On Localism & Future of Online Real Estate

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Ajax and Cassandra Over at my personal blog, I started one of those Cassandra deals speculating on the future of ActiveRain network now that Trulia has launched a blog platform. Since that post went up, I had a chance to sit down with Jonathan Washburn, the founder of ActiveRain, and learned a thing or two. A followup post was necessary. But more I thought about it, more it seemed appropriate for the OnBlog, as my thoughts on the situation are relevant to our clients past, present and future.

First, J-Dub (you Washingtonians ought to get the reference) pointed out that ActiveRain isn't exactly a slouch in the consumer traffic side of things -- as he clarified in the comments to the post, ActiveRain and Localism got 2.3 million visits in the last 30 days, and he said some 80%+ of that is consumer traffic. Second, he charted out a future view of online real estate that is rather convincing. It goes something like this (and I'm probably not doing full justice to his views):

  • Consumers want listings above all else
  • But listings are everywhere
  • Hence, listings are a commodity
  • Differentiation can only come from original content
  • ActiveRain has 100,000 dedicated local real estate professionals who love creating original content, especially about their local market
  • Adding listings to ActiveRain & Localism isn't the most difficult thing in the world, especially if the trend towards aggregation and syndication continue
  • Adding original content, however, is extremely difficult and time-consuming
  • Therefore, Localism will dominate all

You know, that's a pretty convincing point of view. Strategically, it's sound. There is a trend towards listings aggregation and syndication -- a trend that is taking far, far too long to develop, to be sure, but one that has the force of inevitability behind it.

However, strategy is only as good as the execution. And this is where I, as a member of Onboard Informatics, can offer some thoughts that are relevant to all of our clients (and future clients).

Local Content Does Not Equal Valuable Local Content

My first observation is that local content in and of itself is of extremely limited value. I could write a blog, for example, about my town in New Jersey. It can be intensively hyperlocal. I could literally take photos of all my neighbors' front lawns and make snarky comments about them. I can interview my neighbors and post the answers.

All of that, I suppose, has some limited value to those who live here. And if you're a real estate agent in the Millburn area, that might be of some use if one of the residents decided to sell his house. IF we read the blog. But as I've pointed out, only 16% of Americans read a blog at all. It is not at all clear what percentage of those blog readers bother reading anything other than political or entertainment blogs (the two most popular blog categories).

If you don't live in my neighborhood, though, I am not at all convinced that pictures of random houses, or interviews with strangers are of any real value. Sure, it might be entertaining, but more entertaining than JibJab? I doubt that very much indeed.

From my perspective, too many "local blogs" out there offer precious little value. Take this agent blog that I picked at random from ActiveRain. (And Evelyn Panning, I apologize for picking on you, but I do believe that this might end up helping you as well.) On the home page, I see a joke post (literally, it's a post that tells a joke, not that the post itself is a joke), a bunch of listings, and one advisory post about manufactured housing (which doesn't relate any local information). Even if I were someone interested in relocating to Modoc County in California, I got nothing of value out of that blog.

So... how to create value?

What Are Consumer Expectations About Local Content?

In order to even think about "value", you have to ask the "Whom" question: For whom am I attempting to create value?

Far too often, with real estate blogs, the answer is fairly obvious: they are attempting to create value for the blogger. Post after post that is just a listing of a house creates value for the agent-blogger, not for anyone else.

To create valuable content, start by thinking about the audience. Are they buyers or sellers? Are they newbies to the real estate game, or seasoned investors? Are they your average American or are they Wall Street tycoons looking for a summer home in the Hamptons? Audience segmentation and identification is a prerequisite for content creation.

Then, think about it from the consumer's point of view. What are their expectations when they come to a local blog? The answer depends, of course, on who they are. But you can make some rough assumptions, then test those assumptions, then refine.

For example, if I'm a first-time buyer looking to move out of my rental in the city, what would I want to know when I visit the "Modoc County Blog"?

  • Is this a good place to raise my kids?
  • Is this a safe neighborhood?
  • How expensive is it to live there?
  • What kinds of fun things can I do if I live there?
  • Is this an area that's on the up-and-up or declining?
  • Am I going to like my neighbors?

These are just some of the questions that the buyer is asking himself. If your blog cannot answer some or all of these questions, then your blog is not providing any value. You are offering answers to questions no one is asking.

The idea of Long Tail Marketing, that you should post on extraordinarily esoteric topics in the hopes of ranking higher on search engines when someone types that into the box, is a very dangerous and oft-misinterpreted one. This is not the place to get into a lengthy discussion about long tail marketing, but here is one post that might get you started thinking. (Money quote: "The creator is dropped when we get to the long tail "pocket of profit" because the long tail is not profitable for the creator. It's profitable only for the audience and aggregators.")

The proper way to apply long tail marketing to real estate is to recognize that the consumer expectations are not the long tail; your locale is. In other words, your local neighborhood is the "niche", not the questions that consumers have. The answers, therefore, must be consistent across the board to answer consumer questions -- but specific to your local area.

Applied to blog networks, it means that the bloggers have to be trained, and the network operator has to maintain consistency and quality across the board to ensure that consumer expectations are being met.

Differentiation Via Original Content

So, for example, when the question is "How expensive is it to live there?" the answer is not "here's a list of homes for sale". The answer is something more like:

XYZ county is inexpensive, with comparatively low taxes, and a below-average cost of living index. There are some hidden costs of living here, however: the commute to the local center for employment averages 15 miles. With the price of gas these days, that amounts to approximately $3500 per person if you're commuting to City XYZ. Also, because the schools are relatively overcrowded, you may want to look into private schools. There are twelve private schools in the area, with the average annual cost being $7500 per child. Etc. etc. etc.

That sort of content is enormously valuable to the consumer looking to move to the area. That sort of in-depth expertise about the local area is what creates differentiation.

It should be obvious, I suppose, that a demographics data company is going to think that truly local content requires truly local data. But it also happens to be true. At Onboard Informatics, we spend an enormous amount of time gathering, analyzing, and aggregating data about local markets. As a result, we know that all sorts of useful information exists about every local market in the United States (and parts of Canada): average commute time, the percentage of people in an area who are white collar workers, consumer purchasing power (which can speak volumes about the community), age of homes in the area, climate information, health-related data, crime statistics, etc. etc.

Not one single piece of data tells the whole story, of course. For that matter, the data by itself doesn't necessarily tell the story. But put a local expert together with the data, and you have the start of something magnificent.

An example might be something like this:

Corona del Mar Village is densely populated with about 75% of the Village being condo ownership and about 25% single family residences. The Village is divided by Pacific Coast Hwy (PCH) and you either live on "North of PCH" or "South of PCH". Village streets are named after flowers and are (more or less) alphabetically arranged from Avocado to Poppy. The South Side of PCH is generally more coveted as you don’t have to cross PCH in order to get to the beach, however, it is never more than a mile walk to the beach from anywhere in the Village, and North of PCH is a fantastic place to live. All Village property on the North side of PCH is condo living as all lots are zoned R-2 and duplex living dominates the terrain as a result. You will run across ½ addresses (ex: 402.5 Dahlia) in order to express the back unit address found in duplex listing. "Front Unit" and "Back Unit" descriptions in real estate listings are common as a result. Duplex living also creates lots of "mini-HOA’s" in Corona del Mar, made up of two owners who share the ownership and cost of common area items such as landscaping upkeep and roof maintenance.

That is a community overview from the Coastal Orange County Real Estate & Lifestyle Blog. The writer, Stacey Harmon, clearly knows the neighborhood well, and knows real estate. Details like "mini-HOA's" are relevant to outsiders and unknown except to insiders. This is an example of content that differentiates Stacey. However... it still falls short in many ways.

Now, take a look at this:

Demographics
Corona del Mar, California 92625
California
National
Female
Male
Single
Married
People per Household
Households with Children
Median Age
52%
48%
53%
47%
2.07
1,120
46
50%
50%
63%
37%
2.93
4,724,587
46
50%
50%
59%
41%
2.6
39,038,333
46
Income and Jobs
Corona del Mar, California 92625
California
National
Median Household Income
Average Household Income
Per Capita Income
White Collar Jobs
Blue Collar Jobs
$124,570
$195,703
$93,578
3,300
621
$57,493
$78,644
$27,088
12,225,128
3,345,933
$51,683
$65,273
$25,232
107,682,121
27,949,913

This information comes from Coldwell Banker, an Onboard client. Here we have even more detail -- for example, that the per capita income of Corona Del Mar is about triple the average for California. We learn that only 1,120 households have children, and that the majority of the residents are single. That might be relevant to a buyer.

But a chart lacks personality, and it lacks the expertise of a local resident.

Now, imagine combining the two. The personal voice of a local resident, a real estate professional who really knows her market, with the data to backup and explain her claims. Furthermore, had Stacey looked over the data about her own neighborhood, she may have found even more things to write about, more interesting facts to add.

For example, perhaps 52% of the residents of Corona Del Mar are single, but only Stacey knows that the reason is because of a large retirement community right in the middle of town. (I have no idea if there is or is not such a thing; I suspect not, but it's just an example, yo.) Maybe Stacey knows that the median income is $124K, but really, it's because Bill Gates lives in town and his $527 billion kinda skews the figures. Maybe she can explain that the cost of living is actually very reasonable, by referencing shops she knows, restaurants she goes to, and so on.

This is the future of online real estate, in my opinion. This is what we work to help our clients achieve, and it is what we advise them to think about carefully.

On Localism & ActiveRain

To bring this insanely long post back full circle, my take on Localism is that it needs to take these extra steps in order to be truly successful. Taking another totally picked-at-random example from Localism, take a look at their Fort Myers Beach, FL page. I see a post about boating classes, local pubs, Calusa Indians, the local newspaper, and Loggerhead Sea Turtles. I see nothing about what the area is like, no statistics of any kind, and nothing that answers the questions that I would have if I were a potential buyer interested in the area.

The same is true of many of the blogs on ActiveRain itself. Many are good, but most simply do not answer the questions that likely buyers/sellers/investors might have. They certainly do not offer any empirical data to backup their assertions, or to serve as interesting tidbits that can then be expanded on by the blogger.

Recall that the strategy that J-Dub and ActiveRain have is sound, convincing, even compelling. But not meeting the consumer's expectation -- and the consumer is the audience for most of these blogs -- is a surefire recipe for failure to execute the strategy, no matter how good the strategy might be.

With 100,000 local bloggers, passionate real estate professionals who want to educate and entertain the public, ActiveRain/Localism has an incredible opportunity. Their strategic roadmap is solid. Certain clients of ours have the same opportunity and the same strategic roadmap. To both, I offer this post as unsolicited advice on how they might actually see their strategy come to fruition.

I don't know that Trulia will put ActiveRain out of business, as I have claimed in my personal post. Jonathan and team at ActiveRain are very smart, very savvy operators. And their traffic is quite substantial, and their members passionate. I may have been premature in drawing such a conclusion. It isn't the first time, and it won't be the last.

But man, did that spark some thinking. For that, I have to thank J-Dub, Vicky Gkiza from Trulia, and everyone who has commented and emailed me.

Conclusion

To recap the advice:

  1. Identify the target audience.
  2. Segment if necessary -- some bloggers are better at addressing buyers, while others are better at sellers. Some speak the language of the rich, while others make middle-class people feel right at home. Segment the audience to fit the individual blogger's strengths.
  3. Establish consistent standards for local information so that it creates value for the target audience.
  4. Train the bloggers to provide consistent answers to expected questions. Remember, the long tail is in the locale, not in the answers themselves.
  5. Get reliable data, but don't stop there. Bring personal, local, on-the-ground expertise together with solid objective data. In that synthesis lies the future of online real estate.
  6. Dominate the undifferentiated competition.

If you have read this far, through some 2,500 words, I thank you. I hope it was moderately useful to you. If you are a client, please contact your relationship manager to further the conversation. Or, just post your questions and comments here, and I'll be sure to do my best to answer them.

Image Credit: Zbyg on Zbyg.DeviantArt.com