Principals who use vendor-paid advertising as a form of brand marketing are losing out to savvier competitors, writes Jon Ellis, author and founder of strategic communications agency Extension
I don’t know how many times I have heard agents say, “We spend millions on advertising and get nothing for it”, or “make the logo bigger” – all about ads that are vendor-funded.
The prevalent mindset is that property ads are somehow the agency’s brand advertising and a key listing tool. The fact that the ad is actually intended to generate leads for Mrs Smith’s three bedroom California bungalow and, in turn, the commission that feeds the agency is somehow forgotten. Some agents are so conditioned to this way of thinking that they take copies of the ‘local rag’ to pre-listing meetings to show off the number of full page ads they have.
Is it this idea of getting something for nothing that has made many agents starve their business of marketing dollars, effort and know-how? Is the prevalence, and attraction of viewing vendor-paid advertising as agency brand advertising creating a market in which few have any real competitive advantage? I believe so.
Most businesses – at least, successful ones – have a marketing plan and associated budget that spans at the very least the current fiscal year. Most agencies don’t have a marketing plan. They have a pre-listing kit, a listing kit, a marketing schedule for properties they list (that has been recycled time and time again), a newsletter for their office and a corporate newsletter (they do two because, rightly or wrongly, they feel the ‘corporate’ content isn’t relevant to their clients), a few pieces of direct mail collateral and a magazine of vendor-funded properties.
Many, however, don’t actually have a plan.
Assuming other businesses do have a plan, how much do they actually spend? According to Business Week, a majority of companies spend about five per cent of revenue on advertising. Naturally, higher volume, tighter margin companies would spend less; however, professional services companies (the category I would see being the most similar to real estate agencies) spend between eight and 15 per cent on average.
Excluding vendor-funded advertising, most real estate agencies wouldn’t even come close to the level of spend and effort of most other businesses.
So how can their unique edge shine in an ultra-competitive market?
Back to “make the logo bigger”. What do most agency brands really say? Coca-Cola spent $13.7 million last year in Australia alone telling people their brand means fun, summer, laughter, friendship and, ultimately, refreshment. They didn’t spend this on making the logo bigger. In fact, many Coke ads hardly feature the logo. The reason for this is that they have invested in their brand, so recall is high and they now only need to reinforce their message.
Many have said this doesn’t happen in real estate. Wrong – it does. Ask John McGrath in Sydney why he has online video after video, blog interviews and books. It is clear he trades in knowledge and expertise; so much so that few could match him. I’m sure he could tell you what his point of difference is.
Another good example is Melbourne’s ‘hard working’ real estate group, hockingstuart. They started working Sundays, at a time when many others didn’t, and the message of ‘hardest working’ stuck. Then the culture became entrenched, internally reinforced within the agency and the market was given the message time and time again.
In outer eastern Melbourne, Ken Beckwith’s Max Brown has grown from one small agency to an independently owned six-office network in what is traditionally a franchise belt.
Max Brown’s brand is different – in fact, it’s bright pink. This ‘we are different’ philosophy flows through the agency’s DNA and the market knows about it because Max Brown advertises on billboards, buses, local flyers, websites and using basically anything on which a splash of pink can feature.
The message is consistent: that we are different and that we innovate. Ken has advertised his brand values, a free call number and, most recently, QR code usage, even though he admits QR code uptake is not that great – yet. This constant reinforcement has allowed his independent agency to grow and, importantly, to retain market share and fee structures while others are offering commission discounts or fixed fee deals, competing on price.
What is clear about these three very different yet very successful agencies is that they put in extra effort, differentiate themselves and have a very clear communications strategy. This strategy makes prospects firstly select their agency as one worth evaluating, and then secondly, apply an additional value to them when selecting their preferred agency.
So what does this mean for principals?
My advice is to separate completely the ideology associated with marketing to sell a property from marketing to sell the agency’s brand.
Property ads should be all about the client’s property. Sell it as if it were owned by the agency’s principal. If that means no advertising in The Sydney Morning Herald, The Age, Courier Mail, West Australian or whatever the area’s major paper is, then so be it. The agency brand should be included as it helps the prospect identify the agency if they can’t take down contact details. But that is about it. The competition will have massive logos on their ads and boards, which can be used in your listing presentation as ‘we focus on selling your property, not ourselves’.
Brand ads and communication should be all about the agency communicating its competitive advantage. They need to be planned, strategic and have the necessary budget and internal resources allocated to give them real traction.
In my opinion it is clear. Agencies with a real and compelling story backed up by the marketing plan and associated resources to communicate it will outperform their competitors regardless of market conditions.