Over the past 12 months, we’ve participated in a dramatic shift in the online market place in the multi-family industry.
As you can see from the table showing the performance of five top multi-family sites, the share of the top 3 has declined by 1.4 million unique users, or 21%, while the share of the next 2 (ApartmentGuide.com and ApartmentFinder.com) has increased by 694,000 users, or 45%. The overall market for the top 5 sites has declined by 716,000 users, or 9%.
The overall decline of the market is a by-product of reduction of demand for investment-grade rental units, driven by the economic downturn, as evidenced by the declining financial performance of leading REITs and the sober outlook for the year ahead. In fact, two other leading multi-family sites, MyNewPlace.com and ApartmentRatings.com, were down a combined 501,000 unique visits versus prior year in October 2008.
All of the media players serving the multi-family market have experienced operating pressure as property managers have reduced marketing budgets and increased their demands for accountability and concessions from the marketplace.
Over at the blog Being Present, Todd Dubner looks at this shift in a more discrete fashion, with details for each of the participants over the last 12 months. Todd speaks to the benefit to online traffic that the distribution of print copies delivers. A very small percentage of traffic at ApartmentFinder.com is driven by paid search; the majority of traffic comes from direct log-ins to the web site and from organic search. This trend is a result of a focused strategy to build traffic from our print distribution and by developing targeted content and a broad social media footprint in order to tap into multi-word searches from apartment shoppers.
I’m intrigued, however, by the order of magnitude of the shift and the relatively small shifts in share of marketing spend that have accompanied this change. I would venture that fewer than 4 points of marketing spend share in a $750+ million market have shifted over the past year, despite the 200 basis point shift in online audience.
The audience shift has definitely been reflected in significantly higher lead generation at the Apartment Finder business; anecdotally, we know that a similar increase, at least in terms of online lead generation, has been noted at Apartment Guide.
The surplus of marketing options, and the relative changes in performance, create an interesting dynamic in a tightly described market, such as multi-family.
From a purely objective point of view, marketing spend should shift to those media channels that are increasing their value by growing audience share and increasing lead share, while improving the quality of their leads.
In a declining market with seasonal variations, tracking this objective measure is challenging. And, ultimately, determining the quality of a lead in any market means being able to measure the conversion of hard leads — phone calls — into hard activities, such as visits or purchases. Few businesses have the wherewithal to track these details accurately, never mind in the multi-family space, and, as I’ve noted before, trying to attribute leads to single sources in a market with multiple free information resources misses the benefit of saturating a market with branded messages.
From a subjective point of view, there is a lot of logic to slow shifts in market share.
An important part of working with a media or marketing partner is trust, reliability and continuity. When you shift from one partner to another, you take a risk that the benefit you’ve received from the service will be disrupted in the transition. During periods of shifts in market dynamics, businesses are slow to change their buying habits because of the relative risk of change.
Typically, price can be a lure, but price is rarely the primary reason for making a change from one partner to another.
What happens, then, is that market shifts develop over time, as emerging new forces in the market demonstrate reliability, productivity and trust.
The decision to shift is also influenced by a calculation about whether the market change is structural or marginal.
In the Internet marketplace, share can shift fairly rapidly as new entrants dilute the market or as existing entrants change their investment in acquiring customers. Ironically, the relative ease of transfer experienced by consumers is not equally experienced by the marketer: Each partner has different systems for order entry, billing, service and fulfillment.
In some respects, the changes in the multi-family internet market over the past year are structural. At Apartment Finder, we’ve built our larger audience base by changing our operational approach, not by increasing our overall spend on Internet marketing. We’re only half way through our operating plan and expect to see improvements in audience growth, lead production and lead conversion. Apartment Guide has also clearly shifted their operating model. [For insight into the Apartment Guide strategy, see the investor relations section of their corporate web site.]
In this challenging environment, I would venture that property managers are acting logically in evaluating their third-party marketing spend by emphasizing subjective criteria while insisting on accountability and concessions from their favored vendors. They are also acting logically in looking at solutions that can reduce their reliance on third-party marketing while bolstering their own control over lead generation and renewals. (At NCI, we have some interesting visibility into these conversations by virtue of our CommunitySherpa service.
The multi-family marketing landscape has been highly ordered and orderly over the past five years. This past year has witnessed dynamic market shifts that will have a profound impact on the size and distribution of marketing investments by property management companies. It is going to take some time to play out, but the landscape will look very different when it is done.
What it will look like and who will sit in which seats? I don’t have that kind of crystal ball!
An interesting, quick analysis of global GDP trends by Mark Perry, a University of Michigan professor, shows that on the big stage, the United States has held its share of economic production remarkably steady for the past 40 years.
Bottom Line: World GDP (real) doubled between 1969 and 1990, and has increased by another 60% since then, so that world output in 2009 is more than three times greater than in 1969. We might mistakenly assume that the significant economic growth over the last 40 years in China, India and Brazil has somehow come “at the expense of economic growth in the U.S.” (based on the “fixed pie fallacy”) but the data suggest otherwise. Because of advances in technology, innovation, and significant improvements in U.S. productivity, America’s share of total world output has remained remarkably constant at a little more than 25%, despite the significant increases in output around the world, especially in Asia.
I’m struck also by the relative leveling out of global resources between the big three economies — Europe, Asia and the U.S. The trends don’t portend well from Latin America and Africa, which have experienced virtually no change in share, despite various economic development initiatives over the past four decades.
When popular sentiment recovers, and our economic underpinnings feel more stable day-to-day, how will the behavior of the American consumer have changed?
The marketing strategy firm Decitica has released a thoughtful and interesting study that suggests marketers will have to think about consumer segmentation differently, and that posits that the changes in behavior currently manifested will remain present for an extended period of time.
Decitica operates with the assumption that people will do things in the future that they are doing repeatedly today with a high degree of satisfaction and confidence. That perspective suggests that “The Great Recession,” as the researchers term it, has the power to change consumer behavior on a broad scale. The two factors driving this potential for change are the sheer length of the recession, which creates the context for repeated actions, the the sheer breadth of the recession, which creates the context for a forceable change in behavior because of a change in circumstance.
The Decitica survey identies four distinct consumer segments emerging from the recession:
- Steadfast Frugalists, 20% of the population;
- Involuntary Penny-Pinchers, 29% of the population;
- Pragmatic Spenders, 29% of the pipulation; and
- Apathetic Materialists, 22% of the population.
In their report, the researchers characterize the first two segments as being particularly challenging for marketers to influence, because of constraints in either their resources or habits. The second two segments offer more potential for marketers to influence.
In terms of demographic segmentation, the frugalists and the penny-pinchers are 60% female. Pragamatic spenders are largely male, and the aparthetic materialists, who are predominantly members of GenY, have slightly more men than women in their ranks.
What does Decitica’s research tell us about the shift in disposition of these four segments?
First, buying isn’t a pleasure sport anymore. The percentage of men with a household income of more than $75,000 who say they get a lot of pleasure from buying things has declined from 61% to 48% in the last year, and the respondents don’t expect the pleasure of buying to significantly increase in the year to come.
Impulse buying has declined dramatically, by close to 200 basis points on average for all fourth of the consumer segments.
This change in buying behavior has been accompanied by a increase in negative emotions like stress, worry and fright. The majority of respondents report that the levels of stress and worry that they have experienced in the past year continue to exist.
These results, which are more closely denominated to actual consumer activity, align with the broader sentiment surveys published by Gallup and The Conference Board. In addition, the short-term buying intention and consumer sentiments reported by BigResearch reinforce the conclusions presented by Dectica.
The implications are significant for marketers. In an environment where shopping is not an activity that satisfies emotional needs, a marketer needs to effectively communicate to a consumer the utility and relative value of the goods or services. A perceived need has to be clearly satisfied.
This suggests that we will shift back to an advertising and marketing approach that is clearly benefits driven, and that product design and development will focus on core quality and application.
Ironically, this kind of market generates more relative value for companies with strong brand identities that support their basic product promise. And, ironically, the marketing tools available to companies in the Web 2.0 world — such as social media and content marketing tools — can create a marketing information environment that generates the security and confidence that cautious and concerned consumers will need to make buying decisions.
Here’s the Decitica presentation summarizing their survey findings.
This summer, I did several posts about the shift that I believe needs to take place in traditional publishing workflows in order to adapt to the new web environment and stake out a strong position serving online communities. At the core of this shift is the concept of Sharing, distinct from the traditional linear publishing workflow. At the core of Sharing, I postulated, is the activity of Curating content. As active experts in a category, our most valuable activity can be sifting through and dynamically organizing the content created in our market space.
In eMedia Vitals. consultant Mark Danziger marks curating as one of two critical skills for the new era of media.
- Leading conversations will be the first skill, and it starts with the ability to tell a story without monopolizing the conversation – by including the knowledge and viewpoints of others who have something to contribute, and by respectfully dealing with those who are not as knowledgeable and leading them toward knowledge with a chain of facts and logic.
- Curating will be the next skill, because it implies the ability to find stories told by others and bringing them forward to a broader audience. Remember the “It’s not news because it’s not in the Times” attitude? That is changing, because there is a lot of news out there and no news organization – even in the heyday of news organizations – can afford the staff to cover all of it.
Mindy McAdams, an online journalism professor at the University of Florida, has done some work to more precisely define the nature and benefit of the curation model.
In an age where anyone can be a publisher, it is now up to the editor to curate the best of the massive amounts of content now available in a way that is easily digestible. The role of the journalist is much like a museum curator whittling down, say, 19th century Neo-Classicism, into a single, walkable hallway.
“Aggregation is just bringing stuff together, just collecting stuff and laying it out there. We used to do that more in the old days,” says McAdams.
Scientists are in the midst of an ongoing debate about the relative value of openness and collaboration in their profession. The activity of science publishing has been a de facto authority-creation machine, with editorial boards doing peer reviews on science papers that were being considered for publication in journals. The act of publishing in the journals — which were supported by high-priced subscriptions — was critical to the career trajectory, and ultimate economic value, of a scientist.
As communities expand on the web, and collaborative and networking tools are enhanced, many scientists are calling for an open source model of research, where papers would be shared and collaborated on in wiki-type environments.
One proponent of the open approach to science research is Abhishek Tiwari, who writes the science blog FishEye Perspective.
Tiwari is also a gifted designer of information graphics. His graphic above is one of the clearest examples I have seen of demonstrating the process of group curation.
In essence, the filtering occurs as the community of trust narrows. The opportunity for editors is to put themselves in the midst of the content sharing that is going on in their market, and to leverage the power of trusted connections in order to diminish the sheer work of defining which information elements should be included in the curated collection.
The biggest challenge that I have seen, as we’ve introduced the concepts of Sharing and Curating to our content teams, is changing the orientation of information and editorial authority. A traditional editor sees his or her role as creating original and authoritative work.
While there is still a clear position for that work, it needs to be augmented by the identification of other high quality work in the market. In fact, the balance should be between truly original work and curated work. In that model, the consumer of information will look at the brand as a critical hub in their knowledge experience.
Tell someone that you have a blog, or that you think they should have a blog, and you’ll get met more often than not by blank stares.
What’s a blog? Too often, we describe it as a place where people are able to publish whatever they want on the web.
The term “weblog” was coined by Jorn Barger on 17 December 1997. The short form, “blog,” was coined by Peter Merholz, who jokingly broke the word weblog into the phrase we blog in the sidebar of his blog Peterme.com in April or May 1999. Shortly thereafter, Evan Williams at Pyra Labs used “blog” as both a noun and verb (“to blog,” meaning “to edit one’s weblog or to post to one’s weblog”) and devised the term “blogger” in connection with Pyra Labs’ Blogger product, leading to the popularization of the terms.
In talking with local businesses about their web strategy, I’ve stumbled on a much simpler way to explain blogs.
A blog is a web site that you can build quickly and can change as frequently as you want at virtually no cost.
That gets peoples’ attention: You mean I can update my web site whenever I want?
That’s the underpinning of Web 2.0, social media and community: the ability to change frequently and at minimal cost.
Blogs are not just publishing platforms; they are application platforms for activating social connections.
eMarketer reported this week on a Razorfish study that looked at how digital engagement with brands effected consumer behavior.
In total, 40% of the Internet users Razorfish surveyed had “friended” a brand on Facebook or MySpace.
Friending inevitably led to increased activity in the marketing channel, fueled by this brand engagement. More than 60% of the respondents said that they usually or always recommended the brand to other people.
The reasons for following were straight-forward: they liked the brand and responded to it.
The main reason to follow or friend a brand was to get exclusive deals or offers, followed by general fandom—because the user was a current customer, or because of interesting or entertaining content.
The survey shows how important it is for marketers not to underestimate the power of creating social connections with brand advocates. The number does not have to be high: these advocates will have a disproportionate impact on your brand’s success.
Don’t be put off by the title of Jonathan Knee’s book The Curse of the Moguls. If you’re interested in the underlying dynamics of the media business and are curious about how value will be created in the future, this is a very insightful read.
Take the Internet, for instance.
Whenever someone suggests to you that breaking down barriers to entry is good news, hold tight to your wallet. A decrease in barriers inevitably means more competition, and more competition means less-lucrative businesses. The introduction of the Internet has only accelerated this trend of value destruction among incumbent media players, without creating many profitable newcomers.
The Internet strikes at the very heart of the core competitive advantages historically enjoyed by traditional media companies—economies of scale and captive customers. First, it radically reduces the fixed-cost nut required to engage in all manner of activities. And it all but eliminates the actual or psychological cost that impedes a user from trying an alternative product or services.
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