On Thursday, 9/07/06, Borrell Associates published their report : Outlook for 2007: Pac-Man Pace for Local Online Ads. (Executive Summary, free. Full Report, $995). Bottom line: double-digit growth for Local Online Advertising since 1998 when Borrell first started to track this new form of advertising. Local ad spending for Real Estate Companies led the way at 21.8%. This Borrell report comes on the heels of their 7/06 report: 2006 Update: Online Real Estate Advertising. Reliable no-spin numbers and predictions about Online Ads, Real Estate Online advertising and Real Estate in general are hard to come by; unless you believe all those self serving, "When did you stop beating up on FSBO's" numbers from NAR (National Association of Realtors).
Yes, Real Estate again won the Borrell Bowl for Online Ad Spending? If you combine Real Estate's (most people's most valuable asset) 21.8% share with that of the credit and mortgage companies (most people's largest debt) the number 3 group of online advertisers, then home- sale related businesses account for well over 25% of all online ads.
These online ad sales figures come before Google and the other Search Engines have worked out an effective delivery mechanism for local paid ads. And before any Search Engine is offering effective Google-like Home-Search. (Zillow.com's beta site comes closest, but it is still in its infancy and won't flourish until Google or some other search engine gets its local ad program together.) At present home-sale related businesses, other than Real Estate and Lenders, have no efficient, effective, economical and targeted media to reach their customers. Other home-sale related businesses don't even know what they're missing.
Real Estate Companies, Lenders and Real Estate lawyers want to attract home buyers and sellers from their first interest until the signing of the purchase offer. Realtors and Lenders interest and ad dollars should be targeted there, then drop off almost completely. The only media with the potential to give Realtors and Lenders this type of targeting is effective Local Online Advertising.
Real Estate companies, Lenders and Lawyers are only the first wave of potential local online advertisers. If the Real Estate Search Engines can bring their home buyers and sellers back through the closing and during the early move in, they can, for the first time, get the bulk of the ad dollars from all these other home-sale related and early move-in businesses: Home Inspectors, Movers, Remodelers, Other Contractors, Landscapers, Appliance and Furniture sales, Telephone, Cable TV, Internet, etc.
Presently, Google is the best at suppling local online ads and Zillow is best at providing home search. But they're both still in beta, Internet for "infancy". Both Google and Zillow are still in what could be called Home Search Ad 1.0. Home Search Ad 2.0 with their Home Search Ad 2.0 dollars, from many more sources, eagerly await the solution to the local home search and local online ad problems.
According to NAR statistics,in 2005, 72% of all home buyers started their home search on the Internet and over 80% of home buyers used the Internet as a major resource in their home search. Real Estate Companies and their ad dollars (surprisingly) are following these home buyers and sellers to the Internet, constituting 21.8% of all spending. Credit and mortgage companies were the third sector, accounting for 5.3%. The Auto Marketing was second, accounting for 12.7% of the online local ad dollar.
With economists in the WSJ.com survey predicting (what we Realtors already know) a further cooling of the housing market, from its own double-digit growth of 2004 (12%) and 2005 (13%), to a 3.5% prediction in 2006 and a prediction of 0.43% in 2007; do we Realtors still fear Zillow, a media company; like CBS, NBC, ABC and Google; becoming a RE/MAX wannabee in a slowing market with great competition, or the Google of Home Search and Home Search Advertising, in the fast growing market of Local Online Real Estate Advertising, with little competition? We could ask Borrell Associates where they would put their money and their ad dollars; if they'd tell.
Borrell also predicts a growth in Real Estate local online Ad spending, because only 39% of us agents, have gotten our acts together, and currently advertise on the Internet. We're still lured by the siren song of newsprint's expensive, broad stroke, static, unmeasurable and short shelf-life medium; and turned off by the Internet's 24/7, interactive, ever-changing, efficient, measurable and targeted ad delivery.
Home buyers and sellers are voting with their clicks (no hanging chad readers or Supreme Court 5/4 decisions needed here). And Real Estate Companies are voting with their ad dollars. Long live Search. Long live Google. Long live Home Search. Long live Zillow. And long live Borrell.