Real estate agents and brokers are spending less on advertising this year, but a rising share of their ad spend is going to where they think potential clients are: online. That’s according to an annual analysis of real estate ad spending by Borrell Associates Inc.

  • Real estate agents and brokers are spending less on advertising this year, including less on online advertising, according to a report from Borrell Associates.
  • But the share of ad dollars agents and brokers are devoting to online ads is increasing.
  • Borrell predicts that in five years, 29 percent of online ad dollars will be spent on streaming video ads.

Real estate agents and brokers are spending less on advertising this year, but a rising share of their ad spend is going to where they think potential clients are: online.

That’s according to an annual analysis of real estate ad spending by Borrell Associates Inc.

$25.9 billion on advertising — down 6.3 percent

This year, Borrell predicts, the real estate industry — mortgage providers, real estate agents and brokers, rental property management companies, and developers — will spend $25.9 billion on advertising.

That’s down 6.3 percent from $27.6 billion in 2015, the company said. Borrell attributes the decline to a 6 percent drop in home sales this year.

While mortgage providers are expected to up their ad spend by 7.3 percent in 2016, to $13.1 billion, the company anticipates agents and brokers’ ad spend to decrease 13.8 percent, to $9.3 billion.

2016 Spending Estimates, Source: Borrell Associates

2016 Spending Estimates, Source: Borrell Associates

Of that $9.3 billion, Borrell predicts nearly 84 percent — $7.7 billion — will go to online advertising. (Mobile advertising is included within the digital advertising category in the company’s forecasts.)

That’s up from 80 percent in 2015, 79 percent in 2014, and 71 percent in 2013. That may seem to be good news for websites such as Zillow and realtor.com, which count agent advertisers as a main source of revenue.

But in terms of dollar amount, that $7.7 billion is a nearly 14 percent decrease from 2013.

Source: Borrell Associates

Source: Borrell Associates

Print vs. digital

“We believe real estate advertisers — especially those involved with residential home sales — have perhaps overspent on digital and are now ‘adjusting the dials’ for a more appropriate advertising mix,” the report said.

Among real estate advertisers as a whole — not just agents and brokers — five of 11 media categories are expected to see growth this year: other print, directories, cable TV, radio and telemarketing.

The “slight migration” back to print may be an attempt to appease sellers, the report said.

Spending on digital advertising among all real estate advertisers is predicted to drop to about 60 percent of total ad spend this year, down slightly from 61 percent.

Kip Cassino, Borrell’s executive vice president of research, told Inman there are multiple reasons for reduced digital spending among agents and brokers.

“Digital ads are getting cheaper. Agents have increasingly turned away from more expensive paid search toward SEO [search engine optimization] and targeted display (mostly Facebook) solutions,” he said via email.

Facebook is very cheap and very, very easy.”

According to a Borrell survey of 290 agents and brokers conducted April through August, 64 percent have advertised on Facebook and 90 percent are satisfied with Facebook ads. By contrast, 32 percent have advertised on LinkedIn and 70 percent are satisfied with those ads.

In addition, most markets have a continuing shortage of for-sale inventory, “so there is less to advertise,” Cassino said.

Lastly, now that agents have become familiar with digital advertising, they are using it more wisely — “just as they did with newspapers over time,” he added.

Agents in Borrell’s survey spent an average of $40,047 per year on advertising overall, but the company cautioned that this was an average: 4 in 5 agents reported spending less than $2,000 a month on advertising.

Future forecasts

Driven by the rise of digital advertising, spending on residential and commercial advertising by agents and brokers jumped 65 percent over the last decade, rising to $13.86 billion in 2015 from $8.39 billion in 2005, around the height of the housing boom, according to Borrell figures.

Borrell forecasts that agents and brokers will spend 86 percent of their ad dollars online by 2021.

Source: Borrell Associates

Source: Borrell Associates

That’s in contrast to last year’s forecast from Borrell, which said agents’ and brokers’ spending on digital channels had likely plateaued and would decline in 2015. Instead, it grew.

“Note that the 2014-15 report was distributed early in 2015. The estimates shown in it were projections — trending based on incomplete results,” Cassino said.

Now, Borrell said real estate advertisers may continue to trim their spending on online ads slightly as they trim their overall budgets, but the company doesn’t expect spending on digital to dip below 50 percent of advertisers’ overall ad spend.

Homebuyers (and sellers) have aggregated around digital channels. That won’t change. Agents and brokers perceive digital channels to be among their best source of leads. That won’t change, either,” the report said.

“The majority of homebuyers now report that they found the home they bought on the Web, so it is unlikely that any major decline in online advertising will occur in the near future,” Cassino added.

One thing the company does expect to change is where that digital ad spend goes.

Borrell predicts agents and brokers in 2016 will spend 45 percent of their online ad spend on targeted display ads, 29 percent on email and 14 percent on paid search. Only 6 percent is expected to go to streaming video ads.

By 2021, the company forecasts agents and brokers will be spending 29 percent of their online ad spend on streaming video ads, reducing the share spent on paid search and email and, to a lesser extent, targeted display ads.

Source: Borrell Associates

Source: Borrell Associates

Other stats from Borrell’s survey of agents and brokers:

  • 96 percent have a website
  • 76 percent have it “mobile optimized”
  • 88 percent have a social media page
  • 62 percent plan “major” website changes soon
  • 29 is the average number of monthly calls they get from ad-sales reps
  • 4.5 is the average number of ad-sales reps they talk to
  • 3 is the average number of media companies they work with
  • 79 percent of agents prefer to deal with reps via email
  • 58 percent of their digital ad budgets go to email and display
  • 17 percent are buying mobile advertising
  • 5 percent see mobile campaigns as a significant source of leads

Borrell predicts that mobile and video are high-growth areas for the real estate category and that “[r]eticence by agents and brokers to use mobile may change quickly.”

Sources Borrell used in its report include the National Association of Realtors, the U.S. Department of Housing, Scarborough Research, and proprietary research by Borrell.

Email Andrea V. Brambila.

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