The Good and Bad News for Newspaper Real Estate Advertising

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By: Steve Outing There are literally thousands of Web sites offering real estate information, advertising and listings. But it took the long-awaited entry of software giant Microsoft with its ambitious HomeAdvisor site (introduced on Monday), and the recent launch of Yahoo! Real Estate, to refocus serious attention on how the Internet is changing the real estate publishing business and how national companies are encroaching on local real estate markets where newspapers have long held dominance.

That's a topic of serious interest to newspaper publishers, who common wisdom would suggest will suffer because of the entrance of powerful online competitors into the real estate advertising game and the introduction of Multiple Listing Services onto the Web. But, just perhaps, the situation for newspapers is not especially dire when it comes to real estate, as long as publishers react appropriately to changes in the marketplace and an increasingly competitive environment.

There is good news

First, the good news. Real estate is quite unlike other classifieds categories like autos, merchandise or employment, where newspaper ad volume can be hurt by cyber competitors. An ad for a car or a job can result in an actual transaction -- the car is sold, the applicant is hired directly because the ad put buyer/job-seeker and seller/employer together. That's not so with the typical house for sale, however, say experts in the real estate field. It's common wisdom in the real estate business that when real estate agents advertise in their local newspapers, they're not expecting the ad for a particular house to sell that house; the ads are meant to get the listing agent's phone ringing. Home ads placed in newspapers by agents make the sellers happy -- they see that their agent is "working hard" for them -- but the real purpose is to drive potential customers to the agent.

Real estate ads in print are an "appetizer," says Ellen James Martin, a syndicated real estate columnist and radio commentator who's been covering the industry with her "Smart Moves" column since 1991, and is president of the National Association of Real Estate Editors. They serve to drive business to a real estate agent's office, and then the process of finding the potential buyers the right house begins. The most effective means for selling a house directly, she says, is the "for sale" sign in the front yard, not a newspaper or online ad.

For that reason, agents will continue to advertise in newspapers because they really have no choice. The addition of new media sites -- such as HomeAdvisor, Realtor.com, Cyberhomes and a bevy of others -- complement rather than eliminate existing options for real estate agents to market their properties, Martin suggests. And since sites like Yahoo! Classifieds and HomeAdvisor let agents list their properties without charge, agents will certainly be part of those ventures, but that's unlikely to diminish their need for newspaper advertising.

Tony Marsella, vice president for classifieds at the Newspaper Association of America (NAA), is adamant in his belief that the Internet will not dramatically change how people go about buying a house. It's "ludicrous," he suggests, to think that more than a tiny percentage of people will walk into a real estate agent's office with a list of homes found on the Internet and ask to be shown them. The agent is here to stay as part of the process, because people want "hand holding" during a process as complex as purchasing a house, he says. (Marsella is a former real estate agent himself.)

Martin says that a further problem is the inexact nature of search queries on the online real estate sites' databases. Typing in "4 bedrooms, 3 bathrooms, garage, 3,000 square feet, price under $300,000" may get you a list of matching homes, but an agent who knows the market and has visited the houses can save you time by identifying some of those houses as inappropriate to what you're seeking. She says the sites' filtering mechanisms are improving, but it's difficult to get it right and not waste potential buyers' time by returning inappropriate properties that may match a "dumb" filter request.

As long as the real estate agent is not disintermediated by the Internet -- a prospect that most real estate industry observers do not expect to happen anytime soon -- newspapers will continue to be a favored advertising medium for agents. Local newspapers also are a primary medium for "for sale by owner" (FSBO) listings, whereas sites like Realtor.com and HomeAdvisor do not carry FSBOs -- for the obvious reason that such sites are beholden to serving the interests of Realtors. (Realtor.com is the Web site of the National Association of Realtors, and Microsoft has said that HomeAdvisor is a "Realtor-friendly" site, since the company has as a goal getting all of the nation's real estate listings online, but that will take the cooperation of Realtors. Realtor.com has about 1.2 million listings, while HomeAdvisor has only 400,000 currently.)

'We have met the enemy, and he is us'

While the real estate component of newspaper classifieds may not be as much at risk as autos or employment, there is a potential threat; in some cases, it's self inflicted.

Brad Inman sees the problem first-hand. His Inman News Service is a leading provider of syndicated real estate journalism, and for 15 years he has been working primarily with newspapers, supplying content for their real estate sections. But three years ago, Inman began serving online clients, and today nearly two-thirds of his 300 clients are online companies. He's involved with Microsoft's HomeAdvisor site, and provides news for Yahoo! Real Estate, Intuit and Pointcast -- at the same time continuing to sell his content to newspapers who see some of those online ventures as threats.

Inman is going where the market is, and increasingly for his business that's the world of the Internet. He worries that too many newspapers are doing a poor job with their real estate sections and swapping out independent reporting of real estate issues with "advertorial" copy. Allowing an advertising department to sell real estate coverage to advertisers is giving up a paper's consumer franchise, and too many papers are doing it, he says.

(My own local paper, the Boulder Daily Camera, sports an advertorial real estate section on the weekend. And while some larger papers do produce editorially independent and high quality real estate sections, there are examples of major papers like the Houston Chronicle and Sacramento Bee that produce advertorial sections and scatter real estate editorial coverage elsewhere in the paper.)

Obviously, Inman has a vested interest in newspapers providing original real estate reporting, yet he makes a compelling point that newspapers continue to own the local real estate information market, with the majority of home buyers reporting that newspapers continue to be their principal source of information about buying a home. To keep that share, he believes publishers must do a better job at providing useful news and information about the local market. Now, of all times -- with the increasing clamor on the Internet about real estate -- is not the time to hand over content of real estate sections to advertisers.

Columnist Martin says that's an accurate assessment. While there are newspapers that provide excellent real estate sections with unbiased, in-depth reporting of local real estate issues, there are many papers that run weekend sections that are little more than "puffery." She says that during the last U.S. recession, some newspapers took their real estate sections to advertorial content, and that a booming real estate market has seen some papers go back to independent coverage.

Martin cites examples of outstanding real estate sections at the Boston Globe, Chicago Tribune, Los Angeles Times, Philadelphia Daily News and Washington Post. Each provides consumer-oriented reporting and is not afraid to write stories that might offend advertisers -- such as writing on reported quality problems by new-home builders. Publishers must sanction that kind of reporting, or readers will not trust the newspaper as an unbiased source of news and information on real estate matters. At that point, consumer "eyeballs" will shift to online sources if they can offer a better, independent, non-advertorial view.

Martin says that consumer news is more in demand than other newspaper staples like foreign news coverage, so it makes no sense to demean it by offering advertorial real estate sections and placing real coverage of the local real estate scene elsewhere in the newspaper where home-buying consumers are less likely to find it.

Inman points out that a consumer in a market like Boulder, Colorado, where the local paper's real estate section is advertorial content, is likely to gravitate to an online service like Yahoo! Real Estate in search of unbiased real estate information necessary to make a home-buying decision. Newspapers' position as the primary consumer real estate information source is theirs to lose -- and some publishers sponsoring advertorial weekend real estate sections are indeed in danger of losing it to online upstarts.

The threat: real or imagined?

Inman says he's still loyal to the newspaper industry and wants to see it succeed. The biggest threat to the industry is the fact that Multiple Listing Services (MLS) are now open to the public and available on the Web, he says. Further, he believes services like Rent.net, which are being supported with exposure on Yahoo!, pose danger to newspaper real estate advertising. Counter it, he suggests, with great local, unbiased coverage of your real estate marketplace; make your newspaper the place consumers will continue to consult for advice and information.

But at the NAA, real estate and classifieds executives profess to be optimistic about newspapers meeting the challenges. Says Marsella of Microsoft's online real estate venture, "I don't think we need to be responding directly to a particular company's efforts." HomeAdvisor is rather yet another reason that the newspaper industry must plow onward to develop online classifieds standards -- which the NAA is pushing forward -- and more newspaper industry initiatives to get newspaper real estate classifieds online in a more sophisticated digital form. Newspaper industry initiatives like that of Classified Ventures and Careerpath.com have come a long way in meeting online classifieds challenges to newspapers' golden egg, he says.

The industry does still have a way to go. According to NAA director of real estate advertising and online classifieds Kevin McCourt, of the 1,015 NAA member daily newspapers in the U.S., 411 have online real estate services. About 60% of all daily newspaper sites host a Web site. These figures are up significantly in the last year, and, says McCourt, "The increase in the raw number, and the quality of our members' offerings, demonstrates the increased recognition of the opportunities to extend print with online advertising, and results in good part of (NAA's) call to action of 'Classifieds In Crisis' and our efforts in the past year to 'Enable and Accelerate' newspaper online classifieds activity."

Contacts: Brad Inman, brad@inman.com
Tony Marsella, marst@naa.org
Ellen James Martin, ellenwrite@aol.com
Kevin McCourt, mccourt@naa.org

From the other half of the world ...

Brian Forte, writing from Australia, says that in my recent column about tips for keeping Web traffic high even during the hot summer months, I neglected his part of the world. Just as my column has a worldwide audience, so do some news Web sites, he suggests.

"One possibility you neglected to consider was for some sites to think more internationally. From where I sit (literally: I live in Adelaide, South Australia) it's the middle of a fairly cold winter and I'd much rather be in my office chair, with my reverse-cycle air conditioner keeping the 12C day at bay, than out on a freezing, wind-blown beach!

"I'm well aware that many sites have a clear geographical bias but this isn't so for all sites or even all newspapers. Most of my work comes from the Northern Hemisphere these days, so I'm well aware it's summer for many of my clients (and write accordingly). Paying attention to the millions of us for whom July means cold weather and first-run films on Sunday night is surely an equally worthwhile strategy for at least some Northern Hemisphere-based folk."

Contact: Brian Forte, bforte@adelaide.on.net

Steve

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This column is written by Steve Outing exclusively for Editor & Publisher Interactive three days a week. News, tips, and other communications may be sent to Mr. Outing at:steve@planetarynews.com

The views expressed in the above column do not necessarily represent the views of the Editor & Publisher company

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