Newspapers vs. websites – the battle ground for selling your home

As you struggle home from the dairy on a Saturday morning with kids in tow – the ubiquitous bottle of milk in one hand and the weekend paper in the other, ask yourself this question – is all this newsprint I am taking home only to discard in the recycling bin on Monday morning really worth the bother or the cost to the environment?

The fact is newspapers are getting bigger and bigger – not unfortunately as a result of deep insightful investigative journalism, more the result of more and more advertising. At a rough count, the average weekend paper comprising 5 sections and over 150 pages is close to 55% adverts, and of these a third are real estate adverts making the property section often bigger than the national news section – maybe it is time to rename this bulky mass of newsprint the Weekend PropertyPaper.

The reason for the mass of paper based adverts are two fold – the state of the market and the behaviour of the real estate industry.

As the market for residential property has stuttered to a halt over the first quarter of this year, the stock of properties for sale has risen sharply. As reported back in February the stock of properties on this website has risen from 58,000 in October to 60,000 in December to 76,000 in February, to stand today at 81,000 – an extra 23,000 properties in just 6 months!

When set against the projected annual sales of c. 72,000 this calendar year, the stock represents close on 15 months stock – so in theory if no more listing were taken by agents it would take till mid June 2009 to clear this stock!!

All of the owners of these properties are presumably keen to sell. And for real estate agents keen to sell these properties advertising them is critical to ensure they standout from the rest of the market. This results in a bumper time for newspapers that lap up this demand and charge accordingly. In total an estimated annual marketing expenditure by the industry of over $120 million. This lemming like flight to newsprint by real estate agents is in fact in complete contrast to the blinding facts of behaviour of property seekers both here and overseas.

In NZ and internationally the vast majority of property searches start online – the emerging figure is close to 80% of all searches are undertaken on the web; rising steadily from almost nowhere earlier this decade. In the most recent study undertaken in NZ last year through an online survey undertaken by Nielsen Online, 80% of respondents sighted specialist real estate websites as the most consulted in the past week, the comparable figure for metropolitan newspapers was 49.6%. In terms of trends over the past year, websites were up by 10 % and newspapers fell by 7%.

These statistics you would think would drive more and more real estate agents and their clients – home owners to abandon the world of newsprint and insatiably devour real estate websites. The truth be told – its isn’t happening, and the reason is the old head in the sand mentality.

I personally could not have put it better than this quote from Sami Inkinen – founder and COO of Trulia a very successful US property website. The quote is from a major strategic report by Stefan Swanepoel – 2008 Real Estate Trends.

“I can’t find a single large real estate brokerage firm in 2007 that says print advertising really works….but I can easily name dozens who still spend the majority of their ad budgets on newspapers. It’s like a chain smoker battling lung cancer, while still smoking two packs a day.”

What I find equally amazing is the reaction of real estate companies to the alarmist media headlines which some have claimed to have actually perpetrated the accelerated stalling of the property market – it feels so limp wristed – berating the media while at the same time cheerfully handing over millions of dollars a week in ad spend with no clear idea of the true value of the advertising – it is in some ways a more extreme version of the classic marketing catch-cry attributed to John Wanamaker

“I know that half of my advertising dollars are wasted … I just don’t know which half.”

For real estate it seems the ratio is ever worse, with potentially the majority of the money being wasted – “but what can we do” laments the real estate industry, after all vendors want to see their property in the paper! Well i think it is time the industry recognised the power of the web and started being more analytical with that advertising money – after all the majority of the that advertising spend is vendor paid!

Whilst I struggle to find comparable data for NZ (a function of our small newspaper industry) the US is already seeing a turning point in newspaper advertising with a report highlighted by Trulia showing that real estate newspaper advertising fell over 22% in 2007 from the high of over US$5 billion in 2006. Maybe the turning point in NZ is equally not too far away and as a consequence your Saturday morning return trip from the dairy will be lighter in weight – but maybe costlier in price as a consequence of the loss of all that real estate advertising.