Complying with the dictum, “Follow the money” (or at least the consumers), real estate advertising now comprises half of the local advertising on search engines, according to a report released this month.

Paid search ads for individual local real estate agents account for 49.6 percent of listings on keyword searches for local business segments across 10 different cities, up from 17.5 percent of local search ads 18 months ago, according to Borrell Associates’ “2006 Local Search Advertising” report.

Local advertisers now occupy a third of sponsored links in search-engine results, according to the report, and many on city-related keywords.

Given that the National Association of Realtors in 2005 reported that 77 percent of all consumers begin their real estate searches online, more individual agents have followed by advertising online, and particularly in locally placed search advertising, since location is an integral part of real estate.

The Borrell report predicts that paid search advertising by local advertisers will more than double this year to $987 million, and nearly double again in 2007.

Though local paid search accounted for a relatively small $420 million last year, the report projects that local paid search will go from representing barely 10 percent of all local online advertising today to 47 percent in 2010, reaching over $4 billion. And, according to the report, real estate agents dominate local paid search.

Local agents’ search ads jumped from 17.5 percent of all local search ads 18 months ago, to 23.9 percent a year later, the report said.

Search ads for the keyword “mortgage” comprised 25.1 percent of listings on keyword searches, the report said. According to the report, the highest bids in terms of amount paid per click were for DUI attorneys, mortgages and real estate.

The report noted: “The search engines’ ability to snare wallet-ready consumers and catapult them to an advertiser’s Web-based checkout stand is becoming legendary.” According to the report, after Omaha Steaks began advertising on search engines in 2004, revenues grew 240 percent within one year.

Last May, Borrell predicted that online real estate advertising spend will eclipse newspaper classifieds by 2009, reaching more than $3 billion. Money spent on online real estate advertising will account for more than 34 percent of all real estate ad spend in the next four years, the company said. Borrell also expects online real estate advertising dollars to exceed $1.8 billion in 2005, a 55 percent increase from last year.

According to Borrell, real estate and mortgage advertisers are the leading spenders, not just on search engines, but on all local Internet advertising.

According to the March 2005 report, local agents occupy almost half of all search advertisements, and not just in big cities, either. “In Des Moines, half of the advertisements on the Google and Yahoo results pages for ‘Des Moines real estate’ are being placed by local agents bidding as much as $3 per click,” the report said.

Matt Shaw, an agent with Coldwell Banker Mid-America Group in Des Moines, told researchers he estimates as much as half of his total advertising budget is spent on search-engine advertising, and an additional 20 percent on other forms of online marketing. “It’s paid off,” Shaw said, according to the study.

The report tracked more than 2,000 online search ads on Yahoo! and Google and also compiled the predictions of 400 so-called ad experts. One of the reports’ more interesting predictions: “More than three-fourths of the Borrell panel agrees that within the next five years, yellow pages books will evolve into directories of local Web site addresses. Eighty-five percent of respondents think this will happen within five years.”


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