Have You Spent Too Much on Digital Ads?

October 26, 2016

Real estate professionals are big spenders when it comes to advertising. They will spend an estimated $25.9 billion this year alone, according to the 2016 Real Estate Advertising Update by Borrell Associates, which tracks advertising data. The report includes results from the company's survey of about 290 real estate agents and brokers about how they allocate their marketing dollars.

But advertising expenditures have fallen 6 percent since last year, and while real estate pros favor digital ads the most, agencies reduced spending in the digital realm by 8.5 percent this year, the report shows. It notes that practitioners may have committed too much money to digital and are now reallocating cash toward more traditional advertising avenues.

"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 says.

Five of the 11 media categories measured in the report showed advertising growth since 2015:

  • Directories: +84 percent
  • Telemarketing: +20 percent
  • Cable TV advertising: +12.7 percent
  • "Other print": +12.5 percent
  • Radio advertising: +9.5 percent

Real estate professionals are still putting a strong emphasis on digital ads, particularly video. In 2016, agents and brokers spent 6 percent of their digital budgets — or $472 million — on streaming video advertising. Borrell Associates forecasts that in five years, agencies will spend 29 percent of their digital budgets — or $2.6 billion — on streaming video ads.

Twenty-two percent of all real estate advertising dollars is spent at the local level. Local spending will total an estimated $5.7 billion this year, with online media getting more than half of that amount. Here’s a snapshot of some of the local real estate ad spending estimates for 2016:

  • Newspapers: 12.5 percent (local share)
  • Other print: 5.1 percent
  • Directories: 2 percent
  • Broadcast TV: 6.1 percent
  • Cable TV: 2 percent
  • Radio: 5.2 percent
  • Out of home: 1.9 percent
  • Cinema: 5.7 percent
  • Direct mail: 4.6 percent
  • Online/digital: 53.4 percent
  • Telemarketing: 1.4 percent

Overall, real estate professionals reported spending an average of $40,047 on advertising in the last year. Four in five agents, however, reported spending less than $2,000 a month on advertising. Here are some additional findings from the report:

  • 76 percent of agents say their website is "mobile optimized"
  • 88 percent have a social media page
  • 62 percent are planning a "major" website change soon
  • 64 percent have advertised on Facebook
  • 32 percent have advertised on LinkedIn
  • Twenty-nine is the average number of monthly calls they get from ad-sales reps
  • Three is the average number of media companies they work with
  • 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

Source: Borrell Associates