[Tim7332]

I read this article that basically suggests local real estate firms will be priced out of google ppc on page 1 in the near future. Do you think these big national sites like homegain etc will push us all out of page 1 of google for optimized seo?

Article Here:

Real estate ads to move beyond local paid search
Part 3: New era of real estate search
Wednesday, April 05, 2006

By Janis Mara
Inman News


Greg Sterling, Kelsey Group

Editor's note: Real estate search has entered a new phase with the emergence of applications that narrow the hunt for consumers, pool from multiple sources, and enable consumers to search without having to register at a broker site to gain access. In this four-part series, we examine the latest tools and how they're impacting where brokers market properties and how consumers find them. (See Part 1 and Part 2.)

Though real estate agents currently account for almost half of the local advertising on search engines, a local search expert predicts agents' ads will eventually move to sites with detailed real estate information such as HomeGain or Trulia.

Paid search ads for individual local real estate agents account for 49.6 percent of listings on keyword searches for local business segments across 10 different cities, up from 17.5 percent of local search ads 18 months ago, according to Borrell Associates' "2006 Local Search Advertising" report.

But Greg Sterling, an analyst with the Kelsey Group, said he believes this is "an early phase," and real estate agents will be better advised to buy ads on sites such as Trulia, HomeGain, HomePages, "the places where you're actually getting the MLS listings or virtual tours and much closer to the information."

Given that the National Association of Realtors in 2005 reported that 77 percent of all consumers begin their real estate searches online, more individual agents have followed by advertising online, and particularly in locally placed search advertising, since location is an integral part of real estate.

In a development that suggests local search is coming of age, Google is exploring adding advertising to its local search. Searching on "booksellers nyc" in Google Local brings up, not only the familiar red balloons marking the locations of booksellers on the map, but an accompanying coffee cup icon. When you click on the icon, a Barnes & Noble ad appears in a balloon.

The Borrell report predicts that paid search advertising by local advertisers will more than double this year to $987 million, and nearly double again in 2007. According to the report, real estate agents dominate local paid search.

Local search is just one of a plethora of developments, including vertical search and new offerings from Google, making searching for real estate online more specialized and often less frustrating for consumers.

"I think in terms of small businesses advertising on search engines, I would agree that real estate agents are very aggressive," Sterling said. But, the analyst said, "it's unlikely we will see a large number of real estate agents swarming into geo-targeting."

Instead, Sterling believes that agents will advertise more heavily on real estate verticals, despite the current emphasis on search engine marketing.

"We're still in an early phase and it's still possible to cost-effectively buy search engine marketing and a lot of early adopters are doing it. I think in the small business market, real estate agents are a leading indicator and ahead of the curve," Sterling said.

Local agents' search ads jumped from 17.5 percent of all local search ads 18 months ago, to 23.9 percent a year later, according to the Borrell report.

Search ads for the keyword "mortgage" comprised 25.1 percent of listings on keyword searches, the report said. According to the report, the highest bids in terms of amount paid per click were for DUI attorneys, mortgages and real estate.

Looking forward, however, "a lot of real estate agents are not going to be able to compete over time with the corporate entities and the verticals that are bidding for placement against these geo-targeted ad buys," Sterling said.

"Once people engage with the Internet they do search via a search engine, then they find a site with more detailed information," Sterling said. "A lot of the time consumers spend looking for homes to buy is going to be at the Trulias, the other verticals, HomeGain, HomePages, the places where you're actually getting the MLS listings or virtual tours, and much closer to the information."

This is the prime advertising inventory that will be snatched up by agents, Sterling predicted.

While such advertising is not mutually exclusive with search advertising, sites like Trulia and HomeGain bring consumers "much closer to the information they want," according to Sterling.

According to the Borrell report, real estate and mortgage advertisers are currently the leading spenders, not just on search engines, but on all local Internet advertising.

The report said local agents occupy almost half of all search advertisements, and not just in big cities, either. "In Des Moines, half of the advertisements on the Google and Yahoo results pages for 'Des Moines real estate' are being placed by local agents bidding as much as $3 per click," the report said.

"I think search engine advertising has been effective historically and it can be a new awareness medium and in some cases a direct response medium," Sterling said. However, he believes that "search engine marketing can't accommodate that number of real estate agents. If they were all to say, 'I want to be on Google, I want to be on Yahoo,' the inventory is too limited.

"We're only talking about the first page," Sterling said. He was referring to the fact that research has shown that the majority of people look only at the first page of search results, without continuing on to the rest of the pages.

"There are only seven or eight slots. When you read research about the drop-off, there's a very select number of slots available. People tend to look for geography and real estate. There's only going to be a certain amount of lookups on the search engine that are meaningful," Sterling said.

This inventory will cost more and more over time, possibly pricing agents out of the market, Sterling believes.

"The challenge of doing search engine marketing well is that limited ad inventory will limit the number of local real estate agents who can successfully get into this," Sterling said. "There are many other advertising opportunities that may be better for them."

[Eric Blackwell]

OK...

Here's a thought. What is the value of a lead. Is HomeGain ( or any other lead gen firm) really going to pay $100 for a lead that they can only sell for $85?? Nope.

They are in the arbitrage business. They find cost effective niches to market in and exploit them until clever REALTORS (yeah that's us) realize that they are ONLY spending it to make money on it by selling back to us! They do not sell real estate! They sell leads!

If REALTORs realize that they can market PPC just as efficiently as LeadGenCo can, the only ones that are getting priced out of the market are the ones who are buying the leads from LeadGenCo...

YES. The PPC price will climb, but won't it only climb to the value of a referral that is generated from a lead (divided of course by the conversion rate).

Thus the main thrust of a logical assumption that PPC will get priced out is either that a) Realtors are too stupid or b) that LeadGenCo's have "magic beans" that allow them to convert leads more efficiently than a well prepared realtor. I cannot buy into either of these arguements. Deep pockets CANNOT enter into the equation because LeadGenCo's cannot sell leads for more than the 35% they are currently charging and they will not bid it up past the point where they can make money long term.

Just one guy's look at it.

Cheers;

Eric

[Tim7332]

Good point. I didn't think of it like that. I feel that google ppc is just extortion anyways. That being said though do you foresee buyer's always going to search engines to find homes and realtors or do you think some big national site will start to be the preferred route. For example, most people would just go to ebay.com rather than search for "online auction" or whatever. In this case i'd be concerned over people going straight to remax.com or something similar from advertising campaigns leading them to believe its better.

[Eric Blackwell]

Good question...

As far as the SEO marketing channel:

Does Google's algorithm give large companies some advantage over small companies in doing SEO? Nope.

This forum is a GREAT tool to keep those of us working to stay on top together and competing against bigger SEO guys (pun intended-- ).

What exactly are we afraid of? These guys have to SEO a site the same way we do....

As far as National companies advertising (REMAX.com, Prudential.com, ColdwellBanker.com, etc) for them as well, it is about market channel dominance. There is no doubt that they are hitting the heck out of radio and TV and print and so forth. They want the user to go to Brand.com instead of search. That will pull a few folks, but that does NOT mean that Google needs to fear. There are a ton of people searching there as well.

CLARIFICATION NOTE: I work at a RE/MAX office, so I kind of have my butt covered either way....

Again at the end of the day, it boils down to the value of a lead. Large franchisors are going for market share and mind share. Getting dominance over the search engines there is pretty tough...

Best;

Eric

[Tim7332]

I have a question on a side note.

I was thinking of joining up with Re/Max but was wondering if they'd let me continue doing loans on the side. If not it wouldn't be an option.

Also, how do their costs work? I heard it was a 100% place where you're charged a monthly fee and other crap.

Do you think if I didnt need a desk that I could get a better deal?

[judyo]

In my area the different Remax companies have different optiions from 100% with rental of a desk or an office or less if you work from home to other percentages. They are all competing with each other so they keep coming up with different offerings for agents.

[frobn]

Thanks for the post. It certainly reinforces my belief that the winners (whether local or national) will be the sites that offer easy access to the information custormers want most, i.e. listings. I was impressed at the ease and no-hassel use of www.trulia.com/

[Tim7332]

Originally Posted by frobn

Thanks for the post. It certainly reinforces my belief that the winners (whether local or national) will be the sites that offer easy access to the information custormers want most, i.e. listings. I was impressed at the ease and no-hassel use of www.trulia.com/

So I take it you think local agent websites will be pushed out by big national sites like trulia.com?

I couldn't imagine calling up anybody at trulia.com and asking to see property though.

[frobn]

Originally Posted by Tim7332

So I take it you think local agent websites will be pushed out by big national sites like trulia.com?

NOT at all. I said my belief is that "the winners (whether local or national) will be the sites that offer easy access to the information custormers want most, i.e. listings." I think the playing field is level and that locals have as much or better opportunity as nationals.

Originally Posted by Tim7332

I couldn't imagine calling up anybody at trulia.com and asking to see property though.

Is your opinion from the perspective of an Realtor? The average customer may have a different perspective. All things equal my preference is to go with the local guy but if the local guy doesn't provide easy access to the information I seek...

[Tim7332]

Originally Posted by frobn

Is your opinion from the perspective of an Realtor? The average customer may have a different perspective. All things equal my preference is to go with the local guy but if the local guy doesn't provide easy access to the information I seek...

I was thinking from the perspective of a buyer. I just think a home purchase is too important to give "trulia.com" a call. I'd want to talk to a local realtor that knew the area. However, I might go there for information, but when the time came to move on a property I'd call a realtor.