Is Web 2.0 the next big thing for real estate?
The answer, of course, depends on one’s point of view, but the question is nonetheless important for real estate brokers, salespeople and other professionals who now need to formulate winning business plans for 2008, which could be a rocky year in many housing markets around the country.
Proponents of Web 2.0 sing the praises of blogs, online social networking, video content and other interactive online media, and there is little doubt that many people now spend much of their leisure time on these activities. Indeed, millions of users reportedly have added content to MySpace, which is owned by News Corp.; Facebook, in which Microsoft recently invested $240 million to acquire a small stake; and YouTube, which is owned by Google, to take three examples.
Stock market valuations of these companies suggest that investors are bullish on Web 2.0 as well, despite the fact that such early ventures as Friendster, Tripod, Angelfire and Geocities have already faltered.
Yet whether Web 2.0 is a short-term fad in the history of leisure activities or a true paradigm shift in lifestyles remains to be seen. Moreover, Web 2.0 may be more of an amusement for couch potatoes who’ve tired of television than a savior for businesses that want to advertise their products and services to consumers.
That’s because Web 2.0, like any technology, is a poor substitute for a business model. Technology doesn’t create markets for products or services, other than more technology for its own sake. Nor does technology generate leads, trump competitors or close home sales. In other words, technology is a tactic, not a strategy.
Companies that have embraced Web 2.0 point to the massive volume of comments that have been posted on their Web sites. The quantity of posts is impressive and users do seem to be enamored of these opportunities to broadcast their personal opinions, but what is the end game of all this chatter? How many people will wade through hundreds or thousands of posts to find the genuinely interesting gems? How many people will tolerate the intermingling of ads alongside the content and purchase a product or service as a result of their Web 2.0 activities? And most important, which of the Web 2.0 companies will have enough staying power to compete successfully in a crowded marketplace over the long haul?
While anecdotal evidence claims that Web 2.0 can be a valuable business tool, no one has quantified the extent to which Web 2.0 on a large scale generates more qualified leads or results in additional closed business. How many home sales or mortgage originations have resulted directly from blogs, social networking or other Web 2.0 activities? What was the cost in time and money to generate those leads and close those transactions? And were those per-unit costs cheaper than traditional forms of advertising?
Realty brokers and salespeople who believe the buzz about Web 2.0 may be disappointed to discover that a blog or a profile on a social networking site isn’t a sure-fire or even easy way to generate business. Given that, the question is still open as to whether practitioners should invest time and money in these media to avoid the risk of being late to the party or play it safe and stick with tried-and-true marketing methods. The answer will differ from one business to the next, but either way, these decisions by necessity will be based more on instinct than hard data at the moment.
Neither technology in general nor Web 2.0 in particular is a bad idea. After all, if 200,000 nerds are willing to post billions of free questions and comments online, why not let them do so? And why not go ahead and put a few ads around all that content and see whether anyone buys anything?
The point isn’t that Web 2.0 is useless or doomed, but rather that an overly heavy reliance on blogs, social networking and video as a business strategy is a questionable proposition since no one has demonstrated that Web 2.0 works as a marketing tactic. What’s needed is reliable data from proven sources that can track, measure and analyze the results of Web 2.0 in hard numbers that contribute to the bottom line.
Marcie Geffner is a real estate reporter in Los Angeles.
Copyright 2007 Marcie Geffner. All rights reserved. No part of this article may be used or reproduced in any manner whatsoever without written permission of the author.