One of the most fun things I get to do in marketing is looking at data about the industry. As part of routine market research I've been doing, I ran across some very interesting numbers that I thought I would share with you. You know how it seems everyone in real estate is obsessed with the Web? Every conference you attend, every conversation you have, it seems like everyone is talking about their website, about IDX, about data feeds, about Trulia, etc. etc. Words like "social media" get thrown around quite a bit, and you can't go to a conference without running into dozens of agents who have their own blog.
Judging from the talk, one might think that the real estate industry is investing millions of dollars into their web strategies. The numbers, however, tell quite a different story.
The REALTrends Brokerage Performance Report is a gem -- if you have any interest in this area, you should consider purchasing it. According to the Report, the average spend in 2006 by respondents (roughly 25% of the REAL Trends 500 list on a voluntary basis) on Print Advertising was 2.23% of GCI. Now, REAL Trends doesn't provide what the average GCI is for respondents, so it's hard to know what that amount is. But the #250 company in the REAL Trends 500 list did $507m in closed volume in 2007. Assuming 2.5% of that turned into income, the GCI is $12.6m. So that company spent $282,000 on print advertising in 2006.
In contrast, the average spend in 2006 on Technology -- which is mostly related to the company website operations -- was 0.62%. Again, using the same GCI number, that gives us $78,000.
The average respondent -- who is a member of the top 500 brokerages in the United States -- spent a meager $78,000 on their web operations in 2006.
They spent 360% more on advertising on dead trees.
Meanwhile, the latest NAR research shows that 84% of all homebuyers used the Internet in their search.
Chew on that for a while.
Then consider that virtually every form of online marketing provides metrics so that you can see what's working and what's not, while virtually no form of print marketing provides any metrics at all.
Let me gingerly suggest that spending three times as much on a medium that provides no metrics, and is largely ignored by 84% of the homebuyers, might not be in your best interest. It is time for realty companies to start walking the walk, instead of just talking the talk.
The web fundamentally changes how the business of real estate is done. We believe that brokers and agents remain critical, but we also believe that the web is more important than ever in driving leads, inquiries, customer loyalty, and brand recognition. The consumer who may glimpse an ad in a newspaper by chance will quickly forget it; but she will remember which local broker had the best website, providing the best local information, as she goes through the process.
Try spending three times what you spend on print on your website and on your online efforts. You may find the result incredibly illuminating.
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