Online Real Estate Ad Spending to Nearly Double by 2010

  |  June 29, 2006   |  Comments

Spending on print media will continue to drop, while new Web sites and services could shift the industry in yet another direction.

The Web has put the real estate ad industry in constant flux in recent years, and a new Borrell Associates report indicates there are no signs of things settling any time soon. Indeed, online real estate ad spending is expected to grow from $2 billion this year to $3 billion by 2010, rising from a 17.7 percent share of all real estate ad spending to 32.1 percent.

Not only are new Web sites and search tools having an impact, advertisers are also shifting dollars within the print space.

"There's still a lot of room for online spending," observed Borrell Associates VP Pete Conti. The research firm found that while 77 percent of real estate buyers use the Internet for home searches, just 15 percent of the 535 agents surveyed place ad dollars there. Forty-seven percent of agents said they'd spend more online this year than last, and 45 percent said they'd spend the same amount.

The "2006 Update: Online Real Estate Advertising" report puts this in context, noting, "In May we met with the owner of one large brokerage firm who expressed frustration that while potential customers had moved online en masse, his agents hadn't changed their advertising habits correspondingly."

On the whole, newspapers will continue to experience a decline in real estate spending. The report predicts that the 37 percent share attributed to newspapers this year will move down to 30 percent in 2010. These numbers can be deceiving, though; some won't necessarily feel the burn. According to the report, more real estate agents said they plan to raise newspaper ad spending this year -- 42 percent -- compared to 40 percent who said they'd spend the same amount.

Because agents typically aim to target small regional markets rather than large metro areas, they're finding, "They can get a better bang for their buck in a small community paper." While classified ad spending in large metro dailies will dwindle, those dollars will flow towards less-expensive but more targeted suburban and community papers and alternative weeklies, according to the Borrell report. "Agents are running from the metro dailies," said Conti.

Online newspaper sites are gaining online real estate classifieds dollars. Yet even though those Web classifieds are seen by more people than print classifieds, said Conti, the lion's share of those dollars is attributed to the print version of the paper. This "kind of masks the increases," he added.

Real estate advertisers will also spend less on non-newspaper print media and direct mail in the coming years according to the report. Ad buys in magazines and niche publications will drop from 17 percent to almost 13 percent by 2010, while direct mail spends will decline about 3 points from 16 to 13 percent, mainly due to postage costs and increased use of email by agents.

A Borrell Associates report released in March showed that real estate agents did the majority of local search advertising. Search ads for individual local agents rose from 17.5 percent of local search ads in 2004 to 49.6 percent of listings on keyword searches across 10 different cities this year.

The report also found a disparity between long-time agents and those who are relatively new to the industry. It showed that 36 percent of those who have been agents 10 years or longer use online advertising, while 64 percent of those in the business for 10 years or fewer buy online ads. Seventy-one percent of those less-experienced agents will boost their Web ad budgets this year compared to 48 percent of their veteran counterparts.

The agents with longer histories in the industry, opined Conti, "are going to lose out pretty soon" because more and more people entering the market are using the Web to find their next home.

Free listings sites provided by alt weeklies and sites like Craigslist and GoogleBase "will have a big influence over the next 6 months to a year," forecasted Conti. The report mentions Web sites such as social networking site CityCribs.com, New York City housing market blog Curbed, vertical real estate aggregators and search engines like Trulia, Oodle, Yahoo Real Estate and Move.com, as well as real estate value comparison site Zillow.com. Such sites, notes the report, are "aimed at creating a higher level of interaction and a better user experience for home buyers and sellers than ever before….But the real showdown for Web 2.0 real estate advertising dollars online may erupt over how these sites can acquire and display Realtor's [sic] listings."

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ABOUT THE AUTHOR

Kate Kaye

Kate Kaye was Managing Editor at ClickZ News until October 2012. As a daily reporter and editor for the original news source, she covered beats including digital political campaigns and government regulation of the online ad industry. Kate is the author of Campaign '08: A Turning Point for Digital Media, the only book focused on the paid digital media efforts of the 2008 presidential campaigns. Kate created ClickZ's Politics & Advocacy section, and is the primary contributor to the one-of-a-kind section. She began reporting on the interactive ad industry in 1999 and has spoken at several events and in interviews for television, radio, print, and digital media outlets. You can follow Kate on Twitter at @LowbrowKate.

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