It’s hard to write about a topic if you don’t feel any emotion. Many times, I have written out of frustration or anger at how our property industry has operated. Today I write with a feeling of weariness as I watch history repeat itself, just with the inevitable variations. Watching different people making the same mistakes and assumptions that others have done before them.
At the end of last year, I sat in a room with other agents as an enthusiastic, if somewhat opinionated, Director of Customer Experience for one of the real estate property listing portals told a story of how a car hire company had done him wrong. He told how individuals within the car company tried to fix his problem but invariably failed because the business systems of the car company were badly designed. He was making the point to us agents and business owners that we must listen to our customers and to be constantly revising how we do things. No doubt you have heard the same advocates in your line of work, seen the customer surveys and been preached at by people who seem just a little too pious.
After the talk, we wanted to know what this company was doing to change the way people obtained information from their site. The most common email we receive from buyers looking at property online is one that asks, ‘How much are the strata levies?’. The information is in the ad wording, but people don’t read the ad properly and so miss it. All the agents in the room experienced the same problem, a problem that could easily be resolved. We supply Domain and Realestate with the amount of the levies but they just have the information sit in the body of the ad. It would be relatively simple to engineer their sites so that when a buyer asks the question about strata levies, the amount could display as a pop up box. Buyers’ questions could be answered immediately. We agents could save time, and the portals could show that they were listening to their customers – both buyer and real estate agent. Our suggestions were brushed aside.
The Director of Customer Experience’s response to our suggestion. ‘No, we can’t do anything about people not reading the ads properly’. Apparently, a bad customer experience only happens to other people, and this was not their problem.
This isn’t the first time these companies’ arrogance have upset agents. From the 1960’s through to 2000, real estate was sold and leased using classified advertising. The term ‘rivers of gold ‘ referred to Fairfax Press’s massive income stream earned from 10s of 1000s of classified property and job ads each week. We all had to wait for the Saturday paper to come out. The paper had a classified section so thick it was folded separately and had more pages than the main part of the paper. Fairfax thought the money flow would never stop. They thought that property couldn’t be sold or leased without them. Then the Internet became popular.
Early in the 2000’s agents jumped at a small company called Realestate.com as a way of expanding a property’s exposure. Fairfax ignored it for a while but then realised that it had better do something as people flocked to the Internet to find rental accommodation more so than the paper. The Domain website was born. The internet’s advantage for many was that it was accessible 24/7 and the Saturday paper only came out on Saturday. That was the big thing. People could plan mid-week what they wanted to see and even arrange to see property before Saturday. We measure most things with advertising and I still clearly remember the weekend we stopped booking ads in the newspapers because the Internet was generating well over 90% of our inspections.
In 2005 Rupert Murdoch admitted, ‘sometimes rivers dry up ’. Fairfax who owned the Age in Melbourne and the SMH in Sydney had lost the massive cashflow streams of the classifieds. Realestate.com was taking the property ads and Seek was taking all the job ads.
Both portals, Domain and Realestate are at their peak now and have so much of the property advertising market for real estate that they can charge accordingly.
Their prices have doubled in recent years. Not because of costs but because they believe they offer ‘great value’ as a Domain representative told me. It now costs well over $2500 for a single well placed ad on each website. Both portals are focused on charging as high as they can and follow each other’s pricing closely. Classified advertising had market dominance for close to 40 years. Internet Portal advertising has had its day in the sun for close to 10 years but that may be coming to an end. There are some bright people in the real estate industry who innovate and test ideas constantly. They talk and show others what they are doing and how well they succeed.
One of the big changes in advertising that we are starting to see success with is Facebook. It’s not like Facebook is new, it’s that its advertising tools and ability to target market have reached a level of sophistication that now makes it a strong competitor to the portals.
An agent in Victoria tested Facebook’s ability to find a buyer compared to Realestate. He ran one ad on Realestate at a cost of over $2750 and ran another ad on Facebook for less than $100. The results, Realestate created twice as many views as Facebook but at 20 times the cost! However, it is who is seeing the ads in Facebook that’s really got agents excited.
Realestate and Domain are being viewed by Active Buyers, people who are looking for property and are willing to trawl through all the individual properties on the Internet to find what they want. For a long time, this was the only category of buyers that agents went after. But there is another group of buyers who don’t read the mass internet advertising done by the portals.
These buyers are the Passive Buyers, people who aren’t actively looking for a property but will buy if the right property pops up. They aren’t searching the Internet, they are getting on with life, but they will notice a particular home come up in a particular street and will pursue it because the location or style is the key motivation. A property in Ryde we sold at the end of last year was bought by a local who happened to be driving by and saw it being auctioned. He stopped to watch the auction and decided to register while the auction was running. After a few days negotiation, he bought the home. The reason, he had family living nearby and he wanted to downsize. He wasn’t looking on the Internet to buy and he paid more than the buyers who were there at the auction. Seems farfetched? Well it is estimated that Off-Market sales as they are called (sales where the property is not promoted on the portals) may represent as much as 10% of transactions in some market areas. That’s not massive but its early days yet.
And this is where Facebook steps in. It’s an ideal marketing medium for passive buyers. It is estimated that 85% of Australians are on social media so it’s a big forum, bigger than the portals. But what makes it special is how we can fine tune it to whom we present a property. Facebook knows so much about you. There is an infamous story of a father who complained to Facebook that Facebook was targeting his teenage daughter with ads for baby products. The Facebook algorithms had calculated from the daughter’s search activity that she was likely to be pregnant. It later turned out she was pregnant.
With Facebook, we can promote a property to people in a set age group who own property, in a set area and who have shown interest in moving or upgrading. We can target investors or first home buyers. The variations and subtleties are amazing. And the great thing is we are still picking up those buyers who are looking on Domain and Realestate anyway because they look at social media as well. The cost of Facebook advertising is around $100. It will probably get more expensive. Our advertising programs now have Facebook included as standard.
I suspect that Google will not be far behind in looking for a way to take the portals’ advertising income as well. Video of property is becoming more prominent. Google which owns YouTube now places video content above written content when you Google search a topic. Forgetting real estate for a moment, video currently represents 80% of all Internet traffic and 86% of people surveyed said watching video played a role in their purchasing decision. For us video content is becoming invaluable as part of the marketing mix for property. We have tracked usage of our videos put up on the Internet and watched how buyers who are interested in a property have forwarded the video to friends and family to review and give their approval. Measuring what gets clicked on (the Internet knows everything you do), quality videos are scoring runs with buyers. And there is a big cross over with social media. 45% of social media viewers view over an hour of video a week on social media. All our Facebook advertising links back to videos of the properties.
Nothing is certain about where property advertising is going.
What I can be certain of is this. The arrogance that was present when the newspaper advertising reps came into my office 20 years ago, talking about how their new price increases couldn’t be helped and suggesting ‘that if I didn’t like it I could always try not advertising and see how that worked’ is back. The mantra is now being spoken by the representatives from Domain and Realestate. It didn’t take them long. Will social media take over from the portals? I don’t know, but the reign of classified advertising was 40 years. The reign of the portals may be only a fraction of that.
You’d be forgiven for thinking this is just a rant directed towards advertising companies, though in part it is. What’s more important is that how people find property is changing and fragmenting. As agents, we have to keep changing how we promote property, discerning what works from what’s a fad.
Nothing is simple.