with these rules may not be fined, sued or arrested, yet they may face a more serious consequence of being ignored, a horrific fate for those who seek to benefit economically from their Internet participation.
Trust breakers may also face viral attacks, as discussed in previous months of this column, which clearly expose their false claims (or the perception of false claims) to tens of thousands of their potential customers. These attacks can spread without one even knowing that one's flanks are exposed.
Into this space jumps the real estate marketer. It is safe to say that as of this time, with very few exceptions, most real estate entities have simply transferred their former print and electronic media messages onto their Internet efforts. Most of these messages are company-centric, representing attempts to convince the consumer that this agent or brokerage is the biggest, the best, the oldest, the most powerful or have the most of this or that. Little effort is being made to make these efforts consumer-centric.
Unless this initial approach is quickly modified, Internet based marketing could end up being an ambush for the industry.
The rules of the Internet and social media are quite simple. Everyone who seeks to benefit from the low cost, highly effective and opinion influencing aspects of this media would do well to review them frequently:
Rule number One: The consumer is in absolute control here
Rule number Two: What the consumer wants is what the consumer gets
Everything else just falls into place.
Oh, there is one more thing. What is it that the consumer wants? That can be stated in just 12 simple words. Today's consumer, in everything that they do, is seeking: simplicity, innovation, speed, relationships, entertainment, collaboration, transparency, integrity, scrutiny, customization, freedom, and evidence of community service.
This is a short list with a long arm. If we are going to play here, we must play by the rules.
Copyright 2009, Jeremy Conaway, President, RECON Intelligence Services
