Century 21 Real Estate will stop running national television spots in order to beef up online advertising such as display ads, search-engine marketing, and partnerships with real estate listing sites.
The company is confident the move will benefit brokers, agents and their clients, saying it boosted online lead generation by more than 237 percent in 2008 — the cost per lead dropped 62 percent from a year ago.
In the 1970s, Century 21 was the first real estate franchiser to purchase national TV ads, said Tom Kunz, the company’s president and chief executive officer. But Kunz said the main benefit of television ads is name recognition — something Century 21 has in spades.
"We have between 97 and 99 percent name recognition, and nobody can get to 100," Kunz said. The company’s analysis of the return on investment from online ads, however, revealed some "dramatic numbers that backed up our feeling that we should monitor name recognition, but put our money where consumers are" — online, Kunz said.
Although Century 21 may do a few more national TV ads to publicize April as the company’s open-house month, Kunz said TV ads promoting the franchise brand are likely a thing of the past. While the money once spent on TV will instead go to online marketing, "the overall budget has shrunk a bit" as a result of the housing downturn, Kunz acknowledged.
Some agents and brokers may want to keep running local spots on cable television, and Century 21’s international franchisees could view TV as a place to build brand, Kunz said. He said the company will make some enhancements to its TV spots and make them available to franchises to use.
A Realogy Corp. subsidiary, Century 21 claims that its franchises make up the world’s largest residential real estate sales force. When the company dropped print advertising a year or two ago, Kunz said, it found it had some explaining to do to brokers and their clients.
"One of the big issues, when we made the decision to pull out of newsprint, was that the consumer was sitting there saying, ‘That’s where I needed to be,’ " Kunz recalled. Century 21 responded by gathering up statistics showing how buyers had migrated to the online world. That helped brokers and agents say, "I understand that’s what you think (about print advertising), but let me show you facts and figures."
Kunz said the company expects to face similar questions this time around. In addition to lead generation, Century 21’s online efforts are also focused on "brand preference" — convincing consumers to choose the company over a competitor.
If Century 21 was the first franchiser to get into national TV advertising, it was not the first to get out.
Another company under the Realogy umbrella, ERA Franchise Systems, stopped running ads on national broadcast networks three years ago, and has since phased out cable television advertising as well, said P.J. Martin Smith, the company’s senior vice president of marketing.
"Cable was the only venue growing in the area, and that’s why we stayed in for awhile," she said. "The nontraditional venues — sponsorships, online display ads, search-engine optimization, and on and on — your dollars are spent so much better there."
The research and consulting firm Borrell Associates forecasts that by 2013, 33.1 percent of a projected $35.3 billion in real estate-related advertising will be spent online, compared with online’s 19.6 percent market share in 2005. Borrell estimates that online advertising by real estate-related companies and mortgage lenders grew by nearly 20 percent in 2007, to $9.1 billion, but will see slower growth during the current economic downturn (see story).
But that doesn’t mean TV is dead yet. Borrell is forecasting that broadcast and cable TV together will still attract an estimated 22.2 percent of real estate-related ad spending by 2013, up slightly from 19.9 percent in 2005.
Cable television is expected to reach parity with broadcast TV as cable gains market share and broadcast loses it. Cable and broadcast can each be expected to command about 11 percent of real estate ad spending in 2013, compared with a 12.2 percent market share for broadcast TV and 7.7 percent for cable in 2005, Borrell estimates.
Michael Fischer, senior vice president of marketing at another Realogy brand that’s a household name, Coldwell Banker Real Estate, said that national television and radio can still be a valid medium for getting a specific message out. For instance, Fischer said, Coldwell Banker might decide to launch a television campaign to spread the word about the company’s new mobile application for iPhone and BlackBerrys, which facilitates property searches in 28 countries at coldwellbanker.com.
And at the local level, Fischer said, "There are great opportunities for our affiliates in local markets that are coming back and showing signs of recovery to start talking about that" on TV, as a counter to some of the negative headlines about national housing markets.
But Century 21’s point that it’s already got name recognition is a valid one, Fischer said, and gauging the "ROI" (return on investment) from traditional advertising venues like TV and radio "is very difficult … so there’s lots to debate."
How, not where
The key is not so much where ad dollars are spent, said ERA’s Martin-Smith, but using them to create integrated marketing programs where consumers will see them.
"When you talk about television vs. nontraditional vs. online, the key is to have an integrated message that stands clear no matter where you put it, and to use a lot of venues that will approach your consumer in ways they want to be approached," she said.
To accomplish that, ERA offers an online ad purchasing tool as part of its "My Marketing Manager: Powered by ERA" platform. The tool helps franchises purchase online ads, including paid-search campaigns, and build their own local public relations and local ad campaigns.
The online ad purchasing generated more than 1.8 million local online impressions per month in its first year of use, illustrating adoption by affiliates, the company said.
"We are the only brand that offers the ability for our local offices (and) affiliates to purchase paid-search campaigns that we facilitate," said Mark D’Andrea, ERA’s vice president of brand management. "It takes the confusion and fear out of entering that marketplace away."
ERA has created an integrated national and local campaign around its sponsorship of "Ask This Old House," an online Q&A for consumers connected to the popular home remodeling show.
"Everything we offer up at the national level, we offer on a templated basis for local brokers to use," Coldwell Banker’s Fischer said. "Not just TV, but radio, print, and outdoor."
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