The New Zealand Herald judged to have misled consumers in Herald Homes Advert

by Alistair Helm in


The Advertising Standards Authority (ASA) this week published its Complaints Board’s decision against NZME., publisher of the NZ Herald. The board adjudicated that the Herald Homes advert claiming that “On average properties sell for 20% more when the marketing includes the Herald Homes…” was likely to mislead consumers.

I filed the complaint with the ASA following the articles I wrote in October when the advertising campaign commenced (Can advertising generate extra sales price for property / Sale price premium cannot be claimed by advertising alone). I should highlight that at the time I was self-employed. Subsequently I have taken a role with Trade Me Property and this complaint is in no way related to Trade Me Property.

I submitted a detailed complaint to the ASA supporting my claim that the advertising was misleading and potentially deceptive. I judged it to be misleading, as the advertising made no reference to the fact that the research upon which the advert was based only examined million dollar plus homes over a selected six month period. I further stated that their claim could potentially be deceptive as the analysis of the data, whilst proving correlation between advertising and selling price, could not definitely prove causation between advertising and sale price given the multitude of factors and variables involved in selling a property.

The outcome is gratifying – the complaint has been upheld and the NZ Herald has been found to have undertaken an advertising campaign which was judged to be likely to mislead consumers. However, the process taken to reach this outcome and the remedies available to the ASA leave me feeling somewhat frustrated.

The ASA is an industry organisation which seeks to uphold industry standards but is unable to exercise any financial remedies or penalties. The options are limited to forcing advertisers to withdraw and cease to undertake such advertising, matched to a published retraction.

The NZ Herald, in their response to the complaint, stated that:

The Herald Homes advertising campaign has finished its run. It is no longer present on bus shelters, is not scheduled to run in any further print media, and has also concluded its run on all NZME digital channels such that it is no longer accessible online (eg, via www.heraldhomes.co.nz).

I consider this a poor excuse or justification. However the most surprising component of the response from the NZ Herald was their attempt to offload responsibility for the advertising to its research company (TNS Research):

TNS Research were (accordingly) asked to provide their confirmation that the claim and explanatory footnote to the advertising were: accurate; and capable of substantiation based on the research undertaken by them.

NZME received confirmation from TNS Research prior to publication of the Herald Homes advertising campaign, that the claim and explanatory footnote were accurate and statistically supported by their research.

In my opinion the NZ Herald has a responsibility beyond simply asking the research company for confirmation. The ASA Complaints Board found the NZ Herald had breached the Basic Principle #4 of the Code of Ethics. This found that the NZ Herald advertising had not been prepared with a due sense of social responsibility to consumers and society.

The advertising campaign is over and sadly the NZ Herald has achieved what it wanted to achieve – attempting to convince agents and vendors that the NZ Herald Homes advertising can deliver a 20% price premium over CV. Sadly that claim was misleading but the NZ Herald has banked any competitive advantage this has given them between October and December (the strongest listings period of the year).

My only wish now is that the NZ Herald and in fact all publications seeking to attract advertising dollars from agents and vendors take seriously their responsibility to act within the ASA guidelines and Code of Ethics and not to undertake misleading or deceptive advertising.

 

 


Can advertising generate extra sales price for property?

by Alistair Helm in


  • If a TV company were to say to an company - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
     
  • If a radio network were to say to an restauranteur - if you buy this campaign you will see a 20% increase in sales - you would not believe it?
     
  • If a real estate agent were to say to you as a seller - if you buy this campaign you will see a 20% increase in the selling price - you would not believe it?

So why would you believe it when the NZ Herald says - if you buy a campaign in the Herald Homes you will see a 20% increase in selling price?

Well that is exactly what the NZ Herald wants people to believe with the new advertising campaign it has started

To be fair and accurate they are not, as the headline says claiming that by using Herald Homes that you will see a 20% higher selling price. Although these banner ads you can read above suck you in with this ambitious claim!

What they are saying is that if you use Herald Homes then on average the premium of the sale price over the CV of the property will be 20% higher than for a property without the Herald Homes - as ever the small print tells the real story whilst we are seduced by the headline!

Herald_Homes_-_Sell_your_property_in_Auckland_for_more.jpg

So if I am correct in this assessment, this is the scenario they are claiming based on the much promoted Grey Lynn 'dump' - its CV was $690,000 and it sold for $1,075,000 at auction on Wednesday. So Herald Homes is claiming that if this property had not been in the Herald Home (which it was, as well as TVNZ, TV3, Stuff etc etc) then it would have sold for 20% less than $385,000 margin over CV - effectively without the Herald Homes a sale price of just $998,000. So the claim in this case is that the advertising in Herald Homes boosted the sale price by $77,000! - That is some claim. Clearly if this were to be believed then the investment of c. $6,000 a page would be money well spent!

The advertising material to support this ambitious claim references to a "TNS Research 2014" as the source of the claim. I have written to the NZ Herald with questions about the research and to seek to obtain a copy.

I cannot believe this claim as the fact is there is no such thing as a 'control' environment when it comes to property and any claim to state that this method of sale, or that agent, or this advertising will achieve a higher price is unprovable.

To be able to in any way even test this hypothesis you would have to analyse a sample group of properties in a similar area of the country across a variety of price points using different selling methods - some of these properties would be advertised with say Herald Homes and Trade Me / Realestate.co.nz, some just Herald Homes and some with no Herald Homes and just online.

I can see no possible way for any seller to be happy to participate in this type of 'research' - every seller wants maximum exposure and there is absolutely no way of isolating the impact of Herald Homes from other factors such as market demand or online premium advertising or any number of other factors.

I will wait with interest to see if the NZ Herald respond to my request and also to see if they continue with this advertising. I believe that this advertising proposal breaches the code of practice of the Advertising Standards Authority in regard to misleading and potentially deceptive advertising claims. 


New challengers emerge to take on Realestate.co.nz & Trade Me Property (Updated)

by Alistair Helm in


There is an expression I always find amusing - "you wait for what seems like an eternity for a bus and guess what two turn up together"!

Well it seems for no particular reason we are experiencing this with real estate websites. For years it was just Realestate.co.nz and Trade Me Property. Not since AllRealestate exited the market in 2008 have we seen a credible competitor to the two incumbents of this digital marketing space. 

Not one but two new residential property websites and one specialist commercial property websites have appeared in the past month and I thought it would be of value to examine these new entrants and evaluate the likelihood of any of them toppling the incumbents.

The new residential websites are Property.co.nz and Rentorsell.co.nz and for commercial property and businesses for sale True Commercial.  

In my mind there are a few critical components required for a property website to be a viable competitor to challenge the incumbents. These are (1) Content (2) User Experience and (3) Brand presence, so let’s see how these 3 sites stack up.


Property.co.nz

This website seems to be dominated by listings from LJ Hooker and First National - collectively it hosts just under 5,000 listings of property for sale and 270 listings of rental property. This is a very small component of the 38,000 properties for sale and 10,000 for rent across the country. Without comprehensive content then there is little to recommend the site.

The site offers nothing in the way of functionally save for what might be thought of as the very basic search. The site looks like a vanilla “out of the box” website that displays listing and nothing more. Clean it may be, but functionality wise it is a pale imitation of the leading sites.

In terms of brand presence, certainly the domain name is impressive - this would have to be one of the first and most sought-after real estate domain names. It was originally registered in 1997. However domain names and websites that are generic to the category I think are a double-edged sword as I can attest to with Realestate.co.nz - you are instantly relevant in the context of the domain name but when marketing the brand is a mouthful as you have to add the ‘dot co dot nz’ to explain what it its - compare that with Trade Me!

Overall I would judge this site to have done a good job of selling the idea to LJ Hooker and First National to get their listings, but a poor job in executing a website. I would also have to question seriously what they claim to be significant engagement through social media. Their site states that they have over 7,000 Likes on Facebook, over 400 on Google+ and over 800 shares on Twitter! The facts are that their Facebook page has 20 Likes!



RentorSell.co.nz 

This website has a long way to go in regard to the content, as of today they have 10 listings of which 1 is rental. Now to be fair they only launched today so maybe we should hold off to see how they go in the coming weeks.  

When it comes to user experience I have to commend this team which is based in Queenstown. They have built a very appealing site in terms of design, very clean, focused on images and with clear details about properties. The image sizes are huge and allow full-screen presentation which can make a very basic house look great. Not only is the design to be applauded they have implemented unique functionality in their compare feature which allows for the side-by-side comparison of your saved properties.

When it comes to brand name I have to hold my head in my hands! - Rent or Sell. It has to be the most unmemorable name - it is devoid of personality and whilst it is contextual I can see why it was easy to acquire - the domain name was only registered in July this year. It would have been better to call it zwango.co.nz at least that is memorable (and you can buy it for $20 today!).

Overall I think they have the right approach to design but their future relies on hard work to get content. My advice would be go and see LJ Hooker and First National as they seem keen to support new sites with content. I would also caution them to be honest when it comes to content. On their home page they have what they title "Client Testimonials" I think these may have been ideas that they threw on a test site - they have nothing to do with their business and I would have to suggest are works of fiction.

(Updated)

I am grateful to an eagle-eyed reader who spotted this website from the US (WPResidence) which is identical to RentorSell - clearly showing that this is a templated 'out of the box' website designed for property. I must say that in my view it is a good design and when stacked up against the leading incumbents in the NZ market clearly shows how far this category has developed and how little we have seen in innovation and user design in the NZ market - it is long overdue!


True Commercial

This new site is very different from the other two in that it is not an entrepreneurial start-up built with investor money and life savings. This is a site built with the muscle of APN (soon to be renamed NZME) - publisher of The New Zealand Herald. In terms of content the site is well developed having close to half the full complement of listings on the market. This is not surprising for the Weekend Herald print supplement has for years been the primary marketing medium for commercial real estate and thereby provided the necessary existing relationship with the real estate companies.

In terms of user experience the site could not be more of a disappointment - it is clean in terms of design which is something that cannot be said for Realestate.co.nz’s Prime Commercial or Trade Me Property, but largely the cleanness is the result of limited functionality and sparse content. There is nothing new, and in someway the site has the feel just as Property.co.nz’s has of being an ‘out of the box’ solution. The site does have far a good selection of commentary and articles around the commercial property industry but that should only to be expected from a publisher of this scale. A pet hate I have of the site is the need to click a button to reveal a telephone number for an agent - why? - just so they can say to agents, we had 2 people click to find your number!

As for brand awareness, well here we have the compete antithesis to the aspiring residential sites because APN has leveraged their print and digital muscle to promote this site. They have renamed their weekly property supplement and advertise the site extensively on the NZ Herald website - that is a lot of advertising impact. As for brand name - a good domain name combining contextual relevance and a memorable name. 

Overall I am disappointed in this site. The Herald should have been developing this solution in 2005 when the digital market place really took off. They might have possibly waited for the collapse of Sella in 2012 to make way for a dedicated site. All of which demonstrates a missed opportunity of massive proportion not just because the industry has been spending millions to support Trade Me Property and Realestate.co.nz over the years but in having a leading site they could have managed the natural migration of print to digital and in bundling a package of print and online advertising solutions they could have achieved leadership. I just don’t see this site being a real challenger or real threat to the incumbents despite the muscle APN could leverage and the pot of gold they could secure. They would really need to better understand their customers and the unique needs of the market to deliver this result and build a compelling site.


 

So in summary all of these 3 new sites are in my view doomed. Good intentions, good ambition and some small pieces of innovation. However the real reason why none of these will ever succeed is not for what I have written so far in this article, but from the single fact that none of them have a mobile app.

 

If I was to start a new digital property platform today in NZ I might well forego the web and launch purely as a mobile app! Real estate is a mobile experience and to not have an app is to miss the point and to show a complete lack of appreciation of the needs of the market.


Property Market interview with NZ Herald - September

by Alistair Helm in


The beginning of each month spawns a whole new set of property data. The NZ Herald has invited me into their studios to chat through the key factors affecting the property market at this time. Here are the key topics discussed with Chris Daniels, the online editor.

1.         Latest property price data from Barfoot &Thompson the largest regional real estate company showed average prices easing over the past couple of months – indication of a continuing trend of easing or a restbite before a resurgence?

2.         The Reserve Bank LVR policy, what impact this will have on first time buyers, will its effect be on Auckland where the concern is or could the effect be felt greater outside of Auckland?

3.         The seasonal effect, coming into the Spring period when people traditionally think about moving – what impact will this have this year given the strength of the property market through the winter period?

4.         Auctions – the speculation around the continuing focus on Auctions as the preferred method of sale and the facts around some real estate companies offering incentives to agents when they succeed in securing a listing as an auction sale

The video can be viewed below or on the NZ Herald website

 


Video interview with NZ Herald

by Alistair Helm in


I was invited to an interview with Chris Daniels the Online editor of the NZ Herald to talk about the property market. In the space of 14 minutes I managed to share my thoughts, opinions and insights into the property market ably guided by question from Chris.

These are the 7 questions - for the answers you'll need to watch the video!  

  1. There’s a lot of talk of a property boom underway again – what are your thoughts – are we on the cusp of another irrational boom in NZ real estate prices – and how can we tell – are the monthly stats we get good enough to see when things are getting out of hand?

  2. You’ve been pretty critical of the use of CV – capital valuation in real estate ads – ie: sold for $100,000 above CV etc… what’s your problem with this?

  3. Is it possible to truly judge the impact of foreign – non resident buyers on the New Zealand real estate market and prices. What do you think of the Labour policy of banning the practice?

  4. You’ve talked recently about vendors being pushed into auctions with only very short listing times? What’s going on here?

  5. The Reserve Bank is set to announce restrictions on low equity mortgage lending soon – what sort of impact do you think this will have on the NZ property market? Would something like this really take the steam out of any bubble?  

  6. The crash really gutted the real estate industry with many thousands of real estate agents leaving the industry altogether  - are you seeing any signs of new people coming into the business? Are there enough people to sell all these houses?

  7. Prices seem to be going up – but we hear of agents constantly needing new listings –are people actually selling now? Is there still a real shortage of listings and what sort of impact does this have on prices and the sales  process?