Real Estate Advertising Moves From Offline To Online

The real estate section contributes considerable heft to the classifed ads of many daily newspapers, but that could begin changing quickly according to this story in Business Week Online. The article reports newspapers currently garner 37 percent of real estate advertising budgets. However, 77 percent of real estate searches now begin online, so companies are starting to shift their ad dollars to the Web. The National Association of Realtors reports that newspaper ads only account for 5 percent sales. That low of a return on investment is another reason real estate advertising money is moving to the Internet.

If newspapers are going to lose this advertising revenue in their print editions, they would at least like to gain it back on their own Web versions of the newspaper. Unfortunately, there is plenty of competition for this business from other sources, and at any rate, online ad revenues are at a lower margin than newspapers have been reaping from the print side.

This all may be a moot point. A week ago I wrote about a real estate bubble. If that happens, real estate advertising could be affected both offline and online. Since posting that story, I have seen a number of reports that foreshadow trouble in the real estate sector: They include (some of the WSJ links may require subscriptions or trial subscriptions):

• Builders Brace For Housing Downturn (Business Week)
• Realtors See Home Prices Falling As Builders Cut Profits Outlook (Wall Street Journal)
• How Low Will Real Estate Prices Go? (Forbes)
• Home-Price Rises Slow the Most In Over 30 Years (Wall Street Journal)