Pete Flint from Trulia recently alerted me to an article on the Trulia Blogs about the decrease in newspaper real estate advertising revenue over the last 18 months.
The article is based on the quarterly release of advertising expenditure by the Newspaper Association of America (Click here). What is interesting when looking at the results is that, on a quarterly basis, the spend on real estate advertising in papers is down for the 6th quarter in a row to levels not seen since 1996.
Now for those of us in the online industry none of this is a surprise. The US real estate market is under pressure, agents are leaving the industry and there is just not as much money to spend on real estate advertising. In addition, online does deliver significantly better returns than print in terms of cost per lead generated.
The other question is where has the money gone? Has it gone on online or has it just left the industry all together. I think the reality is that it has left the industry all together. Over the last 2 quarters, $700m (the difference in total spend in Q1 & Q2 2008 versus Q1 & Q2 2007) has left the industry and it is not going to online. Yes spend on advertising online is probably up a little, but the majority has just left the industry as agents have less sales and therefore less total commission.
Now this is not a US only phenomena, it is happening all around the world. In the UK, newspapers and magazines are under enormous pressure and rumour has it that forward bookings in the Australian market are looking decidedly shaky.
For the online world, this pain is just what the doctor ordered. Advertisers will be forced to seriously reassess where they are spending their marketing dollars and the effectiveness of online will shine through.
Click here for the full Trulia article.