US-based classified advertising expert Peter Zollman told me this week on the phone that in the US, real estate ad dollars are already moving online as a result of the troubled economy there.
“Real estate agents and real estate advertising are in transition. Online will be a substantial winner and daily newspaper print is going to be a significant loser,” he said.
After our chat, I wondered if what Peter said was also true here in Australia. We haven’t got the economic problems the US has. But, interest rates are rising, the share market has been falling and the real estate markets are uncertain.
I decided to get on the phone to agents in several parts of Australia and test his theory. The agents I spoke to tell me that Peter is right. They are now spending more money on relatively affordable online advertising because of the economic uncertainty in Australia. Let me clarify: I don’t mean they are spending more with just realestate.com.au, but with the online space in general. And I don’t mean that suddenly print ad spends are plummeting.
However, I am hearing about a significant increase in online spending (in percentage terms, from still-low actual numbers). This represents a shift in market share to online that seems faster than what we’ve seen in recent years.
My summaries below are only a small representation of the conversations I had this week, so I encourage anyone with more to add to take advantage of the comments box at bottom.
NATIONAL REAL ESTATE TREND
Sam White, deputy chairman of the Ray White Group, which sold over $25 billion worth of property last year, told me his hundreds of offices are spending more money online than ever before.
To be fair, Sam also told the media yesterday that “We’re a believer in both print and online. It’s a critical mix.”
So his public comments are inconclusive regarding the trend I’m talking about.
(Conflict disclaimer: Sam is also a member of the REA Group’s Board.)
VICTORIA REAL ESTATE TREND
Geoff Cayzer, Managing Director of Cayzer Real Estate in Albert Park and Port Melbourne, told me that owners are less willing to pay for print advertising so agents looks to see where their dollar is best spent, and that is online.
Imagine you are an agent selling a $500,000 house. You think the vendor is unrealistic about the price. You know properties are hanging around on the market for a long time at the moment. And, to make matters worse, the vendor won’t cough up for vendor-paid advertising. How likely would you be to pay for the print ads yourself?
QUEENSLAND REAL ESTATE TREND
Stephen Sharry, CEO of real estate franchise group Raine & Horne Queensland, said if the market is slow, agents have to advertise more. He added that the internet lets you do that better than other media at a cost that is not prohibitive.
The idea is that, when the market gets back to its hot self (3 months? 6?), the agents who have been marketing are the ones who will get the first calls.
Stephen also told me that he is still seeing high numbers of unique browsers looking over his online listings, and he doesn’t want to miss the opportunity to be in front of those buyers.
A quick glance at Nielsen//NetRatings confirms that in February the total number of unique browsers to Australian real estate sites (5,879,088) was higher than any month in history except January 08.
Also in Queensland, Nick Penklis, Director of SPACE Property Agents in Brisbane, said he boosted his agency’s internet spend by over 400 per cent compared to 12 months ago.
NEW SOUTH WALES REAL ESTATE TREND
In NSW, Bruce Eason, a real estate agent and Director of LJ Hooker’s office in West Pennant Hills, says for every dollar his agency spent online three months ago, it now spends 25.
SOUTH AUSTRALIA REAL ESTATE TREND
Anthony Toop, founder and sole director of Toop Real Estate Group of Adelaide said he now spends 200% more on internet advertising than six months ago.
IN THE MEDIA
Australian Financial Review media reporter Neil Shoebridge yesterday weighed in on this trend, as well. He quoted a note that Deutsche Bank media analysts Andrew Anagnostellis and Tim Plumb wrote to clients last week:
“There was a wide divergence between the earnings performance of the new media stocks, which are benefiting from the structural change, and the traditional media stocks.”
For the words “structural change”, read “shift to online.”
David Kirk of Fairfax Media admitted the same, saying Fairfax expected better results from its digital businesses than its print businesses in the coming half year.
That’s the trend as I’ve been able to put it together via lots of time on the phone this week. I’d love to hear what anyone else has to say about it.
6 Comments
Peter Ricci
Dave, I know we are online Czars, but the results speak for themselves, online is where agents sell properties, print and traditional media is where they promote themselves.
One thing REA, domain, and all other sites fail, is brand and promotion, they all try top give this to agents, but it is structured- so it is not unique, in the end the only thing an agent can do online to promote their brand and their wares is on their own website.
Traditional Media loses market share each and every year, yet pricing continues to rise or stay at the same levels.
Glenn Batten
The change is happening no doubt about that whatsoever but it might be that the last people to know about it are the salespeople.
We survey each salesperson after every sale and where they believe the first and primary contact was initiated.
Similarly we also formally survey each and every buyer a range of questions including where their primary contact with the salesperson was from.
The differences are amazing with buyers highlighting the internet at around 60% and over which is dramatically higher than what the salespeople indicated.
I was speaking with another principal on Friday who said that it was not until he started surveying his buyers did he realise that the internet is responsible for so much. He said till then he thought that the internet enquiries were virtually a waste of time.
It seems the buyers know it and some of us are just realizing its full potential only now.. I would suggest that anybody who believes that the internet does not result in a significant amount of sales in their office should start asking the buyers and not their sales team if our experience is anything to go by.
Maybe a few BFO moments are needed.
Dave Platter
Great comments, Glenn. It amazes me that there are large numbers of agents who haven’t been following your example with surveys for a long time. What could be more important to know? However, agents as a whole are becoming more and more savvy as they adjust to the new reality.
Thanks for your input.
Glenn Batten
Thanks Dave.. our CRM package has been spitting out surveys now for over 8 years and it is interesting to compare trends between years.
Slightly removed but still related, one statistic that I find very interesting is the average number of inspections per buyer per week.
8 years ago in our office the office average was around 3 to 4 with peaks hitting 5 to 6. These days the average is closer to 1.5 with peaks hitting 1.8 to 2. Sure, every now and again a salesperson will get an individual case where they show plenty of homes to one buyer, but as an average across the week it always comes back to the same figures.
That change is huge and I blame the internet. No longer do we get buyers walking into the office asking to be shown everything we have between x price and y. After you show them a couple of homes you always had one up your sleeve just in case. When you dealt with a buyer you wrote at least a few hours out of your diary. Most importantly, all this extra time with your buyer meant you built a relationship with the client as you conducted an inspection run.
The internet empowers the buyers and now they know exactly what you have listed and what you dont. They now tell you exactly what they want to see and if you do think of something else that might suit they ask you to email them the link so they can consider it. An inspection run now consists of a buyer moving from agent to agent looking at individual properties one after another. Salespeople have very minimal contact time with a buyer now.
The internet is changing not just the source of leads but also things like how we deal with buyers. The good agents change their systems and procedures to deal with this change.
Last Friday I asked these questions of the same principal I mentioned earlier:-
1/ many email leads did you receive from each of the portals over the last month?
2/ How many were responded to and by which sales members?
3/ What was the average, median, quickest and longest time to respond to these enquries by individual salesperson and the office in total?
4/ If you had to rate your internet lead replies from a scale from 1 to 10 where a 1 is no reply at all and a 10 does everything you would expect in a professional reply (ie. professional layout, correct spelling and grammar, good detail on the property, asking for the inspection, offering alternative if sold, asking for the opportunity to assist with their current property ..etc etc etc) what would be the result for each salesperson and the office as a whole?
His responses in order were
1/ Dunno but I could count them up somewhere I suppose
2/ Don’t really know..
3/ Mine are normally pretty good but I would not know about the team.
4/ Thats a good point… maybe a 2 or 3
Now that sort of response would be fairly typical would it not? Why..?
For something that is responsible for 40 to 60% for most offices I doubt there would be too many agencies who would have those answers at their fingertips and very few could even go and research the results.
Till then, spending money, whether it be 100, 200 or 300% more than last year is like throwing money into the wind in my opinion no matter who or where you are. If you do a terrible job handling your leads and it is still a driver of 50% of your sales, why wouldn’t you handle those leads better rather than spend a whole lot more money?
Don’t get me wrong, I am not actually saying the agents you listed have it wrong What choice do they have? nor am I saying that I can answer the 4 questions, but I would like to.
The problem stems from the fact that everything involved in this process focuses on the quantity above all else. You just have to look at your own press releases for that. How many leads did REA deliver more than Domain, what percentage increase in leads did you each achieve. The simple truth that none of you seem to publish is that a significant amount of those leads went unanswered and the vast majority of them were handled very poorly.
Throwing money at a solution like that when they are generally handling the leads it generates pretty badly just does not seem all that smart.
Dave, here is a quick survey for you if you are interested… randomly pick 5 to 10 competing agents in a number of different locales from each state and fire off an email enquiry using your system on one of their properties at various times through the day and let us know the result.
snoop
Noticed a new crowd called On The house getting lots of press
Free everything?
Can anyone figure the business model ???
Craig
They have a free listing offer for agents and a no “upfront cost” listing for private advertisers with a commision of 0.5% on a succesful sale – aprox $2k on a $400,000 sale.
Is this helpful for agents…Mmm?
http://www.onthehouse.com.au/sell/