Yesterday was a busy day in online real estate research. Both Classified Intelligence and Borrell Associates released new reports: CI’s “Real Estate Advertising 2005: Time to Listen or Lose” and Borrell’s “2005 Update: Online Real Estate Advertising.” (Both are pricey reports — unless you’re a client of CI and get it as part of your fees.)
From both reports, a key point is how dominant the search engines (especially Google) are becoming in attracting local real estate advertising money. Borrell notes how Google has begun pursuing the real estate category directly, now employing three regional sales teams in the U.S. that are focused on the real estate and other classifieds categories. The search giant has been making presentations to major brokerage firms such as Century 21, RE/MAX, and Coldwell Banker, Borrell reports.
Those real estate companies are buying advertising as part of Google’s AdWords and AdSense programs, where they pay per click, and they’re bidding up keywords to $1 per click, and $2 in some cities. A growing segment of these bidders are local advertisers, says Borrell — individual agents and brokerage firms.
The Borrell report quotes a Realtor in Austin, Texas: “That (Google) ad is working great. … We are busy as hell, and that is the only advertising we are doing right now. We quit our print advertising after we posted that Google ad.”
The CI report similarly concludes, “The bulk of Realtors’ online expenditures will be on pay-per-click local-search advertising and in support of their own websites.” Some 31 percent surveyed said they’re spending no dollars with local print newspapers in 2005, and 37 percent of Realtors said they’d spend no money in print newspapers in 2006.
The reports are a depressing read for newspaper executives. Already suffering by assaults on merchandise, auto, and housing rental categories by Craigslist (and other online competitors), now the real estate category looks about to be hit very hard by migration of local real estate spending to search advertising — a form of advertising that was almost non-existent just three years ago.