Feature
by Janis Mara
As eBay snaps up Rent.com and Craigslist offers classified ads for free, real-estate advertising isn’t what it used to be—and neither is the newspaper classified
section.
For more than 65 years, the nation’s real-estate agents and landlords have advertised mostly with newspapers and yard signs. Now a plethora of options is available—and newspapers are losing market share as agents and owners pull their ad spending to invest in the Web.
“People can go to a brokerage’s Web site, to Realtor.com, Rent.com—there’s a world of choices out there,” acknowledged Charlie Diederich, director of marketing and advertising for the Newspaper Association of America.
And plenty of big brokerages are leveraging their online options in favor of print. Ohio-based Real Living pulled $1 million in advertising from Sunday newspaper classifieds in 1997, said Kaira Rouda, chief marketing officer of the company.
According to a 2004 study by Borrell Associates, newspapers had a 2% loss in real-estate advertising market share between 2003 and 2004—and online venues gained 2%.
“Will newspapers recapture their old market share? No. That share will always go down. It’s the nature of competition,” said Diederich. Newspapers must fight for market share, he said, a sentiment echoed by many experts.
To forestall erosion and open up new areas of revenue, newspapers now are aggressively and creatively pursuing readers, said Brian Steffens, executive director of the National Newspaper Association.
“That aggressiveness won’t be strictly on the print side. They will be aggressive in pursuing their online avenues,” Steffens predicted. Steffens and Diederich pointed to the employment arena as an example of newspapers fighting back successfully.
“Monster.com (a major Internet employment site) owned online employment for a long time. But now CareerBuilder, a joint newspaper venture owned by Knight-Ridder and others, is a strong second and not very far behind,” Diederich said.
The New York Times has done a good job in the online real-estate advertising arena, as has Chicago-based Classified Ventures. The latter is owned by six major media companies and is working to establish a stronger Web presence for newspapers’ rental and for-sale property listings.
Still, newspapers will have to fight hard to buck the trend. Seven years ago, the Borrell report says, agents, brokers and developers spent $755 on newspaper advertising for every home sold. In 2004, it was $605. Meanwhile, online ad spending per home jumped from $16 to $148.
“Consumers are switching to online. The simple reason: it’s searchable,” said Charlene Li, principal analyst for Forrester Research. “Online you get pictures, walkthroughs, you can search by price, location, proximity to schools. In the paper you get a few lines of text. You tell me which is better,” said Li.
In shifting to online advertising, Li said, some newspapers have done a good job, but as a whole they have not.
Indeed, a survey of 70 U.S. newspapers in June 2004 revealed that more than half ran online ads that were exactly the same as their printed ads. Only four of them had
virtual tours. None of the 70 offered video clips or other rich media on their sites, according to the survey, performed by Belden Associates and Classified Intelligence.
Newspapers surveyed by Borrell cited Realtor.com as their number one online advertising competitor, with local MLS (multiple-listing service) sites and local agent/broker sites second and third.
“Realtor.com is one of the top online competitors,” agreed Marc Ryan, director of analysis for Nielsen/NetRatings, a firm that specializes in measuring Web traffic and advertising levels.
“Craigslist has definitely made a change in the landscape,” said Ryan. “The other factor is the ability for consumers to access the MLS database online.”
“Craigslist has made a difference because people can advertise,” said Peter Zollman of Classified Intelligence, an eight-year-old consulting firm for the interactive classified advertising industry.
Zollman also states that the competition “is a huge boon for the consumer. Anything that enables the transaction to be better, cheaper, faster from a consumer perspective is a great thing.”
According to Zollman, “Newspapers will continue to adjust so they can serve owners and agents and deliver quality advertising at a fair price. If they don’t they are going to go out of the real-estate business, and that would have a tremendous negative impact for newspapers.”
“It’s not just revenue, but readership that newspapers stand to lose,” said Zollman.
“One of the reasons people buy the newspaper is to find out what houses are for sale in their area. If the newspaper loses the information franchise it will hurt the newspaper,” he said.
The standout role local newspapers have long played in the community has already been diminished in real-estate and other markets by the Internet and other interactive media, Zollman noted. The problem could worsen with the current trend, he said.
“It could happen if people don’t go to the newspaper to learn what home prices are in their neighborhood, whether people are buying, what the schools are like in the neighborhoods,” Zollman said. Newspapers must play to their strengths, said Peter Conti Jr., author of the Borrell report. “The home seeker places a lot of credibility on what they see in the newspaper and that transfers to its Web site. This is an important place to get information about communities and other areas that fit well on a real-estate Web site. The newspapers can do that and do it well,” the analyst said.
“The genie’s out of the bottle,” Conti said. “Newspapers are not going to be able to go back to 10 years ago. They are beginning to realize classifieds can effectively be served on the Net. They understand they need to come up with a Web component that satisfies realtors’ needs.”
The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of SFAA or the San Francisco Apartment Magazine. Copyright © 2005 by Inman News. All rights reserved.