“Real estate agents and real estate advertising are in transition. Online will be a substantial winner and daily newspaper print is going to be a significant loser,” he said.
After our chat, I wondered if what Peter said was also true here in Australia. We haven’t got the economic problems the US has. But, interest rates are rising, the share market has been falling and the real estate markets are uncertain.
I decided to get on the phone to agents in several parts of Australia and test his theory. The agents I spoke to tell me that Peter is right. They are now spending more money on relatively affordable online advertising because of the economic uncertainty in Australia. Let me clarify: I don’t mean they are spending more with just realestate.com.au, but with the online space in general. And I don’t mean that suddenly print ad spends are plummeting.
However, I am hearing about a significant increase in online spending (in percentage terms, from still-low actual numbers). This represents a shift in market share to online that seems faster than what we’ve seen in recent years.
My summaries below are only a small representation of the conversations I had this week, so I encourage anyone with more to add to take advantage of the comments box at bottom.
NATIONAL REAL ESTATE TREND
Sam White, deputy chairman of the Ray White Group, which sold over $25 billion worth of property last year, told me his hundreds of offices are spending more money online than ever before.
To be fair, Sam also told the media yesterday that “We’re a believer in both print and online. It’s a critical mix.”
So his public comments are inconclusive regarding the trend I’m talking about.
(Conflict disclaimer: Sam is also a member of the REA Group’s Board.)
VICTORIA REAL ESTATE TREND
Geoff Cayzer, Managing Director of Cayzer Real Estate in Albert Park and Port Melbourne, told me that owners are less willing to pay for print advertising so agents looks to see where their dollar is best spent, and that is online.
Imagine you are an agent selling a $500,000 house. You think the vendor is unrealistic about the price. You know properties are hanging around on the market for a long time at the moment. And, to make matters worse, the vendor won’t cough up for vendor-paid advertising. How likely would you be to pay for the print ads yourself?
QUEENSLAND REAL ESTATE TREND
Stephen Sharry, CEO of real estate franchise group Raine & Horne Queensland, said if the market is slow, agents have to advertise more. He added that the internet lets you do that better than other media at a cost that is not prohibitive.
The idea is that, when the market gets back to its hot self (3 months? 6?), the agents who have been marketing are the ones who will get the first calls.
Stephen also told me that he is still seeing high numbers of unique browsers looking over his online listings, and he doesn’t want to miss the opportunity to be in front of those buyers.
A quick glance at Nielsen//NetRatings confirms that in February the total number of unique browsers to Australian real estate sites (5,879,088) was higher than any month in history except January 08.
Also in Queensland, Nick Penklis, Director of SPACE Property Agents in Brisbane, said he boosted his agency’s internet spend by over 400 per cent compared to 12 months ago.
NEW SOUTH WALES REAL ESTATE TREND
In NSW, Bruce Eason, a real estate agent and Director of LJ Hooker’s office in West Pennant Hills, says for every dollar his agency spent online three months ago, it now spends 25.
SOUTH AUSTRALIA REAL ESTATE TREND
Anthony Toop, founder and sole director of Toop Real Estate Group of Adelaide said he now spends 200% more on internet advertising than six months ago.
IN THE MEDIA
Australian Financial Review media reporter Neil Shoebridge yesterday weighed in on this trend, as well. He quoted a note that Deutsche Bank media analysts Andrew Anagnostellis and Tim Plumb wrote to clients last week:
“There was a wide divergence between the earnings performance of the new media stocks, which are benefiting from the structural change, and the traditional media stocks.”
For the words “structural change”, read “shift to online.”
David Kirk of Fairfax Media admitted the same, saying Fairfax expected better results from its digital businesses than its print businesses in the coming half year.
That’s the trend as I’ve been able to put it together via lots of time on the phone this week. I’d love to hear what anyone else has to say about it.