June 30, 2006

According to new research performed by Borrell Associates, the Internet has put the real estate advertising industry in a tailspin in the past few years.

Borrell's new numbers suggest that there are no signs of things slowing down any time soon. Overall, real estate advertising spending for online use is expected to increase from $2 billion in 2006 to over $3 billion in four years from now.

These numbers represent a fairly large increase, from a 17.7 percent share of all real estate ad spending to 32.1 percent. Clearly, these numbers speak for themselves.

Borrell notes that, not only are new websites and search tools having a large impact, real estate advertisers are also shifting dollars within the print space.

"Overall, there's still plenty of room for online spending in the real estate segment," says Borrell Associates V.P. Pete Conti. The research firm found that while 77 percent of real estate buyers use the Internet for home searches, just 15 percent of the 535 agents surveyed place ad dollars there.

Forty-seven percent of agents said they'd spend more online this year than last, and 45 percent said they'd spend the same amount.

The "2006 Update: Online Real Estate Advertising" report puts this in context, noting, "In May 2006 we met with the owner of one large brokerage firm who expressed frustration that while potential customers had moved online en masse, his agents hadn't changed their advertising habits correspondingly."

On the whole, newspapers will continue to experience a decrease in real estate ad spending. The report also predicts that the 37 percent share attributed to newspapers this year will move down to 30 percent in less than four years.

But these numbers can be deceiving, though. Some won't necessarily feel the burn. According to the Borrell report, more real estate agents said they plan to raise newspaper ad spending this year -- 42 percent -- compared to 40 percent who said they'd spend the same amount.

Because real estate agents typically aim to target small regional markets rather than large metro areas, they're finding, "They can get a better bang for their buck in a small community paper." While classified ad spending in large metro dailies will dwindle, those dollars will flow towards less-expensive but more targeted suburban and community papers and alternative weeklies, according to the Borrell report.

"Agents are running from the metro dailies," said Conti.

Online newspaper sites are gaining Internet real estate classifieds dollars. Yet even though those Web classifieds are seen by more people than print classifieds, said Conti, the lion's share of those dollars is attributed to the print version of the paper. This "kind of masks the increases," he added.

Real estate advertisers will also spend less on non-newspaper print media and direct mail in the coming years according to Borrell.

Real estate advertising bought in magazines and niche publications will drop from 17 percent to almost 13 percent in four years, while direct mail spends will decline about 3 percent from 16 to 13 percent, mainly due to postage costs and the increased use of email by real estate agents.

Another Borrell report published in March 2006 revealed that real estate agents did the majority of local search advertising. Search ads for individual local agents rose from 17.5 percent of local search ads two years ago to 49.6 percent of listings on keyword searches across 10 different cities in 2006.

The report also found a disparity between long-time agents and those who are relatively new to the industry. It showed that 36 percent of those who have been agents 10 years or longer use online advertising, while 64 percent of those in the business for 10 years or fewer buy online ads.

What's more, 71 percent of those less-experienced agents will increase their online ad budgets this year compared to forty-eight percent of their veteran counterparts.

Real estate agents with longer histories in the industry, opined Conti, "are going to lose out pretty soon" because more and more people entering the market are using the Internet to find their next home.

Free listings sites provided by weeklies and sites like Craigslist and GoogleBase "will have a big influence over the next six to twelve months," forecasted Conti.

The report mentions Web sites such as social networking site CityCribs.com, New York City housing market blog Curbed, vertical real estate aggregators and search engines like Trulia, Oodle, Yahoo Real Estate and Move.com, as well as real estate value comparison site Zillow.com.

Such Internet properties, notes the Borrell report, are "aimed at creating a higher level of interaction and a better user experience for home buyers and sellers than ever before. However, the real showdown for Web 2.0 real estate advertising dollars online may erupt over how these sites can acquire and display Realtor's listings."

Source: Click Z-News