Unreal Estate

A recent market research report says that while overall spending on real estate advertising has been sluggish, the online share is growing so fast that it is poised to overtake the newspaper spend by 2009.

That assessment comes from Borrell Associates which, in a clever business strategy, offers a free download of the $995 report’s executive summary.

According to the summary, Borrell projects that overall real estate ad spending will grow 2.2 percent this year to a projected $11.4 billion. The online component is now $1.8 billion or 16 percent of the total. “Online advertising spent per home sold has already reached $210, more than one-third of the newspaper ad spend … Paid listings on real estate search pages have exploded. Competitors are paying well over $1 for a single click — and as much as $6 in some cities.”

There aren’t many other details in the summary, but I think these guys have a smart strategy. Every business has tire kickers — people who ask a zillion questions and never spend a cent. In my case all I wanted to know was the cost-per-click, to help create a realistic cash flow projection. That’s not worth a grand to me. But as a thank you I spread the word — and maybe it reaches a newspaper publisher or big online site that is willing to spend what would amount to a couple of days worth of sales calls to make the entire team smarter. The Borrell tactic is a lesson that all online businesses should heed — figure out how to give some away and sell the rest.

One last note about real estate. Unless you’ve living under a rock (financed on a no-down, one percent, variable rate mortgage, perhaps) you’re aware of the debate over whether we’re in a housing bubble and if so when it will pop. No need to add words to that discussion (though I can’t resist linking to the housing bubble t-shirt that a colleague mentioned the other day).

The question for this blog is what happens to real estate ad spending when the market cools, whether abruptly enough to make a “pop” or slowly and gradually in the hoped-for soft landing. Will the online share shrink as advertisers return to the tried and true print media? Or will the flow of dollars — even if diminished — moving from print to electronic media accelerate as online proves that it can deliver more bang for the buck?

I certainly don’t know. The question only just occurred to me this morning. I did a quick search to see if I could find out what happened to real estate ad spending back in 1989, which is when the last big correction occurred (at least here in California. But the search yielded no answer. But before I sat down to do a cash flow that included real estate spending, I would want some idea what happened when the last housing cycle turned down.

Tom Abate
‘Cause if you ain’t Mass Media, you’re Mini Media