The Weekly Review is a free weekly lifestyle magazine that competes against Fairfax’s existing magazine The Melbourne Weekly. It’s an important purchase for Fairfax as it means they will now retain the lucrative advertising contracts the The Melbourne Weekly lost last year when The Weekly Review was launched.

This is the second time Fairfax has had to buy a Melbourne based magazine in order to secure real estate print contracts, having previously paid $67 million to purchase The Melbourne Weekly from “Text Media” in 2003. What’s very interesting, is that on both occasions ex Fairfax employees were behind the creation of the magazines.

Commenting on the transaction, Fairfax Media’s CEO of Marketplaces Nic Cola said

“We are delighted to be partnering with Antony Catalano and MMP to provide a more integrated and improved suite of products to real estate agents and their clients across the combined network. The real estate industry has been a great supporter of Fairfax Media for many decades, and we are committed to ensuring that our product offering evolves in accordance with the needs of both our advertisers and our readers.”

Antony Catalano, Managing Director of MMP said

“We are pleased with the success that MMP has achieved since we identified the opportunity to work with leading real estate agents on the launch of The Weekly Review in April 2010. I look forward to a close relationship with Fairfax Media as we set out to embed the MMP ethos across the combined business.

The merger is a smarter move than buying the magazine outright, as it means the existing owners still have an interest in the magazine and an incentive to make sure these real estate advertising contracts continue.

Here is what Jonathan has to say about this week’s launch of Property Observer “I have been writing about property for more than 25 years, and I’ve learnt that getting passionate about property is easy. Getting it right is trickier. I intend for Property Observer to be property central, providing the essential news and analysis on the ins and outs of property. We will cover the capital cities, up and down the coast, and inland to the regional towns and the bush.

We will offer plenty of authoritative coverage about the homes we live in and the investments that top up our incomes.

Property Observer will showcase the best houses and apartments and all the big-name buyers and sellers. We will also keep a watchful eye on new developments, and the plush over-55 developments that seek out the growing band of empty nesters.

Property Observer will capture the changing seasons – we will write about snow homes, vineyards, fishing lodges, marinas and even the occasional beach bathing box. We aim to be of interest to the owner-occupier and the investor, given that population and investment funds are more fluid than ever.

I intend for commercial investment property to be a key component, especially the opportunities on high street – retail neighbourhood shops, small strata offices, pubs and industrial strata. All are suitable for the self-managed super fund investor.

The website will offer wisdom on winning ways with property commentary from key economic and industry practitioners. We won’t overlook the property fundamentals, conveyancing clues, legal rulings and tax advice.

We want input from readers on market prices in their local patches, facilitating shared knowledge through dialogue, so let us know about your stories, insights and properties.”

It’s not just about bricks and mortar, as Property Observer will personalise property with interviews of the movers and shakers.

We want our readers to get wisdom, not clichés. And that way we’ll all be the wealthier.”

The content is excellent and a great assistance for real estate agents writing blogs as it is full of relevant data, analysis and commentaries.

You can also follow Property Observer on Twitter – @Propertyobs Make sure you subscribe to the email alerts too.

Facebook currently has over 500,000,000 users, yes that’s 500 million! An almost unbelievable statistic, coupled with the fact that most users are active it is an Internet behemoth and will almost certainly be a very profitable machine.

Twitter has fewer active users but their figures are also very impressive with a user base of around 200 million.

Both of these platforms outshine even online newspapers for breaking news and events to family and friends, so much so that online newspapers are actually becoming slightly less relevant than they were just a few years ago. You only have to take the recent Osama Bin Laden death to know that most of us get a lot of our news directly from our online networks on both of these platforms.

Creativity Vacuum

Where I think Twitter and Facebook fail is in their business models. The current thinking (or lack thereof) is that build up users and then start displaying advertising from 3rd parties amongst the content on various pages.

Google was the first large Internet player to do this successfully and have reaped billions and billions of dollars in advertising revenue on this model and will continue to do so. Why this is successful is very simple, users search for information and Google displays as close to relevant information back to the user as their algorithms allow.

Newspapers do the same thing, they attract visitors to their websites and then display advertising amongst and over (annoying their users) content and generate most of their online revenue from doing so.

This model is a problem for Twitter and Facebook and Online Newspapers because users do not use or behave the same way on these sites as they do on Google and other search and retrieve related entities. We use Twitter and Facebook to inform others on what we are thinking, what we are doing and where we are going, we gather news from Online Newspapers to share ones that interest us to our networks or to keep ourselves up to date. In short we generally have conversations on Facebook and Twitter and we use newspapers to gather information on the days events.

What is needed from these entities is a creativity revolution, one that value adds the offerings to those of us that want to become power users.

Online Newspapers

I am going to use the Sydney Morning Herald and The Age Newspapers as these are clearly the best newspapers in Australia. Each day I visit both of these websites to read up on news and events and each day I try to avoid any annoying ads across these sites.

What if I became a member of either of these websites? I really get nothing in return, making the added value proposition worthless. However what if the hierarchy thought a little differently about their business model.

What if for say $100 per annum, I could get an enhanced mobile version for both my smartphone and my Android or iPad tablet? What if my membership included the ability to sell my unwanted sofa quickly and easily? What if I could sell my car, engage a real estate agent, advertise open positions at my company? What if all of this was included in one simple interface and for one simple price? I don’t know about you, but I would pay this money without a second thought. Why? Because I trust the company, I know they have the biggest user base and I know I have one place to go to do all of these if and when I choose!

Facebook

If you read the above with interest, could you imagine if Facebook did the same? This would send shivers up the spine of any newspaper across the globe, simply because newspapers have lost control of their users and have been slow to innovate. Facebook could very easily do the same thing and to be honest, I think they would win this battle. Facebook currently has the dumbest advertising platform of all of these entities combined.

As an example if you ever had the miserable pleasure of adding some of your favourite movies, books or music to your profile you will immediately notice your Facebook wall being filled up with junk advertising from related advertisers. They must have been up all night thinking about that one – pathetic!

Facebook is so bad with their business model that it only serves to annoy their base and this is a true crime in the online world and may someday open themselves up to competitors. It also will cost them billions in the long term as users will simply change their behavior.

Facebook should also offer an enhanced version one with stronger privacy cooler profiles and a tranche of new offerings including the above, classifieds, cars, jobs and houses. I should also want to store with the options to share HD Videos, HD Photography and enhanced mobile versions all for a simple annual fee.

Twitter

Twitter worries me, it is no longer a must-be destination for the average Joe consumer or small business. It is slowing down dramatically and may only useful in the future for disseminating news and events. Sure it is still relevant but it maybe just a niche player in a few years.

For the power user it still offers some great insights and I do get great information, but more so from a select group of people I follow.

Summary

In summary I think the advertising model is flawed across Online Newspapers, Facebook and Twitter and needs some real creativity. I am convinced the model of the future for sites that have massive user bases is enhanced offerings all paid for with one simple annual fee.

I’ve recently discussed the merits of the portal with Craig Honeyman owner and Managing Director:

Q. Craig, what were your goals in establishing Realestateguide?

A. Our goal very early on was to develop a system that would deliver quality traffic and leads independently of major portal support. We do not upload to REA and never have.

Q. What are the key performance indicators for Realestateguide?

A. Between 2008-2010 we tested with only 1000 listings and received top traffic results

• Close to 1 million visitors total
• 772,000 Totally unique visitors direct from successful organic placements
• Close to 80% Australian traffic
• 4.3 million page views

With close to 1 million visitors in 3 years (on only 1000 listings) you can see how this platform would increase in traffic and leads exponentially if the data was increased dramatically.

Q. Craig, what differentiates the Realestateguide portal model from existing portals in Australia?

A. Our system should be thought of as one that bridges the SEO gap between the user and agent:

(1) User Search- Search Engine > (2) RealEstateGuide > (3) Agent Listings > (4) Leads to Agent

Our system also allows for unique custom keyword entries for each listing. This can be achieved by the agent logging into their account or by our main administration. As listings are upgraded to Feature or Executive placements, their ranking increases meaning more traffic is achieved.

The unique advantage of this platform is that when data increases, so too will the traffic and leads to advertisers. This is because of successful organic search structure. This system ranks the agents listings independently in Google and other engines as well as our main suburb or state directories.

Q. Does your model work and if so do you have solid figures to back it up?

A. This portal has been under slow development since 1999. We have deliberately kept this model back until we knew that it could deliver quality lead generation.

Since 2005 we invested a considerable amount of time, money and focus into back end structure and SEO for this platform. With 3 years of testing we received 89% of all traffic via (not paid) but organic search engine placements. In other words close to 90% of all visitors found us in a successful organic search. Google topped this at 71%.

The majority of agents who have tested receive quality lead generation above the majority of the larger free portals and some paid subscription based platforms.

Q. How much can someone buy Realestateguide for?

A. We are now requesting major industry funding and support to launch this portal to the next level. A total purchase of this portal model would be considered or part therein.

Is this just another portal beating their chest and pretending they do things better than their competitors? My opinion is no, as in relation to delivering property seeker leads I know for a fact they do achieve this. Only a handful of my clients list on Realestateguide but in discussions with 4 of them they’ve indicated that the enquiries they receive from Realestateguide are in most cases more than what they receive from Myhome or Homehound. This is quite an achievement given they only have 1000 listings on the portal.

I’ll let you be the judge for yourself but Craig is happy to answer any questions through the forum or can be contacted on 0457 080 683. Further details in relation to what’s on offer in the sale can be viewed here.

Twitter
Twitter is a little on the nose to me and I am going to predict a sharp decline in 2011. Sure, Twitter will exist in some form or another well into the future but to me it is finished as a mass marketing tool and will eventually be relegated to some important niche communications. Twitter’s revenue making announcement early last year completely lacked any corporate imagination and signalled to me to be the beginning of the end for the company (and a multi billion dollar entity) and unless they innovate well I cannot see the service lasting in its current format for too many years. It is great for cross communication and breaking news alerts and it should play on those strengths.

Google
Google has made a great move in move with Eric Schmidt stepping down at Google and being replaced with Larry Page. Schmidt has made just about every web developer nervous (including me) as some of his comments were against every moral grain the company had built over the years and some of his recent comments were just idiocy! Hopefully Larry Page can get the company back on track, his communication is poor, but hopefully he has worked on this over the years.

Eric Schmidt did an amazing job in his initial years of organizing the company and building revenues and profitability, but he has shown he struggles with communication and needed to be replaced.

Facebook
Facebook goes from strength to strength and has now reached a valuation of around 50 billion. It does however make you wonder how they are going to satisfy the demand from all investors for revenues, especially in the light of them recently raising another billion of dollars. This places pressure on the company to massively increase revenues when they already should be very profitable.

There are many opportunities for Facebook and it will be interesting to see if they show a little more imagination than the Twitter crowd. I think adding personal related services that are paid for makes just as much sense as the boring old advertising model favored by investors.

I prefer to use Facebook for just family and friends, however I now see some really good opportunities there for our business and Facebook give developers the tools to build out some pretty cool applications. Here are some of our recent Agent additions from my company. You should talk to your developers to get them to build out some apps for you just to test the water. All you need is your own page (not your personal account)

RWM Mosman Facebook Page
Raine and Horne Facebook Page
Ristic Real Estate Facebook Page
Graham Lynham Facebook Page

Will Facebook continue it’s amazing growth? Maybe, however, I see a more local version of my personal life, something that is open source and that I have 100% control over who has access to what. I havent seen it yet, and really do not know what it is – but it definitely is not one company controlling my whole digital personal life.

Groupon
How many companies are offered a buyout of billions of dollars only to reject it and see their valuation plummet in the ensuing years?  Yes, many we have already forgotten about. Groupon rejected Google’s billions and now have to compete with that very same company as Google has just announced they will be launching a competing service. There is a moral to this story – sell your bloody company when you get a decent offer. There are many businesses/ideas you can build with a few million/billion dollars.

Linkedin
I will stay on this site as long as it is free, but to me it is just a chest thumping load of junk. Currently it ranks below my own company site as far as referring traffic (all of the articles on this site are linked to my linkedin.com profile) and from what I can tell this is useless fro business to consumer. For business to business we might see something, but not for the real estate industry.

MySpace
Rupert got his money back on this investment early. But in the ensuing years MySpace has cost him big big money and he can kiss it goodbye as it is currently burning through 100′s of millions of dollars a year. It was a lame duck from the beginning (disorganized, spam) and is a perfect example of why you sell early! Listening to Rupert speak about technology is excruciating. He simply doesn’t have a clue, quotes like Facebook being a fad, Google struggling once it matures and then his continual assault on free news (BBC< AC etc) is childish and gets him nowhere.

Your own blog
If you have a real estate website and you are not blogging about local market, local news, local events then you are missing out the the biggest opportunities for personal and business growth. If you want to start on the ground floor, get a FREE WordPress.com blog and start playing. If you want a professional blog under your own domain name speak to your developer.

Wikileaks
Isn’t it wonderful that we have one news organization in the world that actually operates like all major news organizations once did? I hope there are many more years to come of people leaking information we should already know to organizations such as Wikileaks. Stand up for these freedoms we enjoy at all times and never be a hostage to your own motives!

And to refer back to the title of my post back in April, has it come crashing down to Earth like a huge white elephant, or elegantly applauded in as yet another Apple master stroke?

Before I answer that I’ll come clean and admit that I got one on the day they launched.

The Good

1- They are an extremely good presentation tool. Visually everything just comes to life on the screen. Keynote (Apple’s version of PowerPoint) can do some wonderful things and smart Australian companies will be working on some presentations for this tool and rolling them out to their sales force as I write this. If (like real estate agents) you’re presenting one-to-one, or one-to-two, there’s no better tool.

2 – The size “just works”. I was struggling to see where it would fit in the market if you already had a small laptop and an iPhone, but as soon as I saw one I instantly got it. The size is perfect. It’s not (as I feared) just a laptop without a keyboard. It’s small and slim enough to be a genuinely different product.

3 – As with all Apple products, it’s intuitive. It’s interesting that many of Apple’s products don’t even come with an instruction manual.

4 – It’s not all about fancy games and funky Apps. This thing has got some business grunt. Apps I downloaded on day one included; Pages, Numbers and Keynote (Apple’s version of Microsoft’s Word, XL and PowerPoint), as well as PDF Viewer, GoToMeeting and an App called DocsAnywhere, which enables you to sync the documents on your PC or MAC with your iPad, via iTunes.

5 – For the iPhone owners amongst you, some of the features you already know and love just work much better on the bigger version.

6 – It’s fast, particularly in WiFi mode, but it seems pretty slick in 3G as well.

7 – Battery life, the Achilles heel of the iPhone, thankfully the iPad doesn’t suffer the same problem.

The Bad

1 – You can only do one thing at a time and can’t jump around from one application (or program) to another like you can in Windows. If you want to quickly dive out of “something” to do “something else” for a few seconds, you can’t without closing the program you’re in.

2 – You have to get the WiFi/3G version. If you get the cheaper WiFi only version you’re wasting your money, as the device will not be anywhere near as mobile as you need it to be. Think iPod Touch (WiFi only) versus iPhone (WiFi/3G), there’s just no comparison.

3 – Touch screen keyboards are just not that great.

So, the verdict? For this industry I think they’re a great investment for an agent, assuming that you (or your business) is prepared to work hard to create the tools that will make the iPad really blossom.

A win for Apple I think.

Just as RealEstate.com.au complete the launch of a new web design News Limited are putting the final strokes on a strategy to strike back and one of the weapons of choice in the fight will be a video and website called “For What It’s Worth”. This tussle between the two giants for the real estate advertising revenue has all the drama of a soap opera and our current story is reminiscent of the Empire Strikes Back, the second movie released in the Star Wars franchise.

The Star Wars movie saga  featured the Jedi, who use the Force for good, and the Sith, who use the dark side for evil in an attempt to take over the galaxy.  In the original Star Wars movie the Sith had control of the Galactic Empire. Believing themselves invincible they built the Deathstar to literally crush any opposition still remaining to their absolute domination of the Galaxy. The upstart Rebel Alliance did not have the firepower of the almighty Empire but what they lacked in firepower they made up for with cunning and skill to win the first round in the saga.

The real estate advertising market plays the part of the Galaxy that everyone is fighting for in this story and who can better fill the shoes of the Galactic Empire than Newspaper Advertising.  Up to 10 years ago there was only print as an option for agents to use and the Newspapers ruled the Galaxy with no fear at all. Then along came the internet and from that sprang the Real Estate Portals who are playing the part of the Rebel Alliance. In comparison to the traditional media organisations the portals were comparatively light and nimble and who took the fight to their lumbering foe in guerrilla fashion.

It did not take too long before the Rebel Alliance started making inroads against the Galactic Empire and the war was on.  The battle raged and in the process the Rebel Alliance destroyed the Deathstar and in the process showed the Galaxy that the Empire was able to be defeated.

In the past few years we have Newspapers losing their aura of invincibility for the Real Estate advertising dollars to the new boys on the block  the Real Estate Portals who are fighting way above their weight class.  However just when the portals were getting comfortable with their gains the Empire Strikes Back!

The movie second Star Wars movie,  The Empire Strikes Back starts with Galactic Empire recovering from recent defeats in the original installment and attempting to drive the Rebel Alliance forces back out of the Galaxy and recover what they consider is rightfully theirs.

News Limited are about to launch a fight back against the real estate portals claim on their galaxy, the real estate advertising dollars. Apparently one of the first strikes might be News Limited to stop the realestate.com.au branding on their property pages unless they start coughing up some serious dollars which REA are not prepared to do.

Another strike which is due for release very soon is the “For What It’s Worth” campaign which focuses on promoting print advertising to property sellers. The centre of the campaign is an 18 minute video that attempts to pass itself off as an independent advice to sellers on using print advertising when selling their house.  At a recent launch we were only allowed to preview just a short clip from the video which should be out very soon.

The premise of the video is that 5 or 6 experts discuss the advantages of using print from their perspective through an evidence based presentation.

The four key points the video highlights will be :

1. Choose a good marketing agent (in contrast to a transactional agent)
2. Combine Print and Online marketing
3. Invest 1% of the value of your property in marketing
4. Improve your styling and presentation for best results

There is an analyst from RPData who I presume will come up with statistics to show that houses will sell for more if they are advertised in print.  There is also a property stylist and Tom Panos from News Limited fills one of these expert slots himself.  Another one or two of the slots are to include real life vendors who provides a testimonial on how print worked for him when selling.  There is not a real estate agent in sight apparently and overall the production values on the video appears very high from what we were allowed to see.

News Limited will be providing all of their clients with the dvd’s to provide seller clients as part of a physical pre-listing kit. Of course many agents are skipping the traditional printed pre listing kit and are choosing to deliver digital versions and News Limited is finalising a website now that will feature the video that agents can provide vendors as part of a digital pre listing kit. There will probably be the typical brochures and like to hand out at listing presentations and open houses.

The message that was sold as part of the “show” and I assume will feature heavily on the video itself when we get to see it is:  that of course an agent has to advertise your property on the internet, that’s only natural and to be expected but only the very best agents use print advertising as an additional option and  they are able to leverage the print ads to achieve a premium price by as much as 10% because of the increased competition that a print campaign will create.  With print advertising you get to sell your house For What It’s Worth!

Given the short video that I have seen I actually think the concept works and has a great potential and it seemed to be well received by most agents. The fact that it uses video and the internet to push a print message is of course slightly hypocritical but I think overall it will be a positive move.

It might win them a few battles and keep them in the war a little longer but can the “For What It’s Worth” campaign kick the pesky rebels out of the Galaxy….. not by a long shot.

Any Star Wars fans out there know that by the end of the Empire Strikes Back movie the Rebel Alliance have kicked the Galactic Empires butt once again. In fact once the Empire recovers from that shellacking there is still a third movie in the original Star Wars trilogy called Return of the Jedi to be played out yet where the Rebel Alliance turns up the pressure, the Galactic Empire falls and the Emperor is killed.

These tactics might extend the life of print as an option for property advertising but I fear nothing can save it from the inevitable.

If print is still successful for you and is a valid option that you offer owners then you are probably going to love the For What It’s Worth campaign especially if you are an auction orientated agent. It has the potential to be a great tool to get VPA for print advertising. It wont be the saviour of the Newspaper Advertising for real estate agents that News Limited would like to hope for but it will make a difference and give you a great tool to add to your kit.

Of course to all the Star Wars fans out there I have to ask you to ignore any other Star Wars facts that do quite not fit this story however if you can come up with any other connections between the two sagas then share away!

For instance.. who plays the part of the Emperor… Rupert?

What about this… Darth Vader fathered Luke Skywalker who went on to destroy the empire which is just like News Limited and Fairfax spawning Realestate.com.au and Domain.com.au who then go on to threaten (and ultimately destroy) their cash cow.

Firstly, I have to confess that I’m in love with the Apple brand. The iPod is one of the best consumer inventions in memory and, from a person that used to feel pretty cool in my teens using a yellow, waterproof Sony Walkman (yes, I pre-date the Sony “Disc”man) it’s amazing how quickly I became reliant on my iPod. I took it everywhere and looked forward to a morning run so I could use it.

As you can imagine, the iPhone blew my mind, and continues to amaze me almost every day. I break into a cold sweat if I forget my iPhone. The iPod and BlackBerry are now gathering dust in the spare room, waiting until I get around to putting them on eBay.

I’m now seriously considering buying a MAC for home. Why? I have no idea. As a marketer I’ve just been sucked into the vortex, and I just want one. Every time I switch on my PC at home I’m secretly hoping that it’s broken so I can justify the new purchase to my fiancée (who I know secretly wants one as well).

So, to the eagerly awaited Australian launch of the iPad. Apple’s website is positioning this product as “A magical and revolutionary product at an unbelievable price.” I’m a little sceptical.

Really good marketers are masters at finding a gap in a market and creating a product or a service that exploits that gap and fills the void. Exceptional marketers take that one step further and develop a product or service to fill a void that doesn’t even exist, and then create the gap via clever marketing. Before you know it, nobody can understand how they lived without what you’ve invented.

However, in launching the iPad I wonder if Apple has just got a little carried away. As one of the most powerful brands on the planet are they forcing a product onto us that we just don’t need at all?
Apple is telling us that you can conveniently; surf the web, watch videos, download and use apps, flick through photos, manage your diary and emails. All of these things you can do on your MacBook and iPhone. I struggle to see why you would buy this product if you already have the iPhone, and particularly if you also own a MacBook (Apple speak for a laptop).

Will this product revolutionise the way that we consume information and, in turn, how we do business in the real estate sector?

Here are some ideas on how the product “could” be used:

1. Listing Presentations. Laptops can be a little intimidating in the lounge room, some agents suggest that they can create a barrier between the prospective vendor and the agent. Maybe a touch screen tablet will soften that a little.

2. Property Searches. Some of our offices have MACS in reception, enabling the public to drop in and browse our website. The novelty of using iPads could work well.

3. Capturing Information at Open Homes. With the right software (that plugs directly into you database) it would be pretty handy to record not just buyer details, but buyer feedback on an iPad during open homes.

I’m still a sceptic, but I’ll let you know when I’ve bought one (which will probably be early May by the way).

Over the past few weeks I have been receiving emails about a ‘heated’ war between Antony Catalano (MMP Holdings) and Fairfax’s Real Estate Print Guides. You can read a great little article on Crikey here and also The Age article here.

It seems some of eastern Melbourne’s agents including Jellis Craig, and Kay & Burton, are defecting from Fairfax Media’s Melbourne Weekly Real Estate Guide to a new publication being led by Antony Catalano (MMP Holdings) and some law firms with some the local agents taking a stake in the publication.

Now where do I start?

Yesterday’s article by Charlie pointed to a percentage of agents that claim that vendors are somewhat begging to be included in print publications. I call this segment of the market ‘truth stretchers’ or maybe ‘agents with interests in print publications’ is a better phrase. Seriously? Vendors are knocking on agents doors to advertise in print? Surely you jest!

Print Advertising

Print Advertising is a barrier market these days. Convincing a vendor to shell out thousands of dollars for a one day advert that only competing agents look at (a little harsh yes), is hardly a good advertising investment for your vendors. The barrier market I refer to is at about $700,000, this means very few people with properties for sale under this figure would look at a print campaign, hence the ‘barrier market’. This barrier is rising by the year and in a few years print publications and interested agents will only survive on the multi million dollar vendors.

This is not to say print advertising is dead, it will survive in exclusive pockets of Australia, but to middle Australia and below, it is finished!

MMP Holdings

But wait! Why have MMP Holdings and others invested in real estate print media? You only need to read Charlie’s article from yesterday to understand why – dumb money! For some reason real estate agents in Australia are still infatuated with print media and whilst print advertising is in decline it is still a very lucrative market.

Going up against Fairfax is a tough deal and one that may play out for years. The problem for MMP Holdings is that incumbent newspapers will not give up their market share without a long costly fight and most of these publications cannot stand the heat or successfully sell back to the newspapers within a few years.

MMP Holdings will have  need to make an impact fast. Having a group of agents owning a share of the publication is not the smartest move either. We have seen how far that will get you with competing agents in the past – especially if this is disclosed to competing agents.

The biggest problem faced by MMP Holdings aside from money is infrastructure. Fairfax have so many other perks it can offer agents with zero real costs that it will make competing in the long term difficult. Remember Fairfax are combining their print and online divisions, so offering bonuses on the web for ‘loyal’ agents can make life difficult for MMP Holdings.

Funny Money

Something tells me everyone involved in this is playing with other peoples money. There are hundreds of opportunities out there to make money, why would you spend millions of dollars on an industry that will most surely die a slow and painful death?

All over Australia new glossy print companies are going up against incumbents like Fairfax and every time I read an article on this subject I just think why? Are agents that dumb that they will just continue to throw money at something that offers little value for money?

Maybe I am a web snob, but these glossy wars get a little boring after a while.

Disclosure upfront – for over 10 years now I’ve been running a niche real estate portal and web development business. During that time, I’ve often pondered how much money was being collectively wasted on real estate print advertising. I believe that figure (in Australia alone) is now over $1 billion.

According to IBIS World Research (July 2009), real estate advertising will this year (2009/2010) reach $1.56 billion in Australia. That makes it the second largest advertising sector after fast food ($3.3bn), and is greater than auto industry ($997m), banks ($966m) and supermarkets ($774m). Now, every time I turn on the TV these days (which admittedly, is less and less) ads for burgers, cars, banks and supermarkets abound. The 4 great necessities of life I suppose. I’d imagine these guys to be spending big time.

I’d always known real estate would be spending lots too, but to see them firmly in second place (above the other named high ad spenders)?

Moreover, when you consider the fact that 55% of all property enquiry now comes from online advertising (Macquarie Bank, Real Estate Report, Nov 09) then there is something seriously wrong.

If we take the 55% as an average across the country – most of my clients tell me it’s more like 70 or 80% – then at least $850m should be spent on online advertising. However, the best guesstimate I can make is it’s actually $240m. (Frost & Sullivan’s 2008-2012 Report suggested 15% of total real estate ad spending is online). If realestate.com.au takes in $150m or so, Domain $50m and the table scraps are being picked up by the rest ($40m), this also suggests a $240mn total.

So if 55% (or more) enquiries are coming from less than 20% of the spending, where is the other 80%+ of spending going? I think we all know the answer to that one – print.

Now I know that advertising is not only about selling, it’s also about branding, differentiating and getting new listings (in the case of real estate), but how can the remaining $1.3 billion be justified if it is not creating the business enquiry of a spend one quarter of its size? (I’d also argue that branding and the rest can be done online too.)

When posed the question, most real estate agents tell me it’s because their sellers expect print ads. Even if told it is a waste. Perhaps the sellers need educating. Perhaps some agents also like to see their name in lights (well, the local rag made from dead trees anyway) and it’s a competitive forces (“they advertise all over it, so we have to be there”). How much business would be lost if they (collectively, or even unilaterally) halved their print spend? How much money would be saved?

Yes, the print spend is falling (slowly, but inexorably). However, more than a decade into the new economy I can only see justification for maybe an equal split of offline and online ad spend – say $250m each or so on each – and that still leaves a $1 billion dollar black hole.

Please excuse me while I go and have a quiet sob in a darkened room.

Photo credit: the Torus Black Hole, NASA 2003