Classified ads for jobs and autos have shifted from newspapers and other print publications in recent years, but real estate advertisers have resisted the pull.
With house prices sliding and inventory increasing, will real estate advertisers allocate a larger portion of their ad budgets to the Internet? Some think so.
That's because the longer a home remains for sale, the longer it takes to market it. That can cost hundreds of dollars or more for ads in a newspaper or real estate magazine. No wonder some people equate spending on real estate ads to dumping cash into a money pit.
"Advertising in a homes book or a newspaper isn't designed to sell a home," insists Gordon Borrell, chief executive of Borrell Associates, a consulting firm that tracks local advertising. "It's proof to the seller that the agent is doing his job."
As spending in print declines, Borrell and others predict more information about real estate and related advertising will shift from print to online.
Newspapers have taken a big hit. Spending on real estate classified ads totaled $2.9 billion for the first nine months of 2007, a decline of $739 million, or 20 percent, compared to the same period in 2006, according to the Newspaper Association of America.
Print real estate advertising is down as much as 40 to 50 percent in some markets, but Peter Zollman, founding principal of consultancy Classified Intelligence, chalks that up to market conditions, not completely to a market shift. "However, print will never return to the size that it was a few years and will continue to migrate online increasingly at a steady pace," he says.
Still, there's a dizzying assortment of online options for sellers and real estate agents, enough to cause paralysis. Nearly four in five brokers and agents have Web sites, according to a 2007 Classified Intelligence survey. Yet 58 percent say they're dissatisfied with the number and quality of leads generated from these sites.
So where can sellers get the most exposure and the biggest bang for their buck for their advertising dollars? And who benefits if advertising dollars shift online?
Earlier this month, Yahoo got some buzz for permitting real estate brokers and franchisors to post home listings for free. "The old model, which was 'I pay you to publish the advertisement,' is giving way to 'You give me the listings for free and then I build an audience and sell ads around those listings,'" Zollman says.
Even before that development, Yahoo's real estate section had been gaining traction. It was ranked number three in December, based on unique visitors, according to comScore Media Metrix.
Number one is Move, including Realtor.com, the official site of the National Association of Realtors, and number two is MSN. Google's real estate section doesn't show up among the top 10 real estate sites for comScore or Hitwise.
"It's in the interest for brokers to get their listings out in front of as many home buyers as possible and distribute them to sites like Yahoo," says Steve Schultz, director of Yahoo Real Estate. Advertisers include the usual suspects: LendingTree, QuickenLoans, and Countrywide Home Loans.
Previously, Yahoo had an arrangement with Prudential Real Estate to publish listings. Anyone seeking to view additional information online about a listed home would have to register with Prudential. On future listings, Prudential will drop the registration requirement.
Still, the Internet hasn't had the disruptive impact on the real estate sector as it's had on other verticals, such as music and books. Rick Sharga, VP of marketing at RealtyTrac, a site that collects and publishes information about homes in foreclosure, has a hunch. Information about homes for sale has been in the hands of a small group of people, that is, Realtors. For a sale to occur, there are many entities involved, including buyers, sellers, appraisers, financing companies, title insurers, and lawyers.
While the company remained profitable and grew in 2007, Sharga says the downturn still forced RealtyTrac to diversify its revenue stream. The company, which collects and publishes about 1.2 millions in foreclosure, two years ago sold $50 a month subscriptions.
In what Sharga calls a combination of advertising and lead generation, RealtyTrac now puts real estate professionals in touch with anyone seeking help with a foreclosure. For that access, a real estate professional will pay RealtyTrac for exclusive rights to a territory, based on Zip Code.
ZipRealty, a residential real estate brokerage firm, allocates most of its advertising budget to online, says Leslie Tyler, VP of marketing. That includes paid and organic search and banner ads.
Then there's Zillow, which burst on the scene in 2006 as the ultimate site for nosy neighbors. It shows the estimated value of a house, as well as those in a neighborhood. But could the novelty wear off in a market where prices slide rather than go up? "Things look gloomy right now in the national media...But millions of people will still move, millions of mortgages will be given," says Greg Schwartz, Zillow's VP of advertising sales.
Zillow's main competition is direct mail, not other real estate sites, Schwartz says. How so? Zillow helps advertisers target homeowners by address, home value, psychographic clusters, such as urban families with children, and other features.
Look out for Trulia, a site that describes itself as real estate search engine. It's seen its traffic climb 184 percent, to 1.6 million in December 2007 compared to the same month a year earlier, according to comScore. "We make money through advertising, not lead generation," reads the company's "about us" page. It offers a heat map that shows average listing prices and median sales prices by region.And just this past week, another startup called Roost rolled out a real estate search engine.
That means the number one site, Realtor.com, can't afford to stand still.
"It's struggling to find a long-term business strategy that works," observes Classified Intelligence's Zollman. "Many Realtors hate Realtor.com because it doesn't offer tools some other sites do." Plus, Realtor.com won't run homes for sale by owner, 10 to 20 percent of all homes on the market.
Mark Lesswing, the National Association of Realtors' CTO, says Realtor.com is updated at least twice a year as new tools are offered. "Our strategy is to provide the best, most timely, and accurate information about listings. We make sure we don't have information free radicals: listings that are old, stale, or inaccurate," he says.
Look out: the real estate advertising and marketing turf war has only just begun.
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Anna Maria Virzi, ClickZ's executive editor from 2007 until 2012, covered Internet business and technology since 1996. She was on the launch team for Ziff Davis Media's Baseline and also worked at Forbes.com, Web Week, Internet World, and the Connecticut Post.
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