The lure of theis that it’s a quick one-stop solution — search, display, web , conversion, sale — that puts a within reach of the majority of shoppers.
This easy lure can obscure the value of creating a multi-channel brand, using multiple media and marketing messages, in order to stay prominently in the mind of consumers who are using different sources to research and buy.
Almost one-half of respondents said they used two channels to research and purchase products and services, and 30% used three or more. While Internet users were more likely to say they made a purchase in-store at least weekly (65%, versus 14% online), they browsed and research online more frequently (61% at least weekly, compared with 37% in-store).
The recovering economy is driving bullish projections for online advertising. Two trends are apparent: the dollars will migrate toward the outlets with the largest and best performing audiences, and the trend towards leveraging social media tools in marketing continues to be a small portion of overall spend.
eMarketer has featured several research snippets and projections over the past couple of weeks that help support these observations.
Forecasts from leading market observers regarding online advertising growth are getting increasingly bullish, a recent roundup shows.
US online advertising proved at least somewhat recession-resistant in 2009, if not recession-proof. eMarketer estimated in December that spending on online ads dipped 4.6% last year to $22.4 billion and forecast a return to growth of 5.5% this year. Other firms have published projections in the past three months predicting that 2010 ad spending will increase more steeply.
The forecast from Citi Investment Research presented in the accompanying chart shows the strong growth in both search and display advertising projected for 2010. The biggest growing category continues to be digital video.
Within the overall online landscape, the top ad portals exert a disproportionate amount of influence. eMarketer’s research shows that the top four portals will account for more than 57% of all internet ad spending in 2010.
Google is by far the dominant player, driving more than 3 times the share and more than 2 times the average revenue per user than its closest competitor, Yahoo!.
The hegemony of the largest sites and the relatively fixed share of market for the top internet advertising outlets mask a developing shift in consumer behavior that portends continued strong growth for content marketing and social media marketing.
Consumers are becoming increasingly more likely to respond to advertising when it is accompanied by good content.
An ARANet Adfusion study shows that web users are significantly more likely to take action on an online ad when it is close to “online articles that include brand information” than when they see the ad as a sponsored search engine link.
“We’re seeing that article-based advertising rates highest with these important and discerning audiences,” said ARAnet president Scott Severson, in a statement. “Compared to other online advertising options, consumers prefer reading an article, evaluating it, and then deciding to click through for more information.”
Sponsored search links also appealed to younger and higher-income targets, with 23% of 25- to 34-year-olds saying they were very likely to act on such ads compared with 11% of respondents overall. Banner ads and e-mail offers appealed most to the 18-to-34 age group, as well as Hispanics and African-Americans.
This increased responsiveness — which should lead to increased sales — is the basic reason for companies to incorporate content into their marketing and advertising programs.
The tactical question is how to best distribute the content so that it will be encountered frequently by consumers, with an effective ad or response tool available at the same time. But it would be a mistake for companies to look at the overall projections for internet marketing and conclude that content marketing, and the viability of social media platforms, is a passing fad with no real value to the bottom line.
The U.S. economy lost more than 1 million households during the recession, even as the population grew more than 3.5 million, driving down home ownership and increasing rental vacancies at a rate that hasn’t been experienced in more than a generation.
Just as economic distress reduced households, economic recovery will increase households, concludes USC professor Gary Painter in a paper sponsored by the Research Institute for Housing America, a mortgage industry-backed think-tank.
As you read through What Happens to Household Formation in a Recession?, it becomes clear that the rebound in household formation will greatly benefit the rental market, while the impact to the residential real estate market will be more muted.
Finally, it will be important to observe a turnaround in home ownership rates before the housing market is likely to stabilize. This is because increases in initial household formation will disproportionately come from renters, which may cause home ownership to fall further. In addition, former homeowners who lost their homes due to foreclosure have had their credit damaged and will likely take time to repair their scores and secure a down payment. Once both of these classes of renters make the transition to home ownership then we would expect the housing market to stabilize.
Painter provides one of the most complete analyses of available data to capture what happens to households during changes in the economy. The graphic below illustrates the dynamic of households. During periods of economic stress and increased unemployment, more people combine households and fewer people leave existing households.
Declines in employment and increases in the unemployment rate during periods of recession reduce household formation rates. Specifically, a national recession suppresses the formation of new renter households, while higher unemployment rates suppress the formation of both new renter and owner households.
The remarkable thing is how much those numbers add up: in all, a net decrease of 1.2 million households during the recession, Painter estimates.
The model…using data covering 6 recessions, predicts that rental household formation likely fell by 2–4 percentage points due to the current recession and that the formation of owner households likely fell by about 1 percentage point. Confirming these predictions, data from the ACS shows that formation of native-born households in a sample of 80 of the largest metropolitan areas has fallen by about 3 percentage points overall and by nearly 4 percentage points in the largest immigrant gateway metropolitan areas. This translates into a reduction of nearly 1.2 million households nationwide during a period where the population in these metropolitans grew by 3.4 million.
These figures help to explain the significant pressure on the residential home market and on the rental market.
As the table below demonstrates, the drop in home ownership that began in 2004 was accompanied by a sharp increase in vacant homes.
At the same time, occupancy of rental units has decreased to generational lows, leaving one to wonder, Where have all these people gone?
Last month, Pew Research Center released data showing that multi-generational households — two or more generations sharing a home — had increased to 16% of the population during the recession. In raw numbers, this means that 7 million more people were living in multi-generational households in 2008 than were in 2000.
That creates a depression of demand. Add in the glut of inventory that was created to satisfy the temporary demand of the housing bubble, and you’ve got the kind of discontinuity that drives down prices and disrupts the orderly progression of markets.
Interestingly, Painter shows that the elimination of households was disproportionately concentrated among native-born Americans, and particularly among households that had moved in during the recession.
The good news in Painter’s analysis is that the signs of a rebound in household formation are apparent in his model.
The model suggests household formation should increase by about 2 percentage points from current levels by 2012, as people find jobs and recession-induced anxieties abate. That would imply that by 2012, normal rates of household formation should reappear (roughly 1–1.5 million new households per year), but it will take even longer before the U.S. completely recovers from the deficit in household formation caused by the severe recession.
As noted above, the first market to benefit from the gain will be rentals. The residential home market should recover more slowly, Painter argues.
To the degree that the economy rebounds more strongly, the recovery will be more rapid. The mystery of increased demand isn’t unsolvable: the dynamics that drive household formation need to reassert themselves, and the core drivers are jobs and incomes.
You can find the full report available for download here.
I was reminded this week of a primary premise in evolutionary psychology: we’re genetically programmed to emphasize information about danger and minimize information about pleasure.
This is a gross simplification of interesting science, but is a useful overlay to the confluence of economic statistics and contradictory commentary in recent weeks.
In today’s New York Times, the pragmatic Floyd Norris makes the argument that data is pointing to a strong economic recovery, even while conventional wisdom suggests that we’re mired in a “new normal” of stagnant performance.
Norris has staked out a niche is letting numbers do his talking. In the column, he points to several statistical developments that suggest many experts are downplaying the positive. One example he cites is the March employment report.
Employment is a lagging indicator. Employers can be slow to cut back when business turns down, and slow to rehire when it picks up. It stands to reason that when employers cut back sharply — as happened in this cycle — they will have to rehire faster than if they had been slow to fire, as was true in the two previous downturns.
I looked back at the recoveries after seven recessions from 1950 through 1982 and found that, on average, such a strong three-month performance of the household survey, defined as a gain of at least 0.8 percent in the total number of existing jobs, came seven months after the recession had ended, with a range of two to 13 months.
If the 2007-9 recession ended in August, as the index of coincident indicators would seem to indicate, the lag this time will have been seven months.
Mark Perry of Carpe Diem presented the trending of initial jobless claims since 1974 in a recent post. The chart is one point in an ongoing argument that Perry has been building that we’re experiencing a real recovery in the economy.
Perry consolidates his 10 primary points in a post on The Enterprise Blog. He characterizes this as a period of “solid and sustained economic expansion.”
The positive proof points are wide-ranging: manufacturing activity up, restaurant activity rebounding, manufacturing accelerating, job growth increasing. (Perry points out that very few people have reported on the fact that private-sector employment increased by 1.1 million jobs in the first three months of 2010.)
The consensus of most economists is that the Great Recession ended sometime around June 2009. In that case, we are now nine months into an economic recovery, and the economic data and reports summarized here all point to a recovery that is real and sustainable. While this rebound may not be quite as strong as other post-recession expansions of the past by some measures, there is at least now unmistakable evidence that the recession ended last year, the U.S. and world economies and financial markets have recovered and are gaining momentum almost daily, and there are no signs on the economic horizon of a double-dip recession.
The recovering economy was a theme in a conversation I had with one of my key executives last week.
“Don’t expect your customers to recognize that the market is turning,” I said. “They’ve been burned by the dramatic drop in the market, and won’t believe any improvement is going to last until it’s well underway.”
Acknowledging this lag in human perception is an important part of managing your own focus and energy. In this case, our observation translates into a specific sales approach: Be positive, emphasize the benefit of your service, and keep encouraging customers to regain the hope that accompanies investments in marketing, because there is a shift in the way their prospects and customers are seeing the world.
From the overall perspective of the economy, it’s difficult for people to imagine a strong recovery that doesn’t incorporate some of the activity that drove the housing bubble — high levels of construction and resale home activity.
The economic recovery is likely going to incorporate a “new normal in real estate” and a continuing correction in personal and corporate balance sheets. What is clear is that the overall economy has sufficient scale to mitigate the drag of these trends.
While the crashing of the housing bubble was highly disruptive, in the end it has only resulted in the elimination of about 2.3 million jobs. As households re-form and housing inventories gets worked off, new construction will return to the new homes and multi-family markets. The characteristics of this construction will be different: few high-volume (and high margin) tract developments and high-end rental and condominium buildings, and more custom and mid-range projects.
This is how it feels to recover from a bad blow. You need a moment to believe that you’re not about to get hit again, and when you go about your business, you keep looking over your shoulder, thinking that something bad is going to happen again.
Like my mom said, dust yourself off and get moving.
Last week my colleague Todd Dubner was at The Kelsey Group Marketplaces Conference talking about our DigitalSherpa service.
You can see his summary of his comments and some of the reactions on his blog Being Present. It’s an interesting read.
After about 9 months of selling, we have about 1000 clients to our DigitalSherpa services, so we’ve been learning a lot about what works, what doesn’t and how to communicate effectively with clients. We’ve taken our lumps and have had some remarkable success stories, all part of launching a brand new business.
Todd does a good job of describing our core premise with the service in this quote:
Here was the premise of the presentation was that local media has always been about high touch service at an affordable price. We can look at NCI’s history with The Real Estate Book to see that in action. In the early days we were not just a media provider, but truly a full-service provider. Our interaction with our customer often began with taking photos of a house, included production of a 4 color advertisement and concluded with printing and targeted distribution of a magazine – an awesome value, priced today at ~$400 a page.
Now we are offering a local social media marketing tool that is designed in the same light. Our customers recognize that there is likely to be value in establishing an active presence in Facebook and Twitter and understand that having a current, active, blog-like web presence is better than an old (dusty) static web page.
You can see Todd’s entire presentation below:
Edward Boches of Creativity Unbound asked some influential folks who went to SxSW what was their one big takeaway from the conference.
Kristina Halverson, CEO of Brain Traffic spoke to the readiness on the client side to make process changes that will enable content marketing strategies.
“My takeaway? Clients are ready to coordinate their currently siloed interactive marketing initiatives–social media, SEO, web and email communications, and so on—by creating a content strategy that defines and drives their content and its lifecycle processes. The larger implication is that organizations will need to reinvent themselves as publishers, creating new infrastructures to support the ongoing creation and care of relevant, quality content.”
Embedded in this well-crafted quote is a broad range of new skills and processes that are going to take a lot of work to establish within all kinds of organizations.
I was struck by this late last week as I met with one of our social media teams. This group is focused on implementing the social media applications platform that we’ve developed with our DigitalSherpa line of products.
My focus was to dig in on results: The actual results that were being delivered, the results that clients were able to define they wanted and the degree to which our dialogue with the clients was aligned.
As we spoke, it was clear that most of our clients had very little understanding of the broad impact that creating consistent, relevant digital content would have on their digital footprint and web activity. As a result, the client service focus was on activities that, in the grand scheme of things, were tangential to the ultimate benefits they would receive from the service.
This is a manageable disconnect, requiring us to focus more closely on education, training and innovative measurements. But it is a disconnect nonetheless.
Across all of our markets, I am seeing a increased focus on driving web-based business activity. But within that emphasis, I see very little understanding of how to create web footprints that are designed to convert activity in leads; of how to use social media tools to increase your content presence on the web; and to what degree social networking can be used to enhance your connection with those prospect, clients and business peers who are interested in being part of your social community.
The transition that Halverson sees coming is more than the addition of functional roles. To fully leverage a digital content strategy requires a seemless alignment of content focus across all parts of the marketing spectrum, and highly coordinated execution — including information sharing — between all of the different constituents who are managing the content, including the traditional advertising functions.
The marketers who do that the best will have creative and literate marketing leaders who are able to tell a story, let it acquire dimension and let it loose from the defined constraints of a brand. This is the stuff of folklore meshed into marketing, and the thought of that evolution is unsettling, no matter how oriented you are to the potential of social media tools
Real estate agents and brokers are faced with more choices — and more contradictory claims — than ever in how they distribute listings, connect with consumers and promote their brand. Real estate marketing used to be a pretty straightforward activity; now, it can consume big chunks of a realtor’s time, energy and money if not managed in a focused and sensible way.
I was asked recently to give a speech on how print media fit into a multi-channel real estate marketing program. Preparing my remarks, I realized that you couldn’t justify the inclusion of one marketing outlet over another in any program until you’d created a solid set of principles for the overall marketing program. And, with so much complexity and choice, those principles needed to be clear and simple.
In order to compete effectively and to leverage new tools efficiently, a realtor needs to apply three basic rules to their marketing program:
- Distribute your listings everywhere on the internet, so that your properties are included in as many consumer searches as possible;
- Invest in marketing outlets that let you stand out from the crowd and create tangible leads for your personal business;
- Commit energy and focus on networking, particularly on digital platforms.
Applying these three rules make its much easier for realtors to decide how to take advantage of the alternatives that are available to them and helps to drown out some of the noise generated by passionate advocates for specific solutions.
Each of the rules benefits from a little context.
Rule 1: Place your listings everywhere
The first rule is designed to take advantage of the way that consumers are using the Internet — as a limitless database of home-specific information.
While the “Internet” is a huge real estate space, it’s also a fragmented space. In February, for instance, there were more than 226 million searches on Google for “real estate.” More than 55 million consumers visited a real estate web site in February, according to Comscore/Media Metrix.
That activity, which is fairly consistent with prior months, came in a month when only 308,000 homes were sold.
So, while consumers are doing an incredible amount of research online every month about real estate, only a fraction of them are actual Buyers and Sellers.
From a marketing perspective, it’s difficult to find an affordable way to have a maximum impact by paying to promote enhanced internet listings. The first challenge is how many different sites consumers go to. You can’t find any one site that delivers the majority of the 55 million people who visited a real estate site. Realtor.com and Zillow are the two largest, with more than 6 million unique visitors, according to Comscore/Media Metrix. The third most visited site is MSN, at 5 million, and more than 11 sites have more than 1 million visitors each month.
In fact, the top 5 real estate sites have relatively little overlap in visitors.
This fragmentation means that a realtor has to focus on inclusion of their listings in every site, not over-relying on one or two sites.
Consumers expect to find listings in the leading web services. For a realtor who wants to be successful in working with consumers, internet presence is a baseline requirement.
This emphasis, however, can drive misdirected marketing investments, which leads to the second rule of realtor marketing.
In our research of home buyers and sellers at NCI, we’ve found that a visible commitment to advertising and marketing is a key decision driver for why consumers work with specific realtors.
75% of homes sellers said that an realtor’s ongoing advertising program was very or extremely important in their selection of a listing agent. In fact, 76% said marketing skills were one of the most important selection attributes. Home buyers reported high recall of agent advertising and that visibility was a primary driver of their selecting a specific agent to work with.
Rule 2: Stand out from the crowd
When a realtor considers paid advertising, their focus needs to be on how visible their advertising investment makes them and how many measurable instances of business activity they will get from that investment.
Think about it: if 54 million people are searching real estate web site, but only 308,000 homes are sold in a month, that means that a lot of people are going to be looking at listings — and seeing a realtor’s personal information — without taking action. Being a frequent and visible presence in their search is going to benefit a realtor.
The challenge is how to find cost-effective and time-saving ways to become frequent and visible.
It doesn’t always mean trying to enhance your personal profile wherever real estate information appears. It means investing in a marketing platform that makes you stand out.
This was the point in my presentation that I highlighted the benefits of The Real Estate Book’s integrated media approach, combing print presence in a four-color catalog of homes with distribution of listing data to more than 40 web sites, including therealestatebook.com, with more than 1 million unique visitors a month.
The Real Estate Book makes a real estate agent stand out. We can demonstrate that the book is getting looked at by consumers. We can demonstrate that we drive phone calls, e-mails and web traffic to realtors. And, we can demonstrate that we do this at a reasonably cost in a format that takes very little time to execute.
The Real Estate Book isn’t the only way to stand out. Many realtors still use traditional signage at grocery stores, on benches or on billboards. The key is that these realtors understand that just having their listings appear in web searches doesn’t make them stand out enough to increase their share of their real estate market. (Of course, I do believe that The Real Estate Book is the BEST way to stand out in the local market!)
The explosion of home information on the Internet has not just changed the way that realtors need to think about marketing, it has also changed the way that they need to think about networking with consumers.
I’ve heard many agents bemoan the challenges of working with home sellers and buyers who have too much information from online sites and who think that they are experts.
The important thing for all of us to understand is that the consumer isn’t just get smarter, they are becoming more enthusiastic.
The National Association of Realtors has an interesting fact that shows that home buyers who rely exclusively on the internet for home information take twice as long to buy a home and visit three times as many homes as other home buyers.
This is the description of an enthusiast — they love to get deep into the topic, love to gather information and love to experience things.
Rule 3: Network — in person & digitally
This expanding passion for home information creates a priceless opportunity for real estate agents to engage and excite potential buyers and sellers.
With the explosion of social media tools, this kind of enthusiast networking can shift onto digital platforms, like Facebook. This social networking activity is the core of the third rule of effective real estate marketing: increase your networking activity by leveraging digital tools.
Too many real estate agents believe that they can show their expertise by mailing out data about market trends and other real-estate topics. In fact, the best way to keep the interest of prospective buyers and sellers it to communicate your passion for real estate by sharing updates on social networks like Facebook that show you being active and engaged in the business of homes. These networks can share a new listing that you saw, or an interesting sale that occurred, or the reason why a new part of town has become so attractive. They are short, smart and informative updates. They help people who have connected with you through all your other marketing activity to see just how active a realtor you are.
One of the key points of my speech was that the proper application of these three rules should balance effort, cost and return. The graphic above outlines the relative relationship of these three elements.
The broad distribution of your home listings should be very low cost and should go very wide. Marketing opportunities where you stand out and create business activity will require more cash investment and should have more measurable results. And your networking activities should be at the core of your marketing program; these will be of varying cost, depending on the approach you decide to take.
The component of the program that is more variable is the opportunities that make you stand out. A realtor can build a practice out of broad distribution of listings and very strong networking. Our experience shows us that there is a limit to how large that practice can be, because consumers maintain their bias towards working with realtors who are visible marketers, and any kind of high visibility requires some investment of cost.
Inevitably, when I make this last point, someone points to their blog and social media activity and says, “I am able to get a lot of visibility without spending money.”
Time is Money. If you have the time and the talent to build visibility using social media tools and creating your own content, then you have been able to drive a sweat investment into a real asset. The reality is that most realtors don’t have the skills and disposition to do that kind of work. It’s important to the future of those realtors business that they can apply a set of principles to their marketing that makes them relevant, current and successful.
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