Editor’s note: Online marketing in real estate is quickly moving forward as brokers test new methods for reaching consumers on the Internet. Marketing choices have grown more complicated with a larger selection of Web sites to promote property listings and a growing list of lead generation and management technologies to choose from. In this three-part series, we take a look at new broker strategies and where new partnerships are cropping up.

Editor’s note: Online marketing in real estate is quickly moving forward as brokers test new methods for reaching consumers on the Internet. Marketing choices have grown more complicated with a larger selection of Web sites to promote property listings and a growing list of lead generation and management technologies to choose from. In this three-part series, we take a look at new broker strategies and where new partnerships are cropping up. (Read Part 2 and Part 3.)

Real estate marketing on the Internet — though still in its infancy — is maturing. Those early questions about where to market properties online have evolved to questions about which Web sites reach the largest audience and produce the best results and metrics for the lowest cost while not interfering with the interaction of consumers and real estate professionals.

Offline business strategies are moving to online venues as whiz-bang Internet innovators adopt brick-and-mortar fundamentals, and a growing number of real estate professionals are using high-tech tools to gauge the return on investment for online marketing efforts with greater precision.

Online marketing is no longer just about getting consumers to your Web site — it’s about allowing consumers to be in control of when and how to contact them; understanding what they want from you and your Web site; and keeping track of where they came from, what they are doing and where they are going as they move closer to a transaction, industry experts say.

This brave new world of marketing presents a growing set of challenges for real estate professionals. There is a deep pool of marketing channels to choose from, each with their own data formats, cost and display options, and metrics. Property listings information is ubiquitous on the Internet these days, and real estate professionals are grappling with how to stand out from the crowd and tap into the massive audience of consumers who are hungry for online information.

In the latest National Association of Realtors Profile of Home Buyers and Sellers, based on a survey of 7,500 home buyers and sellers, 80 percent of home buyers used the Internet in searching for a home, up from 77 percent in the 2005 survey and 74 percent in 2004. And the 2006 survey found that 24 percent of buyers learned about the home they purchased from the Internet, which is even with the 2005 survey and is up from 15 percent in 2004.

Meanwhile, a 2006 survey by media research firm Borrell Associates Inc. found that 61 percent of real estate agents do not advertise on the Internet and 87 percent of agents do not buy keyword advertising from the Google or Yahoo search-engine companies.

The real estate industry was expected to spend about $11.6 billion on advertising in 2006 — that amount has grown less than 4 percent in the past four years — and the online share was expected to reach $2 billion in 2006, and to eclipse newspapers’ advertising share and top $3 billion by year by 2010, Borrell reported. The online share of real estate advertising, which was 3.5 percent in 2001, is expected to reach 32.1 percent in 2010.

And the industry’s total advertising costs are expected to drop to about $9.6 billion by 2010, according to the report, as “The Internet and related technologies have substantially lowered the overall cost of reaching potential home buyers. The same promotional reach simply costs less money today than it did just a few years ago.”

Online marketing is increasingly complex and competitive, said Mike Montsko, president of the Weichert Lead Network. The network includes a large call center that connects consumers with Weichert real estate professionals.

“Every year it gets harder to get a positive return on investment. Our online marketing budget increases substantially every year due to the … growth of our franchise division and a rise in pay-per-click costs,” Montsko said. And the company’s print advertising hasn’t gone away. “We continue to spend money on traditional marketing channels like print. Our customers and associates still value these channels.”

Individual agents can get caught up in bidding wars over pay-per-click campaigns at major search engines, Montsko said. “In most cases they are not tracking their results. They end up overbidding on keywords to try to get in the number one spot. In some areas this overbidding is so common that it’s almost impossible to purchase traffic and still get a positive return on investment.”

Weichert Lead Network tracks all of the sources sending traffic to Weichert.com, he said, and also tracks customer contacts from these sources and the percentage of contacts that lead to a closed transaction. “Since we track to closing we can calculate the amount of revenue each source generates,” he said.

The company developed its Internet-tracking tools in-house, and Montsko noted that Google offers free Web analytics tools and pay-per-click tracking that also allow real estate professionals to monitor statistics and estimate the return on investment. The Weichert Lead Network call center includes about 40 sales consultants, three supervisors and a manager. Speaking at a real estate conference this month, Montsko advised real estate professionals to closely track how much they are spending on individual advertising campaigns “and make sure it’s worth the money.”

He also said that it’s important to rapidly respond to consumers who make an online contact, and to assign online leads to real estate professionals who are most qualified to handle them.

While Weichert has devoted substantial resources to building its own lead network, other companies use a combination of in-house systems and outside vendors to capture and incubate leads and to measure the effectiveness of online marketing.

John L. Scott Real Estate, for example, a large brokerage company in the Pacific Northwest, has established an eBusiness center to qualify online leads and this month announced a contract with LanTrax, a company that provides lead management services. Barry Matheny, eBusiness manager at John L. Scott, said that the eBusiness department took shape over the past year and includes a team of Internet service representatives who are licensed agents.

These representatives serve as first responders to Internet consumers and have a goal to answer inquiries within 15 to 30 minutes, qualifying the leads and sending out the information to Internet-savvy agents who have agreed, by contract, to accept and respond to the leads in a timely manner and work with these consumers.

The relationship with LanTrax, he said, is an effort to better manage the relationship with consumers who reach out to the company online, including those who are just looking for information and may not enter the real estate market for awhile.

“I think the tracking is getting better and I think it will get much better as we move forward,” he said, and the new system assists in tracking follow-up with clients and prospective clients. “Much of the process is a timing issue — depending on where the client is in the process.” Statistics collected through the new system will allow the company to view success in closing transactions with consumers who contacted the company online by office and by agent, Matheny said.

John Chang, vice president of marketing and eBusiness at John L. Scott, said the company’s overall budget for marketing and Internet technology has increased over the past several years, “largely due to rising Web development costs.” And while the company has maintained a roughly level commitment for print advertising, the company “has invested significantly into Web technology and promotion … and we anticipate continued growth in this sector.”

Large brokerage companies may have the resources to staff an in-house call center and technology ventures, though the volume of online traffic and contacts from consumers can be overwhelming even for these large companies, said Aaron Taylor, president and CEO for LanTrax, which provides lead-management services to about 20 real estate companies nationwide.

“The money they’re spending online is increasing. Now they are focusing on how they can do it more effectively versus the shotgun approach,” Taylor said, adding that companies are asking for better accounting of which leads are paying off and how agents are following up with prospective clients when they receive online leads.

The quality of online leads is only as good as the quality of the response — an agent may receive 1,000 leads but those leads may amount to nothing if there aren’t processes in place to properly handle those consumers, Taylor said.

Among the questions that real estate companies should be asking: “What are you doing to make sure you have the right agents working on the Internet leads team? Which ones are really qualified? Who are you going to hand it off to?” he added, and those companies that don’t figure this out may lose business to a competitor.

While large companies may have the most resources to build better lead capture, management and conversion systems, Taylor said smaller companies, too, can build scaled systems that provide a common voice and response without the need for a sprawling call center.

Real estate companies must do a better job of processing and responding to online leads, said Jim Secord, president of Most Home Real Estate Services, which provides lead response and other Internet services to the real estate industry. Most Home employs customer specialists — who either have a real estate license or are working toward a real estate license — to respond to online consumers and qualify those leads before delivering them to brokers. The company handles an average of 50,000 to 100,000 Internet leads per month for its clients and also provides statistics related to these leads.

An estimated 80 percent of leads generated through a company’s Web site “are either lost, thrown out or ignored altogether. It becomes very difficult to quantify how valuable those leads are if you are not responding to them,” Secord said. “There has been so much emphasis on lead-creation as opposed to lead-conversion. (Companies) are less concerned about what’s happening to those leads. The tricky part is not with the consumer. The tricky part is with the Realtor to make sure they follow through.”

Part of the problem is that Internet leads can be time-consuming and convert at a lesser rate than non-Internet leads, Secord said. While one in 10 phone calls by a consumer to a real estate professional may lead to a closed transaction, the ratio is more like 200 to 1 for Internet-based contacts, he said.

Agents and brokers may be too busy to deal with every Internet lead that comes in, he said, though he encouraged companies to develop systems to address the needs of these consumers, too. “It’s not that these (consumers) coming in aren’t necessarily real people or aren’t serious at any one point in time.”

A consumer who contacts a real estate company online may not be ready to commit to a transaction at the moment, he said, though another consumer may want an immediate response. “Consumers are becoming less tolerant and less patient. It’s the one who gets back to them first who they’re going to engage. It’s a tough problem for the agents to solve,” Taylor said, and the key is connecting with consumers when and how they want — on their terms.

Companies should take note that not every Internet consumer is the same, he said. “Treat each inquiry individually as opposed to treating everyone the same. Understand that there are different segments of customers.”

Most companies are not doing a good job at monitoring their return on investment for online marketing dollars, Taylor said, and need to work to improve their long-term follow-up with Internet leads.

In addition to building better lead-management systems, some real estate companies, brokers and agents are focusing more on search-engine optimization strategies that are intended to increase their Web site’s ranking in searches conducted by consumers.

Joe Ballarino, president and founder of Amerivest Realty, a real estate company based in Naples, Fla., said, “Our initial online marketing was almost solely pay-per-click campaigns through both Google and Yahoo, but over time we saw the need to work on natural placement of our site as a way to control costs as competition increased. This has made online advertising much more complex as we have invested many … hours in research and programming time optimizing our sites to place naturally.”

He added, “Unfortunately, natural placement has a maintenance cost as well as we have to monitor our position, watch the competition and make adjustments as needed.”

Most agents don’t have the capability to build and maintain robust Internet advertising campaigns — including pay-per-click, banner ads and search-engine optimization — on their own, he said, and this can be overwhelming for small real estate companies, too.

“The top 10 positions for natural (search-engine) placement in our local markets are held by large local real estate brokerages with advanced Web technology and a few resourceful agents, although the agents are slowly being overcome,” he said.

Brokers, he added, should play a role in “moving the Web marketing strategy continually forward” while freeing up agents to work with clients. “A good, clear written plan of how the company’s Web marketing hands off clients to (its) agents is a must,” he said.

“Our banner placement, (search-engine optimization) techniques, and using traditional print advertising to drive Web traffic are the methods by which most of our listings are being viewed on the Web,” he also said, and the company analyzes Web statistics to determine the sources and value of online leads at the company’s Web site.

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Send tips or a Letter to the Editor to glenn@inman.com or call (510) 658-9252, ext. 137.

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