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Home arrow Real Estate News arrow General News arrow Real estate listings are moving online racing to protect their classifieds market

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Real estate listings are moving online racing to protect their classifieds market
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Friday, 08 September 2006

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Newspapers have an estimated 37 percent of the market now, and the shift would mean a difference of as much as $1.8 billion in annual revenue. Even this year, Borrell expects a fall. He says the big gain at dailies that belong to the newspaper association masks a collapse at weeklies and alternative papers, and believes print overall will lose more than two market-share points this year alone.

For years, brokers have been anxious to move away from advertising in newspapers. Privately, big brokers like Chicago's Baird & Warner and Realogy (H), the publicly traded company that owns the franchisers Coldwell Banker and Century 21, have said they have stuck with papers because the real estate boom was throwing off so much commission revenue. They argued that the main reason to stick with print, despite what they say is a relatively poor return on their advertising dollar from newspapers, was that home sellers expected to see them use every available medium to sell homes. And since listings are scarce in a seller's market, that's what agents and brokers did. "The sellers require [print ads] but they don't pay for them," says Steve Murray, head of industry consulting firm RealTrends. "Brokers are trapped."

Indeed, the Net already drives consumer behavior. The bigger, more notable jump in the NAR's data is in the percentage of buyers who pick a home they first identified online, usually before consulting an agent. That's up to 24 percent, from 15 percent in 2004 and 2 percent in 1997. Only brokers themselves point out more homes to consumers, at 36 percent. The Internet has waxed such longtime staples as yard signs, which come in at 15 percent. Newspaper ads accounted for only 5 percent of sales, according to the NAR.

When unsold homes are backing up on the market, Piper Jaffray analyst Aaron Kessler says brokers' usual response has historically been to advertise heavily in almost any available medium for the first year. That's why Cook, for one, doesn't expect a big dip in newspaper advertising soon. Newspaper execs naturally agree. "I don't see doom and gloom, at least not for the next year or two, because [sellers] can tell brokers, 'It's a slow market and I want you to do everything,' says Timothy Landon, president of Tribune Interactive, a unit of Tribune (TRB), which owns the Los Angeles Times and the Chicago Tribune.

Over time, though, brokers' spending will get more strategic. The signs are clear enough now. At Realogy, President Richard Smith says his company is spending heavily on its own Web sites, and its franchisees collectively are also the largest advertiser on Realtor.com. In addition, Peltier says Iowa Realty, which like Edina is a unit of Berkshire Hathaway (BRK), has dropped most newspaper ads in favor of cheaper preprinted ads that can be inserted into newspapers. And Murray says Kansas City-based Reece & Nichols is running big newspaper ads only one weekend per month. "Newspapers should be—and are—very worried," Classified Intelligence analyst Peter Zollman says.

Even the Sunday open-house listings—one of the newspapers' bread and butter staples—are coming under pressure. Because brokers can display other agencies' listings on their own Web sites under Multiple Listing Service regulations, they are positioning their own sites as places to advertise all the open houses in a market on a given Sunday. That gives an agent a shot at a commission for representing a buyer even if they can't land the listing. Peltier is doing just that in Minneapolis, and Murray says the largest real estate firm in Ohio, Columbus-based Real Living, is doing much the same thing. Most newspapers don't allow the same kind of ubiquity: Each advertiser promotes its own open houses in separate ads at most papers.

The newspaper industry sees this coming—and is responding. Classified Ventures, a joint venture of Belo (BLC), Gannett (GCI), Tribune, McClatchy (MNI), and The Washington Post (WPO), has started or bought a number of real estate Web sites, including home-appraisal site Homegain, apartment search site Apartments, and Homescape, a portal linking the online real estate sections of different newspaper sites around the country. They're also beefing up real estate sections of sites like ChicagoTribune.com.

While specific data about real estate advertising isn't available, classified advertising of all types at newspaper-industry Web sites was up 33 percent in the second quarter from a year ago, Newspaper Association Vice-President Mort Goldstrom says. Tribune's Landon says his firm is gearing up especially to shift its open-house franchise to its newspaper sites, with moves he's not ready to disclose. "We believe we have enough market power and pricing power that the agent will give us all the information and multiple photos, and get the print-and-online combination," he says.

But the question isn't whether real estate ads will move online: It's how fast, and whether newspaper sites can protect their share. Newspapers haven't been very effective in competing with Net rivals so far, with newspapers losing big chunks of business in help-wanted and auto advertising as those categories have moved to the Net. Given that track record, it's easy to be pessimistic.

 

Edwina Baniqued

 
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