The reliance on newspapers by the real estate industry has been an enduring relationship – one that has seen many a boom and bust in the latter’s industry cycles, and yet through all of that, the two have been inseparable – a perfect symbiotic relationship.
Newspapers have delivered the captive audience and offered the visual medium so critical in portraying property for sale at what has been a cost effective rate. The real estate industry has found the layout opportunity of the newspapers very much to their liking with clear sections focussed to bundle key company brands rather than location based presentation. Allied to this the individual agents have grabbed the opportunity to profile themselves as part of the newspaper advert for a client’s property again bundling their portfolio as a subset of the company pages. All very efficiently handled and mutually supportive.
But as with every other industry and in fact every advertising medium the steady march of the internet has begun to expose some deep cracks in these relationships.
The newspaper industry when it comes to real estate search is struggling to maintain a relevant and credible offering – the market research from Nielsen Online as of July last year showed that in the 12 months running up to the report the rating of newspapers as the most actively used medium for searching for properties in the past week had remained static at just under 50% of all buyers, whilst by comparison the web has rocketed from 70% to 80%. (The latest update to the research will be available shortly and based on overseas trends is rising at a stellar rate towards 95%).
The impact from the latest data from the US is also showing the effect on the bottom line of the newspaper industry. The statistics from the Newspaper Association of America just released for the 1st quarter of 2008 show just how much the real estate industry is fleeing this once critical medium – a 35% decline in spending in the 1st quarter of this year as compared to 2007 – just US$619m was spent – representing a net loss to the newspaper industry of US$334m!
It is interesting that these figures were reported in the NZ Herald the other week, but were not featured among the headlines of the day. The adjacent graph shows the extent of the decline in real estate advertising on newspapers in the US over the past 3 years – a period that has seen over a billion dollars removed from newspapers’ coffers and reinvested in other media or simply not spent.
The comparable data for NZ is not published – investigation of the website for newspaper advertising does not offer such comprehensive information to provide an insight into the performance of the two major media empires of the NZ market.
Whilst the decline is inevitable the extent of the reliance on this medium is still surprising. One explanation for the continuation of the support for the medium was effectively shown in a recent research study of the marketing activities of a sample of 1,300 US agents carried out by VHT – a real estate marketing services company.
When asked what their most common media for advertising a listing 83.3 percent said they used newspapers. While respondents indicated a significant portion of their listing budget was spent on newspapers, only 20.4 percent said they think this medium is “effective.” 49 percent felt that online ads were “very effective.”
As to this illogical imbalance between investment and return – the telling statistic was the in the response that when asked what their sellers felt was important (in advertising a property) 92.4 percent said that their sellers mentioned newspaper ads.
Clearly the real estate industry continues to educate the public in the perpetuation of the belief that newspapers are valuable in marketing property, thereby gaining valuable marketing dollars to continue the perpetuation of company and individual agent self promotion in the property supplements to the newspapers. The purpose of this blog is to bring some impartial perspective to the real estate industry and I believe this is one of the key elements of this industry that needs greater understanding and transparency.
Disclosure of interest – it should be noted that the successful transfer of marketing dollars to online website such as realestate.co.nz is in the best interests of the consumer (property buyers and sellers), the real estate industry and this website – a rough estimate of the collective media spend by the real estate industry online in the whole of 2007 in NZ was less than $15m – that is less than 10% of the total spend by the real estate industry across all media, yet at that level of spend online is delivering the best return in lead generation.