Thursday, July 28, 2005

Google and classified advertising

Steve Outing at Poynter writes about how real estate agents are moving from using newspaper classifieds to using search engine advertising:
Google has begun pursuing the real estate category directly, now employing three regional sales teams in the U.S. that are focused on the real estate and other classifieds categories. The search giant has been making presentations to major brokerage firms such as Century 21, RE/MAX, and Coldwell Banker ....

Already suffering by assaults on merchandise, auto, and housing rental categories by Craigslist (and other online competitors), now the real estate category looks about to be hit very hard by migration of local real estate spending to search advertising -- a form of advertising that was almost non-existent just three years ago.
This is all part of a larger trend of small merchants using AdWords and AdSense to find and target interested audiences directly instead of using newspaper classifieds, eBay, or more traditional forms of mass market advertising.

See also my earlier post, "Google, small businesses, and eBay".


Dustin Luther said...

That's interesting stuff... I'm not surprised to hear that newspaper classifieds are taking a hit. I've been using Google to get people to my real estate blog for a while now, and initially, Google Ads were providing at least half of the people that would show up to Rain City Guide...

On a related note... most agents are still providing such generic content on their websites that I don't think they will benefit from additional google ads.

redbarren said...

Great points Greg. t makes you realise it's not just recruiters (or employment classifieds salespeople on commission;) who have to worry - What about that agent (or local newspaper realestate media sales exec :) down the street that sold your house - or did he really sell it ? Did he just take a couple % points, place an ad (which he places a marketing services margin on), runs an auction if a proactive buyer doesn't search craigslist, contact him and make an offer. Yes, its getting closer to disintermediating the real estate agent and while the local newspaper for real estate isnt dead : There is a shift going on when a newspaper property ad, will be a premium 'addition' to a property sale campaign for buyers that that have already optimised their online campaign. This will affect the economics of the property business.

By disintermediating I mean making a 'frictionless' sales process for buyer and seller, thus allowing a cheaper selling price, and thus decrease in total revenue for laggard realtors. Like all classified category plays, stage 1 happened mid-late 90's with a replication of newspapers but online and with pictures. Stage 2 is more local meta-aggregated free listings orientated (eg with the controlling value chain player being the realtor. However, their greed (plus sheer relative weight of emails and calls vs spend vs newspapers) drives them to use online more and more, churning their print spend. Before long (its almost there now) the realtor cant live without the online leads. The online business in stage 3 then increases the price dramatically. Sellers, then realising what the realtor really does (just as they did to the newspaper in the stage before), have the choice of bypassing the agent by using an end-end selling service 'linkedin meets meets for real estate' (they deliver a board to put outside your house, the copy for which you build online like an adsense ad) - as well as manage your online selling campaign like a CPC search adsense campaign. (with a post-click behaviorial tracking engine of interested buyers - like a recruitment tracking app)

Are you thinking of applying your learnings in Findory, personalisation, news and contextual marketing to real estate classifieds Greg ?

Greg Linden said...

Hi, Ben. It's a good point. The traditional, lucrative 6% commission for real estate agents is under pressure from information services available on the Web. It does seem like an industry ripe for disruption.