Realtors repudiate newspaper ads
That’s the impresion left from a survey released today by the Aim Group, a consulting organization that used to be known as Classified Intelligence. Being intelligent enough to see how rapidly the classified business is wasting, founder Peter M. Zollman has changed the name of his company.
But there’s no perfuming the results of his new poll, which discovered that nearly 6 out of every 10 real estate agents think newspaper advertising is useless.
While the survey found that nearly 80% of agents still buy print ads from time to time, they report doing so to appease the sellers they represent – not because they actually think it will move any homes.
The survey of some 200 agents by Zollman and colleague Jim Townsend is contained in an in-depth study of the global real estate classified business summarized here.
Real estate advertising in newspapers boomed along with the funny money-fueled housing market, rising to what probably will be an all-time high of nearly $5.2 billion in 2006 from annual levels of approximately $3 billion at the beginning of the decade. (See chart below.)
When the bubble popped in 2008, ad sales came in just shy of $2.5 billion, making for the lowest level since the mid-1990s, according to the Newspaper Association of America.
Given the comparatively high cost of newspaper advertising and low confidence in its effectiveness on the part of agents, it is not surprising that the Aim Group learned 43% of Realtors cut their newspaper ad budgets in the last 12 months while only 6% increased them.
If real estate advertising placed by agents isn’t long for this world, the agents themselves may be endangered, too.
By the time the housing market revives, you can bet a good number of consumers will have forsaken real estate agents in favor of buying and selling homes on their own.
Market information, detailed comps and other free tools make it a cinch to sell- or buy-it-yourself at websites like Zillow.Com. Unless you are flogging real estate in New York, there’s no charge for listing a flat, a farm or a villa with Craig, either.
For those who want a little low-priced handholding, consumers may opt to use such discount brokers as Redfin.Com, which charges buyers and sellers fixed fees for brokerage assistance that saves thousands of dollars over the 5% and 6% commissions customary among most traditional Realtors.
As proof of the growing popularity of its discount-brokerage concept, Redfin, a venture-funded company founded in 2004, reported that it recently moved to profitability despite the real estate meltdown.
Faced with the prospects of fewer transactions and more pressure on their profit margins during the prolonged housing slump, real estate agents are shifting their scarce marketing dollars into cheaper alternatives to newspapers.
According to Zollman and Townsend, the preferred venues include their own websites; social networks like MySpace and Face Book; specialized websites like Zillow and Trulia, and search marketing through Google and Yahoo.
The high-priced, online real estate sites operated by most newspapers “don’t impress,” says the Aim study. Newspaper sites frequently lack the tools and often lack the depth of inventory available at specialized web competitors.
Although demand from home sellers appears to be the largest reason that Realtors still use newspapers, a funny thing happens when buyers start shopping for new digs.
“When sellers become buyers, overwhelmingly they look for listings online, not in print,” noted the Aim report. “In its 2008 survey, the National Association of Realtors reported that 87% of home buyers used the Internet in their home search.”
Not good news for newspapers.