Monetizing a Real Estate Social Network
by Curlylocks
Parks Associates research confirm what many of us already know intuitively; few people would pay to use social networking sites.
This online survey of Internet users found 72% of social networking users would stop using a site if required to pay a $2 monthly fee.
Duh.
Monetizing their communities is the big problem facing real estate social networks like ActiveRain and especially Zolve — who, unlike ActiveRain, tried to launch with a (flawed) business model in place and may scared off any prospective members in doing so (see Zolve Tries to Kick ActiveRain While its Down).
There’s no doubt that social networks offer some attractive benefits to their members; mentoring, friendship, referrals, etc. But what exactly do these growing communities offer their hosts, besides tech support worries and greater bandwidth and hosting costs?
by Fort Photo
Social networks are very challenging to monetize, largely as the experience is easily duplicated elsewhere. Virtual communities are, by their nature, just like a flock of birds - flighty. Just ask the guys behind Friendster.
Paid services only work when the utility of the network to the users is crystal clear, like LinkedIn (I’m looking for a job or I’m looking for a new employee) and users are willing (desperate) to have access to each other.
Ultimately however, the only really viable business option for a meat and potatoes social network site (even in a niche like real estate) is to leverage the user base as a desirable demographic to advertisers. And to their credit - ActiveRain has begun to doing this, though right now it’s targeting only at a very superficial level (by region, specific pages and to groups).
Being able to take the user base — users who have already self-identified themselves to their peers, and therefore reduced the amount of bogus identities — in aggregate and then slicing and dicing them into precise groups and offering them individually to select advertisers is the great promise behind social networking.
And this is the real genius behind Facebook’s new interest-based targeting platform (see Marketing Yourself with Facebook Flyers, also more from WSJ.com).
A real estate social network that’s first able to sustain its community’s critical mass through a compelling feature set, while being able to cleanly and effectively serve its individual users to prospective advertisers will truly become a valuable enterprise.
The only question is who’s going to get there first.
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Andrew | Oct 19, 2007 | Reply
While I agree that it is tough to monetize some niche social networks like the ones available in real estate, I believe serving ads is the best way. This can be done in real estate. RE ads have some big spenders on a CPM basis. Have you ever seen a Lowermybills banner ad?
A couple of years ago I built a little social networking platform for myself and a few others and it has helped business 10 fold and increased quality of life 20 fold. The platform solves many commonly faced problems that we all deal with as consumers and real estate professionals each day. The system has worked so well that I recently decided to rebuild and scale the platform so others can use it and I think I have figured it out. We shall see.
Everyone wants to get big fast and because of this many simple aspects get overlooked. I feel starting small helped me understand things better.
Todd Carpenter | Oct 19, 2007 | Reply
I think there is a second option to monetizing a social network. That is to charge vendors who transact business through the network. Take a look at how the open API Facebook operates and apply it to fantasy real estate social network. If a vendor wants to develop a widget that allow the network members to order their services, then the social network would get a cut.
Joe from VideoHomes | Oct 19, 2007 | Reply
I must admit I merely scanned this post, it’s been a productive week but very long. Funny thing was it was because of my mere ’scanning’ approach that something jumped off the screen. It was the pic of slicing/dicing…it just didn’t sit well. Not that mapping out users, content, ect… is a bad thing, frankly it should and needs to be done for benefit of both sides. It helps make a better connection.
What struck me wrong was the process. This ‘race’ you mention is very interesting. Does it include the ‘real masses’? In other words does it not just look at the large amount of ‘SocialApp’ users but rather look at the large world itself? Sort of like thinking the earth is big…well it is. It’s real big. At least until you look at the universe in which we live.
The race is about going to the moon, not about finding a better route to the West Indies. At this point, applications must be eying shopping carts not the computers that go in them. I foresee a great many ‘killer apps’ being killed by the offline world.
retrove.com | Oct 22, 2007 | Reply
In my humble opinion, I think there is a larger problem regarding the RE specific social networks. Generally it’s agents communicating with each other not with clients directly. Agents don’t get paid for investing all this time posting with each other and once the novelty wears off (users left friendster for myspace because myspace made it easier to others with common insterest, i.e. bands - higher value to users), agents will go were their time invested online has some kind of return that is valuable to them… i.e. real estate commissions (finding bands).
These networks are a good support group but finding and communicating with clients is how the bills get paid. I think T voices or Z Q&A or any other tool that helps agents connect with consumers directly is a better investment of agent’s time and they will probably win the race for agents continued contributions to UGC and monetizing the traffic. Under the current AR model, I think they could deliver advertising from the related service providers, i.e. title / escrow / appraisers / lenders etc who have traditionally solicited agents for business. How they do this and still retain the agents attention is the real question.
Ken Horst | Oct 23, 2007 | Reply
While I enjoy using Activerain, I was wondering from the begining who is making money and how? When I saw the value that Move Inc. put on AR I about fell out of my chair. Somehow I think $30,000,000 is a little rich for an echo chamber.
I think a better approach for a real estate community start up is to start out with a business model and plan and grow the community around that once you are making money and your brand is starting to gain traction.
Sol @ Forsalebyweb | Oct 23, 2007 | Reply
My only disappointment with social networking sites is that they don’t do much for the consumers. They bring tremendous value and entertainment for the agent but which problems have they addressed for the consumers?
Is the purpose of social networking to help consumers save money, create confusion or provide entertainment?
Patrick Teuscher | Dec 5, 2007 | Reply
I’d have to agree with the lack of value based on commissions for an agent on a site like activerain. But it seems clear that its rare to find a direct, one-to-one connection between an agent and buyer/seller online, though activerain most def. is a helpful resource for the agent to other agent to buyer/seller OR active rain idea to agent to buyer/seller.
It’s a question of saturation. Zillow voices allows direct agent to buyer/seller contact, but within a few weeks it was saturated by agent advertising / invalid postings.
We run a social network for real estate investors and think of it as a great resource for agents with under market value listings, but growing a user base requires motivation, so we’ve struggled to find fill or niche. http://www.flippingpad.com
I’d love to hear ideas and thoughts for us!
Cheers,
Patrick
Colin Andrews Egbert | Dec 6, 2007 | Reply
As an owner and co-founder of a fast growing real estate investing social network, RealEstateInvestor.com, I can say that we have seen the results of an active, vibrant community.
While agents might not work together as much as investors do, there’s huge synergy with having so many people sharing and learning from mutual experiences. With over 22,000 pages, we have enough contest to allow even the most experienced investor the ability to take away some major nuggets. Can we monetize a community that provides this level of value?
Absolutely. By the way, when you’re ready to do a follow up article on this or one focused on investing…. I’m your man.
Colin Andrews Egbert
Brian Ward | Feb 4, 2008 | Reply
StreetAdvisor.com is a real estate social network aimed at consumers that enables them to review the streets they live in and visit. It will become a valuable resource for anyone moving to a new area and realtors are also using it to share their local knowledge and expertise.