It has been about five years in the making, but the Internet has finally changed the face of residential real estate advertising in New York.
Online advertising has become the hot new thing for many of the biggest players, even if it isn’t expected to eclipse print advertising anytime soon.
Last year, when the real estate industry spent a healthy $11 billion nationwide on advertising, online advertising made strong gains in a remarkable new trend that saw declining interest in traditional advertising vehicles like outdoor, telemarketing and free- distribution home magazines.
According to figures on U.S. media spending for 2002 released in January by Corzen, Inc., a New York-based online provider of market data for the media industry, online ad expenditure jumped more than 46 percent, from $5.8 billion in 2001 to $8.6 billion in 2002.
“One of the largest changes over the past couple of years is the impact of the Internet,” said Lori Levin, director of advertising for the Corcoran Group.
“Websites have made a big difference in advertising activities through bringing things to the buyers and of course in advertising spending,” said Karen van de Vrande, vice president of marketing and communications at Douglas Elliman.
Industry insiders cite convenience and lower cost as reasons for the appeal of online advertising. Online advertising allows people to look for real estate “peacefully, calmly and casually in the comfort of their homes,” said Andrew Heiberger, president and chairman of Citi Habitats.
Heiberger said classified advertising is very expensive, leaving only the larger firms with the ability to advertise in print. “The reality now is the Internet is the greatest bargain in town, much cheaper than print classified advertising,” he said. “Some companies are 100 percent Internet and can’t afford to run print ads. The Internet reduces the barriers to entry to new business and I think that’s good.”
David Berkowitz of the online subscription-based database service eMarketer agreed, citing the convenience of being able to surf freely and find answers to their questions as a reason many buyers are drawn to the Internet.
The user-friendly nature of the Internet has also been a hit with buyers looking to buy or lease real estate, said Meir Kahtan, a senior account executive at Miller Advertising Agency in New York, which also does marketing for William B. May.
“It’s [the Internet] is a great way for customers to learn about the market and narrow down the property choices,” he said. “The dynamic nature of the Internet, the ability to enter search criteria, pictures and floor plans and the ability to e-mail directly to the broker make it an attractive medium.”
However, online ads are more of a big deal in the ad campaigns of some firms than those of others. The spectrum varies widely, from extensive use of online ads by companies like Corcoran, which says it is visited by more than 25,000 people daily, to companies like Stribling & Associates, which does less online advertising, according to Rosita Sarnoff, the firm’s director of marketing and business development.
Corcoran said Internet advertising brought in twice as many buyers last year as print advertising, with average asking price on apartments virtually the same. Citi Habitats now gets fully one-third of its business through its online advertising efforts, according to the company. Douglas Elliman said it spends about as much on online advertising as it does on print advertising.
Yet for all its new popularity, online advertising has not yet knocked print classified advertising off its dominant pedestal, and perhaps may not do so for a while. At best, far from being a replacement, it has so far only been a supplement to still dominant print classified advertising in the way the advertising budget pie is sliced.
Many of the firms typically advertise in both print and online formats, with each firm’s online advertising benefiting from references to them in its print advertising campaigns.
Commonly, advertisements are placed in both the printed classified sections and the online editions of the same newspapers, with The New York Times classifieds and the newspaper’s website being something of a must-do for the big real estate players in Manhattan. “It [the Internet] has been more complementary, just one more way to promote your product. It’s not going to replace print,” Sarnoff said.
Berkowitz adds that local newspapers like Manhattan’s Village Voice will remain popular as a source of information on real estate availability, especially because it’s available free.
But Heiberger sees a dramatic change in future advertising choices. “I think print classified is going to whittle down to zero and Internet advertising will go up to about 95 percent. But that will be many years away.”
He attributes the present dominance of print over online advertising to sheer demographics, adding that most people over 35 are sticking with printed matter out of habit, and that real estate advertising has had to cater to that habit. But he concedes that such a change is not imminent. “We are not even close to being an e-market yet,” he said.
Kahtan would not bet on that scenario, saying simply that the Internet is an additional channel which is still a very small percentage of total spending, perhaps about five percent or less.
For the moment, online advertising is full of momentum, growing fast and perhaps likely to pull alongside print advertising in time. In the current market, the increased pressure on real estate firms to advertise smarter and more creatively will only increase the tide of Internet use. But online advertising hardly seems poised to pull north of print advertising anytime soon.