"This is like going out to sea and fishing: once, the more fish you caught the better, now it's about catching only the one that will make you the most money." This is how Alexander Hoffmann, one of Google's analytics chiefs in Germany, describes how the online advertising industry is changing in the world of portals.
You, the daily visitor, along with the millions of other users, going on employment pages, cars, and property, are the fish. And real estate portals such as Idealista, or automotive such as cars.com, are the boats that go fishing. Before they used coarse ads, without segmentation. They killed flies with gunshots. Now new techniques have arrived, which let the software take care of everything.
The online portals business of buying and selling products and services, the 'marketplaces', continues to rise. Dozens of companies in the sector and hundreds of attendees who met in Madrid for the 26th edition of the Property Portal Watch Conference to analyze what is happening and what is yet to come in the real estate portals and classified ads sector. The event, which closes today, brings together giants such as Google to 'startups' from half the world, such as the Swedish Norban or the Spanish Spotahome, two of the most recognized European success stories of late.
Google is precisely the elephant in the room. At the moment, unlike what it has done with the flight sector, the company has decided not to sneak into the real estate sector. But the search engine is still the place where millions of people go every day to find apartments for sale or for rent. Advertising on Google, with the exact words and in the right way, is still one of the most direct ways to fish customers.
"Let's say we are developing a fish detector to find the ones that are really valuable to you. We use machine learning and algorithms to understand when people are looking for, with what device, or why they type 'buy a 2-room apartment in Madrid'. If we know that that person, anonymously, compares motorcycle prices from their Android smartphone or looks for tips on taking care of their tattooed skin, the ads we tailor for them specifically can be much more effective. We stop analyzing data, to move on to analyze behaviors," says Hoffman of Google.
Google is not the only company that is turning to machine learning, a discipline of artificial intelligence, to reinvent the real estate classifieds sector. The 'startup' Utopia Analytics, based in Finland, has created an algorithm that analyzes the interaction of users with ads (if they see them, or they reject them, or even how much time they spend on each one...) and automates their moderation. Utopia Analytics works with portals such as tori.fi, for buying and selling cars and flats, one of the largest in Finland and owned by the Norwegian group Schibsted (owner of Milanuncios) to scan, filter and automate more than 1.3 million ads per month. Instead of having dozens of moderators who manually verify ads, technology now does so in seconds and almost equally reliably.
This technology no longer applies to the internet alone, but also to phone calls. Firms such as UK-based iovox work with real estate portals in more than 50 countries to automate all calls they receive from customers. By creating a virtual number, the system redirects important calls (for example, from clients interested in an apartment of 2 million euros) to the most experienced telephone agents. What's more, by adding metadata to the call, you can know if it was a complaint or not, if it ended up for sale or not (and why), what information customers are looking for etc. iovox even records calls (with the prior consent of the client), performs an automatic transcription, analyzes the content with algorithms, adds all transcripts and sends reports with conclusions about what is not working to make adequate decisions.
Beyond the great established giants, from Google to Airbnb, through traditional portals such as Idealista or Fotocasa, new proposals for portals are making a successful hole in the real estate sector. In Spain, Spotahome is the startup that everyone looks at. Your idea: focus on medium-term rentals, between 1 and 12 months. "We have nothing to do with Airbnb, they place holiday stays for a few days, we don't," explains Eduardo Garbayo, head of Spotahome in Spain.
Among the advantages that Spotahome sells against other more traditional alternatives, such as Idealista or a real estate agency, are the presentation of its flats and commissions much lower than those paid in the 'offline' world. The firm has some employees, whom it calls 'home-checkers', who are in charge of photographing and inspecting in person the flats that are going to be advertised online. "We sell reality. If a kitchen has oil stains, we want them to come out. We do not take photos of lies, they are images of the host," explained its founder, Alejandro Artacho. Once the user decides to keep an apartment, he has to pay a commission ("not exceeding 300 euros") and can back out the first day if what they see does not convince them. The website even has insurance that covers hotel nights in case of any unforeseen events.
The startup Norban is launching a similar idea in Finland. "Only 6% of Finns claim to rely on traditional real estate agencies, 74% don't know which one to choose to sell their flat," explains Adrian Miller, founder of the company. His approach is to have real estate agents on the payroll without relying on sales commissions to really help users buy or sell properties and offer an online platform in which to close agreements in minutes. "We do not take a commission from the seller, we charge the buyer a flat rate of 3,000 euros but we assure you that we will find the house you are looking for. That is why they trust us."
The above article was originally written and published for the Spanish publication, El Confidencial.
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