Print vs. Technology: Tale of the Tape
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.
-rsh
Tags: REAL Trends, REAL Trends 500.
on Oct 15th, 2008 at 9:20 pm
[...] at the OnBlog, I posted an item discussing the difference between how much brokerages spend on print advertising vs. their website. [...]
on Oct 16th, 2008 at 9:02 am
As the VP of Interactive Marketing for Better Homes and Gardens Real Estate I could not have said that any better myself. I guess old habits are truly hard to break, but the one’s that have are reaping the benefits.
on Oct 16th, 2008 at 11:53 am
The report didn’t say “84% of all homebuyers used the internet exclusive of all other mediums”. Just because people used the internet doesn’t mean they also don’t check the real estate section of their local newspaper for real estate open house times and information.
In our market, the Sunday newspaper is the only place for Open House info.
on Oct 17th, 2008 at 4:58 pm
@Marlow -
I could see spending some money on print advertising — I’m not 100% opposed to it. I just think the 3:1 ratio is shocking, that’s all.
It either means print advertising is way, way overpriced for the value, or websites are way, way inexpensive, or too many brokers are just too set in their ways and haven’t thought about it much.
Honestly, how many brokerages have trained professional marketers working for them?
-rsh
on Oct 18th, 2008 at 12:58 pm
@Marlow.
In our market the Sunday paper is the only source of open house information because the big brokerages aren’t contributing their open house information to the MLS. Why not advertise your open houses online when you can do so for free today?
on Oct 20th, 2008 at 4:06 pm
[...] true, then here lies another significant issue for brokerages. In this post on OnBlog, I ran through some assumptions to get at what the GCI involved is, and came up with [...]
on Jan 18th, 2009 at 5:17 pm
[...] 00’s when real estate started to bubble. I touched on this topic at some length on this post on OnBlog. When you’ve spent years investing three-and-a-half times as much on dead-tree advertising [...]
on Jan 18th, 2009 at 11:31 pm
I am pretty sure the numbers for 2008 will be drastically different for print advertising! I would anticipate the percentage spent on the Internet will be slightly higher but not significant due to the real estate market we experienced in late 2007 and into 2008.