Online Real Estate Ads Hit $2 Billion

Real estate-related Internet advertising will reach US$2 billion in 2006, or 17.7 percent of all real estate spending, according to a new report from Borrell Associates. The report predicts online will jump to 32.1 percent of all real estate spending by 2010, with most of the increase coming at the direct expense of newspapers, real estate publications and direct mail.

But online's growth isn't all cannibalism. Newspapers actually made US$244 million from online real estate advertising in 2005, adding 5+ percentage points to their total real estate revenues. Overall, newspapers account for 14 percent of online real estate revenues — leading all other media, with the possible exception of Google.

While impressive, that's a far cry from the 40 percent share of real estate advertising that newspapers command in print today. Borrell expects newspapers to lose an additional 33 percent of their market share in real estate advertising by 2010. Borrell notes that the size of the increase in real estate's overall online advertising doesn't begin to gauge the Internet's huge impact on the business since it is so much cheaper and more efficient.

The report also includes results from a survey of 531 agents, as well as extensive analysis of the impact of Web 2.0 players on the industry. The survey reveals that 61 percent of agents still don't advertise on the Web, and 87 percent don't make keyword buys. But tellingly, newer agents are much more dependent on the Web. Sixty-four percent of newer agents advertise online, compared with 36 percent of agents with 10+ years’ experience.