Editor’s note: Real estate search has entered a new phase with the emergence of applications that narrow the hunt for consumers, pool from multiple sources, and enable consumers to search without having to register at a broker site to gain access. In this four-part series, we examine the latest tools and how they’re impacting where brokers market properties and how consumers find them. (See Part 1 and Part 2.)
Though real estate agents currently account for almost half of the local advertising on search engines, a local search expert predicts agents’ ads will eventually move to sites with detailed real estate information such as HomeGain or Trulia.
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.
But Greg Sterling, an analyst with the Kelsey Group, said he believes this is “an early phase,” and real estate agents will be better advised to buy ads on sites such as Trulia, HomeGain, HomePages, “the places where you’re actually getting the MLS listings or virtual tours and much closer to the information.”
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.
In a development that suggests local search is coming of age, Google is exploring adding advertising to its local search. Searching on “booksellers nyc” in Google Local brings up, not only the familiar red balloons marking the locations of booksellers on the map, but an accompanying coffee cup icon. When you click on the icon, a Barnes & Noble ad appears in a balloon.
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. According to the report, real estate agents dominate local paid search.
Local search is just one of a plethora of developments, including vertical search and new offerings from Google, making searching for real estate online more specialized and often less frustrating for consumers.
“I think in terms of small businesses advertising on search engines, I would agree that real estate agents are very aggressive,” Sterling said. But, the analyst said, “it’s unlikely we will see a large number of real estate agents swarming into geo-targeting.”
Instead, Sterling believes that agents will advertise more heavily on real estate verticals, despite the current emphasis on search engine marketing.
“We’re still in an early phase and it’s still possible to cost-effectively buy search engine marketing and a lot of early adopters are doing it. I think in the small business market, real estate agents are a leading indicator and ahead of the curve,” Sterling said.
Local agents’ search ads jumped from 17.5 percent of all local search ads 18 months ago, to 23.9 percent a year later, according to the Borrell report.
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.
Looking forward, however, “a lot of real estate agents are not going to be able to compete over time with the corporate entities and the verticals that are bidding for placement against these geo-targeted ad buys,” Sterling said.
“Once people engage with the Internet they do search via a search engine, then they find a site with more detailed information,” Sterling said. “A lot of the time consumers spend looking for homes to buy is going to be at the Trulias, the other verticals, HomeGain, HomePages, the places where you’re actually getting the MLS listings or virtual tours, and much closer to the information.”
This is the prime advertising inventory that will be snatched up by agents, Sterling predicted.
While such advertising is not mutually exclusive with search advertising, sites like Trulia and HomeGain bring consumers “much closer to the information they want,” according to Sterling.
According to the Borrell report, real estate and mortgage advertisers are currently the leading spenders, not just on search engines, but on all local Internet advertising.
The report said 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.
“I think search engine advertising has been effective historically and it can be a new awareness medium and in some cases a direct response medium,” Sterling said. However, he believes that “search engine marketing can’t accommodate that number of real estate agents. If they were all to say, ‘I want to be on Google, I want to be on Yahoo,’ the inventory is too limited.
“We’re only talking about the first page,” Sterling said. He was referring to the fact that research has shown that the majority of people look only at the first page of search results, without continuing on to the rest of the pages.
“There are only seven or eight slots. When you read research about the drop-off, there’s a very select number of slots available. People tend to look for geography and real estate. There’s only going to be a certain amount of lookups on the search engine that are meaningful,” Sterling said.
This inventory will cost more and more over time, possibly pricing agents out of the market, Sterling believes.
“The challenge of doing search engine marketing well is that limited ad inventory will limit the number of local real estate agents who can successfully get into this,” Sterling said. “There are many other advertising opportunities that may be better for them.”
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