Property musings on Facebook - 5 September

by Alistair Helm in


Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.


The Housing Crisis



Property musings on Facebook - 29th August

by Alistair Helm in


Here are the articles posted on Facebook over the past week - short, spontaneous insights and observations which I felt needed immediate discussion and didn't warrant long-form articles written.

 

Australia vs NZ in house prices


Competing property portals in Australia go head to head

by Alistair Helm in


NZ may have an impasse between agents and Trade Me - however across the Tasman it looks to be heading for an outright war between the two leader property websites!

The Australian digital property marketing space is a heavyweight boxing ring with the incumbent REA Group (majority owned by News Corp) facing off against a newly resurgent Fairfax owned Domain. The clash is about to get elevated to a whole new level given the email sent out by the CEO of Domain, Antony Catalano calling on agents to pull the plug on REA Group.

The email has been sent as an open letter to the real estate industry and pulls no punches. Stating that “If Australia's real estate industry had any doubts that it is fuelling its own demise it need look no further than the reality behind REA's latest round of price hikes.” This will sound familiar to NZ real estate agents if you were to replace REA with Trade Me, however we have yet to hear this level of rhetoric from Realestate.co.nz.

The argument expounded in the email is nothing new and is something that I have often stated over the years - that the headline traffic numbers of websites bear no relation to the scale of the industry in terms of genuine buyers. Catalano states that the 23 million visits made to the REA platform per month bares no relation to the monthly property sales of 33,000, just as a monthly traffic to Trade Me Property of around 2 million unique visitors a month bares no relation to monthly property sales in NZ of 7,000.

Real estate online listings appeal to a far wider audience than buyers alone and always will do - its a fact and therefore the key determinant of true value delivery by a property portal is leads - quality leads that turn into buyers, as that is what agents want.

The email is emotional and colourful as is the writer who has quite a reputation in the industry in Australia. Antony Catalano was at one time the top executive for Fairfax Newspapers in Victoria in the real estate advertising business before leaving and starting up a rival publication which in the space of a few years came to virtually destroy the Fairfax magazine and driving Fairfax to acquire 50% of Catalano’s business.

The email is a carefully timed piece of incendiary media marketing. REA Group have just announced their latest round of price increases of as they like to present it - a market based pricing which whilst still based around a monthly subscription is edging ever closer to the per-listing fee structure implemented by Trade Me Property. In Australia these revisions to REA’s pricing policy are an annual event and always generates enormous vitriol amongst the industry but somehow the industry ends up paying the invoice and another year rolls around.

The other critical timing opportunity Catalano has played to, is the transition from the outgoing CEO Greg Ellis to the new CEO Tracy Fellows who although announced last week is not due to start in the role until September, so the interim CEO will be attending to this media barrage.

The stakes are high in the Australian real estate digital marketplace and the ego’s no less so. REA Group with its primary interests in the Australian market with the websites of Realestate.com.au and Realcommercial.com.au also owns websites in Italy and Luxemborg as well as Hong Kong, employing more than 700 people - its recent full year revenue was A$336m delivering an EBIDTA of A$164m giving it a capitalised market value of A$5.8bn. Domain by comparison has a revenue from Australian operations of the residential website of Domain.com and the commercial site of Commercialrealestate.com.au generated revenues of A$141m and an EBIDTA of A$45m.

It seems somewhat duplicitous for Catalano to challenge the industry to boycott REA as he trying to take the high ground as some white-knight to defend the interests of the industry, his agenda is as clear as day - to maximise the shareholder returns of the business he is charged with running.

It will be interesting to watch from the sidelines in NZ as the aspiration for Domain is to seek an IPO in the coming year or so as a further cash injection to support the ailing print media business of Fairfax - wasn't that the purpose of Fairfax selling Trade Me though!?


Real estate agents endorsing digital media! - the tide has turned

by Alistair Helm in


Digital world iStock_000004474914Small.jpg.png

Working in the realm of digital media as I have done for over 7 years now, I struggled long and hard to get agents to see the value of online advertising, it was a long and arduous road. Getting agent to embrace digital media and relinquish that decades old love affair with newspapers, that was the objective at Realestate.co.nz and at many property portal around the world.

In many countries the pendulum has firmly swung in favour of online advertising, the US being a prime example where it is rare to see any print media advertising for real estate. In Australia the majority of spend by agents is heading online and Europe is firmly in favour of online. However in other parts of the world the print media and particularly newspapers are still seen as the advertising medium of choice.

So imagine my surprise and delighted when the following video was brought to my attention by Business2 in Australia, the media hub of real estate and technology. The video they profiled on their site was made by a real estate company!.

The video by Philip Webb pulls no punches; stating that the primary function of real estate advertising in newspapers is for the brand profile of the agent or the real estate company, not the property. Buyers go online. Sellers check out the newspaper - after all that is where the agent said they were going to spend the vendors money advertising it!

In NZ it costs less than $700 to do a significant online campaign, a campaign that is working 24hrs a day for a month around the world to an audience of hundreds of thousands. That amount of money would not even buy a single page in a property magazine. A single page that becomes recycle trash within 24hrs and reaches people who have to go to an office to pick it up and sift through thousands of properties that are not sorted in the logical needs of buyers - location and price filtering!

Here's the video from Philip Webb.

Its a brave move by Philip Webb. It's guerrilla marketing. The video is not to be found on their website, clearly they want to kick up a storm and demonstrate a competitive distinction. I would judge that they are achieving this, they are certainly getting media coverage within the industry.

Maybe other smart real estate companies might take their head out of the sand and realise that they could differentiate themselves by endorsing online-only campaigns as 200Square does in NZ.


Advertising property for sale - online or offline - that is the question

by Alistair Helm in


I was attending the digital conference in Melbourne this week hosted by the Real Estate Institute of Victoria and RealEstateView.com.au.

One of the speakers, Andrew Beecher the head of marketing for Realestateview and previously with carsales.com.au made the statement that he had “a passion for seeing print media decline” he also went on to challenge the real estate industry that “2012 (or 2013) should be the year to undertake an online-only campaign for property”. The latter driven by first hand experience of selling his own house this year. These statements are completely consistent with someone who is working for a property portal and given the dominance of online for property searching in Australia.

I, in my usual manner was actively tweeting from the conference, keen as ever to share the insights from the speakers and both of these quotes I shared with my followers

Alistair Helm (alistairnz) on Twitter-1.jpg

With over 1,300 followers I have a good cross section of real estate people as well as technology people and “others” who are interested to hear my thoughts. However I was somewhat surprised to receive this tweet from one of my followers – a person who I shall not identify but is a key person in the NZ real estate market who runs a large real estate company. Have a read of the tweet:

TweetDeck.jpg

I was very surprised to see this response; it was to my mind very defensive and clearly showed that I had hit a raw nerve!

Surely real estate companies recognise the power of the web. It is the most effective medium for buyers to locate their new home and the most cost effective medium for sellers to promote their property to buyers.

To say that “experts” have proven that property selling requires both print and online is inaccurate. Not because I dispute any such research; but because it can never be tested.

Statistically to prove a hypothesis requires a control, and in property marketing you can never establish a control. Let me explain.

If I were to say that online marketing can sell more cans of soup that offline then I would set up control environments. I would set up similar audience, similar competitive environment and do a test over a significant enough time period (say a month) at the same time in four discrete markets; one market would just have online advertising, one would have no advertising, one with print only, and one with both forms of advertising. A statistically valid sample size of buyers over a month period would allow a statistical confidence to be established to show that one form of advertising is more effective over another or not.

When it comes to property you cannot establish two simultaneous markets, let alone four. Every property is unique. Even two identical properties in the same apartment development are not identical as the small pool of buyers actually will skew the data. Equally the only way to establish online-only or offline-only advertising is in different physical markets, this is impossible with property as houses are only in a physical location and the physical location affects the appeal and demand.

Therefore I can say with complete confidence that there is no evidence that online-only property advertising is better than offline-only or that you need both. It simply cannot be proven.

What we do know from extensive research globally is that property buyers each year in larger numbers spend more time researching, browsing and enquiring online, whereas the numbers using and relying on print media is declining, with people spending less time viewing print media.

The real estate industry is trying to deny this trend; not because they don’t believe the research, no it is even simpler.

Online property advertising is not as effective a medium for real estate brands as print media and that is why real estate companies continue to pour $millions each year into print publications. Added to which the print publications incentivize such advertising – as any medium would do to ensure they don’t loose customers – especially as print media is in terminal decline.