Editor’s note: In this three-part series, Inman News looks at what industry insiders and participants expect will drive change and technology development in the next few years. We’ll drill down on two of the hottest Web trends that are expected to get hotter for real estate: mapping and Web applications that drive consumers to broker and agent Web sites. (Read Part 1 and Part 2.)

Search-engine optimization.

Editor’s note: In this three-part series, Inman News looks at what industry insiders and participants expect will drive change and technology development in the next few years. We’ll drill down on two of the hottest Web trends that are expected to get hotter for real estate: mapping and Web applications that drive consumers to broker and agent Web sites. (Read Part 1 and Part 2.)

Search-engine optimization. Paid search. Vertical search. Pay per call. From a real estate professional’s perspective, these are all different means to the same end: lead generation.

Whether you’re a Realtor, mortgage broker or title insurer, technology is changing the way customers come to your door. The range of options — from do-it-yourself to outsourcing everything — can be confusing.

Some say the trick is to not put all your eggs in one basket. Like an investor looking for long-term gains, you should diversify, always keeping a close eye on your return on investment. The bottom line: find the most cost-effective way not only of generating leads, but closing sales.

For those who have the money and expertise to build more than a rudimentary marketing “brochure ware” Web site, search-engine optimization is a worthwhile investment, experts who spoke last month at Inman News‘ Real Estate Connect conference in San Francisco said.

Major search engines like Google, Yahoo and MSN use complex algorithms to return the most relevant results to users. To improve your standing in the rankings, your Web site must offer a wealth of information (like listings or a wide range of products) that attracts visitors and gets other sites linking to yours.

Because search-engine companies are also on the lookout for attempts to game the system, there are pitfalls to avoid in building a site, such as not providing identical content on multiple pages. A company that specializes in search-engine optimization can help design and promote a Web site. But agents should be aware that some overly aggressive or unscrupulous methods used to improve Web site ranking can prompt search engines to blacklist a site and prevent it from showing up at the top of the heap.

“If you have a site that’s relevant, with a high click-through rate, you’re going to have a better shot within Google, both organic and paid,” said Sam Sebastian, director of classified and local advertising at Google. “The goal of Google, and the reason we’ve been successful, is that the advertising is relevant.”

Instead of trying to improve a site’s standing in the “organic” or “natural” search results — the list of sites that companies like Google say are ranked without regard to advertising — agents can also try paid search.

But search-engine optimization can be a good long-term investment because an increase in traffic can help a site appear higher in the rankings, which can generate more traffic. This positive feedback loop can give a content-rich Web site the momentum it needs to climb up the search-engine rankings.

“Search-engine optimization is an investment. It pays off dividends,” said Jamie Glenn, vice president of product development for the real estate search engine Trulia. “It’s hard to calculate the return on investment, but natural (search) results are more valuable” than paid.

Dean DeBiase, chairman and chief executive officer of Fathom Online, recommends focusing on paid search.

Paid search is a technique anyone with enough money to burn can use to build traffic. To generate revenue, search-engine companies allow advertisers bid for keywords that users enter when looking for goods, services or information. The highest bidders for these keywords have their Web sites listed on the top of paid search results, in the “golden triangle” above and to the side of the natural search results on a user’s screen.

A mortgage broker looking for customers, for example, could bid on the keyword “mortgage refinance.” One drawback to bidding for keywords is that those that generate the best results are highly sought after, and are priced accordingly.

Surveys show sites like LendingTree and ChampionMortgage are willing to pay up to $8 a click for keyword search terms like “mortgage” and “refinance,” said consultant Greg Sterling of Sterling Market Intelligence.

But smaller companies can still make cost-effective use of paid search by using more specific keywords that are less in demand, and more affordable. For the best results, describe the product you are marketing — a red Victorian house, for example — and the state, city or even neighborhood where you do business.

The drawback to this approach is that it may involve managing bids on hundreds or even thousands of keywords. And some search engine sites are raising their minimum prices for keywords, even if nobody is bidding on them.

“At HomeGain, we were managing a couple million keywords,” said Andrew Coleman, who left that company to found LeadQual. Now, he said, “Google is changing their model by raising minimum bids across the board, which were traditionally 5 cents. Nobody is bidding on ‘red Victorian homes in east San Francisco,’ but it’s 40 cents” to buy the term for paid searches.

There is another cost-effective way to benefit indirectly from paid search: work with a company that already has a large presence on the Web. There are a legion of sites that aggregate MLS listings, classified ads, mortgage rate data, and other information that consumers are looking for.

Because many of these aggregators have deep pockets and their sites offer a wealth of information, they are likely to show up before smaller sites in both natural and paid search results.

“The aggregators are really curve busters in search advertising,” said Steve Horowitz, senior vice president of product and business development at Bankrate.com — one of the biggest aggregators on the Internet. “They’re the guy you hated in your calculus class. They kind of kill the curve for everybody” by shelling out big bucks for the best keywords.

Aggregators make their money as lead generators — charging for each referral they make to you — and from ads on their sites.

“If you take advantage of the long tail (and bid on niche keywords) you can make (paid search) work, but there are lots of companies that will package it up (traffic and leads) and send it to you,” said Google’s Sebastian. “If you’re a smaller, more local lending organization, don’t spend a ton of money on search — buy leads,” Sebastian said. “Because it’s much more efficient to buy that lead from LendingTree than trying to get better terms on Google or Yahoo,”

Many aggregators function like search engines, but with a focus on a more narrow range of information such as home listings. To build traffic, they seek to offer more comprehensive, up-to-date and accurate information than their competitors.

Google Base, for example, invites all Realtors to bulk upload their listings to the site. Oodle, a Web site that aggregates classified ad listings, has entered into a deal with iHomefinder to provide MLS listings, which tend to be more current than classified ads.

Although Oodle will only use MLS property listings at the request of brokers (and with the permission of local MLS boards), other sites aggregate content that’s freely available on the Internet — often without the knowledge or consent of the originating source.

Like search engines, aggregators must promise consumers easy access to information in order to generate traffic. And like search engines, some aggregators will accept payments to display your information — and a link to your Web site — more prominently in their results.

That’s one reason some Realtors don’t want aggregators using their MLS data. If they choose to go along, they end up paying aggregators for leads that are generated with the help of the Realtors’ own listings. If they choose not to do business with these companies, their competitors may. The result is that a consumer who searches for real estate at an aggregator’s site may end up patronizing the Realtor who’s willing to pay more for leads — not the one with the most listings in the neighborhood where they want to buy.

Leads don’t have to come from your own Web site or an aggregator’s. Companies like Ingenio will conduct marketing campaigns on your behalf, directing the phone calls they generate to your sales force.

Ingenio’s customers pick the region they need leads in, the hours they want to receive calls, and then place bids in an auction environment, paying for each call received.

According to Ingenio’s director of sales and business development, Ross Weinstein, the cost per call depends on the industry, with real estate firms paying $10 to $15 per call and mortgage lenders $40 to $80 per call. Although that may sound like a lot, several industry insiders at Connect said higher priced leads are more likely to “convert” to sales.

Sites like Leadpoint Inc. and Root Markets provide online forums where traders can buy and sell leads as if they were stocks or commodities.

Leadpoint has been up and running for two years, and more than 700 buyers and 300 sellers trade more than 2,000 leads a day, said Chief Marketing Officer Michael Rosenberg.

“You bid what you want to bid, so you can get the return on investment you want,” Rosenberg said. “You can pay exactly what (a lead) is worth to you.”

Prices vary according to the type, location and quality of the lead. Leads for customers looking to finance a new home might sell for $8 to $14 on Leadpoint, depending on the state, while more profitable refinance loans can sell for $17 to $25. The most expensive leads are for mortgage refinancing loans, which can sell for $30 to $55, Rosenberg said.

To insure the quality of leads, Leadpoint lets buyers provide feedback on sellers, and will bar sellers who don’t meet quality standards from the exchange.

“We are very, very obsessed with quality,” Rosenberg said. “We haven’t had a single major buyer quit the Leadpoint engine in the last two years.

Once you’ve gone to the trouble of getting leads, it’s important to manage them well. Some leads have a very short lifespan, because consumers are shopping around for a house or mortgage and want to close the deal right away. Others are still in the window-shopping stage, and need to be “incubated.”

LeadQual helps companies convert their online leads into sales by calling employing operators who call your prospects within minutes of filling out a Web form. The operators qualify the leads and “hot swap” the calls to your sales force when they are good.

It’s important to contact prospects quickly, said LeadQual co-founder Glenn Houck, because the average real estate buyer visits five sites and fills out three forms. If one of those forms is at an aggregator’s site, the lead will be sold at least four more times, meaning there will be seven companies chasing the same prospective customer.

Companies like TARGUSinfo can help you decide whether a lead is good and warrants a call.

TARGUSinfo not only validates leads, but verifies them — an important distinction, said General Manager Dave Wengel. Validation, the more traditional method, involves checking to make sure the address a customer has provided is real, and that their phone number’s area code matches their Zip Code. The drawback to that method is that there’s still no guarantee the phone number will give a salesman access to a real lead, and some valid leads can be rejected if they were filled out partially or carelessly.

TARGUSinfo takes the process a step further, Wengel said, by “triangulating” the data, verifying that the name, address and phone number provided are linked.

Wengel said before buying leads, you should ask what type of campaign generated the leads, whether (and how many times) they will be sold to others, when the lead data was captured, whether the leads have been verified, and what percentage of bad leads to expect. Also find out what the seller’s policy is on refunds, and what information you will have to provide to prove that a lead was bad.

With all the hype surrounding the Internet, it’s easy to lose sight of the fact that plenty of leads are still generated the old fashioned way: in print ad campaigns and through face-to-face meetings.

“You never want to put all your eggs in one basket,” said Trulia’s Glenn. “Print becomes more of an index for online. The benefit of online is you can track performance and ROI (return on investment).”

“What you’re going to see is people going to search engines, responding to those offline campaigns,” Sterling said. “You often see a spike in search engine activity that’s driven by those (print) campaigns. You can use that to come up with a cheaper keyword to bid on” for paid search.

Before becoming director of strategic development for Prudential California Realty, Burke Smith said he successfully promoted his San Diego real estate firm by partnering with the city’s Major League Baseball team, the Padres.

“We put Padres players in the backyards of my open houses to sign autographs,” Smith said. “Where nobody was coming before, now we had a line of 1,000 people who had to walk through the house to get an autograph … we became known as the Padres’ real estate company.”

Nevertheless, Smith recommends that Realtors spend 35 to 40 percent of their marketing budgets online, and use software to track leads.

“When you create these leads, you’ve got to have somewhere to put them,” Smith said. “It’s no good to have them sitting in your e-mail. They’ve got to go to your Blackberry or Treo.”

Technology, Smith said, “is not going to replace agents. But agents with technology will.”

***

Send tips or a Letter to the Editor to matt@inman.com or call (510) 658-9252, ext. 150.

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