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Report: Online Real Estate Ad Revenue to Eclipse Newspapers by 2012

Written on
November 27th 2007
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No doubt the collapsing housing market has played a huge role in the downturn of real estate classified advertising. For the third quarter, the Newspaper Association of America reported that real estate ad revenue plummeted 24.4% to $1 billion compared to the same period a year ago.

But for those who think this is all cyclical — the housing market will bounce back at some point and so too will print ad dollars — a new report from Borrell Associates suggests that once the spending flows again, it’s going to the Internet.

The firm forecasted that in three years, agents and brokers will be spending more on online media than on newspaper advertising. By 2012, Borrell anticipates that newspaper real estate ad revenue will hit $3.2 billion while online real estate ad revenue will surpass that at $3.4 billion.

So far this year, total ad spending on real estate dropped 3%, the report found, but online advertising soared 25.8% to $2.6 billion most likely due to a shift of those dollars from print to online. The rate of online growth is expected to slow over the next year — estimated at around 12% but it should still eclipse newspaper real estate ad revenue.

Borrell suggests newspapers are going to suffer the most when compared to other media. The firm projects that after last year’s high of $5.2 billion in print real estate ad revenue, there will be a 6.8% decline this year and an identical drop in 2008 before the decline truly accelerates at 16% in 2009.

Analysts do point out that that newspapers stand to gain something from the shift of dollars to the Internet. In 2006, the industry generated $380 million from online real estate advertising or about a 19% share. If the share holds for this year, newspapers stand to gain almost $100 million in additional real estate ad revenue. However, it’s unlikely the gain in online dollars will offset print losses.

The study nods to the very recent announcement of 11 newspaper companies partnering with Zillow.com in addition to the Yahoo consortium, which could help more real estate ad dollars flow to the newspapers.

At the same time, brokers and agents are shifting their ad budgets to maintaining their own Web sites. By 2009, Borrell anticipates that Web site design and maintenance will represent 47.6% of broker and agent online spending. “The clear implication of this change is that brokers and agents are increasingly taking control of client communications and hence the client relationship,” Borrell analysts wrote. “While they will continue to advertise in commercial media, they see their own web operations as growing in significance.”

Compliments of Editor & Publisher

 http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003677609



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