Anyone in the real estate profession in the earlier years of this century knew the importance of advertising constantly. That is, constantly in local newspapers and other print materials. Each week loan officers and real estate agents would struggle to string together the most compelling text in order to bring life to their advertisements and maximize their investment in what can be said is the most important part of being in business. Generating new clients is the only way to succeed in the churning, burning world of real estate where each morning is your first day in business.
Real estate professionals are not paid each week by their boss. They do not have retirement plans created by the companies they work for. There is no residual income from selling or financing houses. Real estate agents and loan officers are special breeds who are paid by the commissions generated by what they sell, so consequently they must continually be selling something. Whether its listings, relationships, homes, mortgage rates, or great service, real estate professionals are not in the position to allow themselves to become idle and wait for Friday’s check. Real estate professionals are hustlers. They work well past 5 p.m. and you can find them on the road most weekends showing clients around the same neighborhoods that they have driven hundreds of times before.
Today’s real estate professionals are faced with hurdles that the real estate pros of the previous decade did not have to endure and for which there are no classes or guidebooks. First, there was the mortgage meltdown, and then a prolonged recession which, combined, nearly collapsed the market completely. Now the dust is beginning to settle and the market is coming back, albeit slowly. Those problems will pass as they have many times before. The real problem for real estate professionals today is not the real estate market being slow; it is the advertising industry.
Advertising is different than it was just 10 years ago. Now, a “must have channel” for advertising comes out virtually every six months. Some of these channels are free while others are not, but each dilute the value of the previous and require today’s real estate professional to be more selective with their time, money, and effort than ever before.
In the past placing an advertisement in the local paper would suffice as a marketing plan. Today, in many cities, the local paper no longer exists, while other city newspapers have either cut less profitable editions or filed bankruptcy. Since 2007 local papers have seen a 65 percent decrease in circulation as their readers receive more and more of their news and other information from online sources. Real estate falls into the “other information” category.
Put another way, two thirds of the readers of your local paper are no longer reading it. It doesn’t take a sociologist to figure out that the remaining one third are not in the desired homebuyer demographic. They are generally of the age when they are more interested in nursing homes than new home listings. In 2009 alone Gannett Co. Inc., publisher of more than 900 newspapers, reported laying off 10,000 people as revenue fell 34.1 percent. And the picture doesn’t appear any brighter for the rest of the industry either, as 61 newspapers closed their doors completely that year.
This is not the case with national papers as they have had a better handle on things to come. The Wall Street Journal is an example of a paper that, earlier than most, adopted a “pay wall” that did not allow the reader remain on their website past a predetermined point before they were asked to pay. But that’s The Wall Street Journal, which represents demographic and geographic issues for the majority of real estate buyers, sellers and professionals. Now more newspapers, in an effort to survive the digital age, are adopting the “pay wall” strategy, but it is too early to tell if they will be successful.
The National Association of REALTORS® reports that 95 percent of all homebuyers indicate that they began their real estate search online which may be the reason that The Washington Post has only two pages of real estate advertisements compared to the year 2000 when the same newspaper regularly had 10 to 12 pages in the Sunday edition. Another interesting item is that the price for the same advertisement in 2000 has not been reduced, but in fact has increased even with the reduction of readership.
We have all heard the real estate professional that says something to the effect of “I only work with referrals” or “Word of mouth is the best method of advertising.” These are just other ways of saying “I can’t figure this advertising thing out anymore.” Referrals and word of mouth are great things, but to trying to survive during a down market or grow a business on those two strategies alone is a recipe for financial disaster.
With newspapers and most other print media no longer sustainable options, we are forced to look at the rest of the opportunities that are available and dissect their viability. Create a plan that grows our business and moves us forward in the pursuit to control our own destiny by creating a greater number of transactions.
1. Each ad includes a call to action
3. Familiar and unchanging
1. Too expensive
2. Low return on investment
3. Shrinking readership
Score: 1-5 (5 being the highest)
Ease of use: 5
Time required: 4
Total score: 14 of a possible 25
Michael Urbanski is the CEO of Qazzoo.com, an online community for real estate consumers and professionals. Urbanski has been an innovator in online advertising since the late 1990s and holds several software patents for geo-targeted advertising. He can be reached at Michael@qazzo.com.