Weekend Discussion Thread: Online Advertising Slump?
They Said:
Internet Recession Watch: Falling Ads, Taxes, Housing
Yesterday, Nielsen reported that spending by the top 10 web customers dropped in September vs. August. Homebuilder Beazer said that a whopping 68% of customer sales contracts were cancelled in Q3. Countrywide said Q3 lending volume dropped 44% year over year. Recent sales tax receipts in 25 states have dropped to “recession levels.” Several major retailers missed sales estimates for September (Target, JC Penney, Nordstrom).
He Said:
Questions for Greg Schwartz, VP of Sales at Zillow
Volatility is good for our traffic because people are quite interested in the value of their homes and they’re researching it. They’re spending a lot of time with us, even more so than in the past. The second thing is we have a very, very affluent audience…. Our [users] aren’t typically subprimers…All those [advertisers] targeting prime lending are still [advertising].
Your thoughts?
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9 Comment(s)
2 Trackback(s)
- From Inman News Blog: Will ad-dependent sites soon starve? | Oct 12, 2007
- From Estately Blog » Schooling the competition | Oct 17, 2007
Steve Kantor | Oct 12, 2007 | Reply
As more buyer leads become FUTURE business instead of NOW business, the ROI for internet lead generation continues to drop. The majority of agents who do significant internet leadgen often do not balance investment in lead qualification to fully work the leads. Thus, the roughly 1-5% conversion rate on internet buyer leads. With the mortgage credit crunch eliminating more potential buyers from getting pre-approved, and more buyers ‘waiting,’ the numbers get more challenging. A Billion Dollar Agent will grasp this as an opportunity and put in place the systems needed to interact with FUTURE buyers until they buy in 2008/2009 once market is more balanced.
Glenn Weilbacher | Oct 12, 2007 | Reply
While the housing slump definately exists and conditions in some local markets are really bad, the activity on the Net has not dropped significantly. Monitoring the activity on over 100 Realtor websites across the country we see clients who are still generating more than 100 leads each month. There are definately lookers but few buyers. Many buyers are in a holdinmg pattern as they wait for their existing homes to sell. Other believe home prices will fall further and are waiting. Still others think that interest rates will come down. Unfortunately, the media continues to quote the worse stats and does not acknowledge the local markets that have remained stable with minimal price depreciation.
Realtors must communicate the statistics on their local market on their websites and in communications with buyers.
#1 Kansas City Real Estate Guy | Oct 13, 2007 | Reply
I guess I must be doing something right. I have 10-20 people register on my website a day. One day last week, I have 39 people register. My traffic has gone way up. I average 250 visitors a day on my website. September of ‘06 I averaged 110 visitors. I think traffic has decreased for most people realtors because there are more websites for consumers to view. It is more important then ever to have a good SEO program.
Morgan | Oct 13, 2007 | Reply
While Zillow may be getting eyeballs as people load up their zip code and cross their fingers, it is going to be difficult to monetize that traffic for their current ad partners. It will take a shrewd advertiser acquisition plan to find the right type of partners that will be able to see return from the site as their traffic goes from elated homeowners watching their house value soar to concerned ones watching equity slip away under the specter of an adjustable rate mortgage.
It will be a different type of traffic to ad partners and Zillow has to find the right partners who will see a return and pay for inventory.
Further, Zillow needs to find more institutional ad partners with deeper marketing budgets. Brokers don’t carry the deepest balance sheets, and individual agents and other easy ad buyers don’t have the deep pockets to continue spending marketing dollars on a diminishing return outlet.
Public companies, and those larger companies who can sustain spending during downturns are better targets in this market than those that have been previously courted (brokers, agents, individuals).
Michael Price | Oct 14, 2007 | Reply
I doubt any slump in online advertising will be nearly as bad as the slump traditional advertising will continue to see. As marketers figure out how to succeed beyond the banner and keyword, more and more of the budget will shift online. Here’s a good example culled from an article in the NYT http://www.nytimes.com/2007/10/14/business/media/14ad.html?_r=1&ex=1350014400&en=d38a4ebd52ebf219&ei=5089&partner=rssyahoo&emc=rss&oref=slogin
Last year, Nike spent just 33 percent of its $678 million United States advertising budget on ads with television networks and other traditional media companies. That’s down from 55 percent 10 years ago, according to the trade publication Advertising Age.
“We’re not in the business of keeping the media companies alive,” Mr. Edwards says he tells many media executives. “We’re in the business of connecting with consumers.”
Elizabeth Weintraub | Oct 15, 2007 | Reply
My page views have been exceeding same-month numbers over last year’s, so my readership is expanding. People always want to get an inside scoop on the world of real estate and don’t stop reading about it simply because real estate sale numbers have declined.
Real estate is the religion of California and (many other areas of the country).
retrove.com | Oct 15, 2007 | Reply
If RE companies / agents don’t advertise online… where else are they going to advertise? As noted above the smart agents will transfer their traditional “farming” programs online.
Joel Burslem | Oct 15, 2007 | Reply
@Michael Price - Great article from the Times. But if you read on in the article it also says that while big brand advertisers are boosting their investments online they are using the money to create a more direct connection with consumers on their own websites, not buying online ads like what Zillow offers.
Joel Burslem | Oct 15, 2007 | Reply
@Morgan - You’re absolutely right, Zillow needs to reach out to the big institutions and public companies to secure more ad dollars, as their current base is pretty weak. I think that’s the goal when they hired Schwartz. The question is does Zillow have a compelling enough argument to make to the media planners?