As local property markets become much more competitive and as buyers take on a much more conservative view, the role of advertising and marketing, in particular media has also shifted.
By comparison to 2017-2018, over the last 6-months we’ve seen a big, and in some markets a huge increase in related marketing cost per sale. It’s a trend that may well continue for the next 6-12 months, and very possibly longer. The increased costs per sale are those attributed to marketing, promotion and advertising and do not include the many incentives that are now widespread.
Against this background I’m going to take a look at some of the general advertising expenditure trends to help give a big picture overview of current media and ad spend trends. While property does not rank among the big spenders, an understanding of the trends does help to guide our planning and budget settings.
Recently published figures revealed that the global spend on advertising is set to reach US$616b in 2019. Reflecting the biggest year on year increase since 2011 however, there’s a surprising decline of 7.2% forecast for the internet ad spend but that excludes Google and Facebook.
Google and Facebook combined will account for 61.4% of the total internet ad spend, while traditional media will account for 53.3% of the total spend.
Programmatic online display will account for 65.3% of the online spend and that’s a key development for property as the industry moves aggressively into varied online formats beyond the traditional real estate portals.
For some this may be a new term and simply described, programmatic advertising is the automated buying and selling of online advertising that streamlines the process of digital advertising via one technology platform. In contrast to the more familiar routine of for example by placing individual listings on a real estate portal.
However, the opportunities are much greater than just making ad buying easier, faster and more flexible. The benefit is that programmatic marketing delivers (space) bids accessing more sites where people can be targeted to a far greater extent and in real time.
The Big Duopoly
One trend that’s impossible to ignore, and that’s despite the current negative publicity around these two, is the power of Google and Facebook, and the figure tell a compelling story.
In 2019 Google and Facebook are expected to account for a combined 28.6% of the total global ad spend and 41% of the search and social media spend in the US and possibly a similar level here.
Together the Duopoly’s expected share of the total online ad market is expected to reach a staggering 61.4%.
This dominance is further demonstrated by the fact that in the US Facebook’s share of the social ad spend in 2018 was 82.7% and in the UK social media’s share of the video advertising content was 86%. Video’s and video advertising are becoming more important to the property sector and these figures reinforce the value of that trend.
What these figures do show is that currently one in every 4 dollars of ad expenditure goes to the Duopoly with search and social media accounting for 4 cents out of every US dollar ad spend.
It is however, worth considering the role of search and social media, and this is as relevant for property as it is for other consumer markets.
Search is an activation channel that reaches consumers close to the point of purchase, it’s of most use when we are able to reach those people that are seen as ‘in-the-market’ and actively looking now. In the current market there’s also been a big jump in search activity with buyers being anxious to secure the best deal for any purchase they are considering.
In the search environment it’s interesting to note that Google handles 63,000 searches per second, or roughly two trillion in an average year.
While the key appeal and value of social is its ability, in various formats (including video) to target consumers (buyers) using a rich choice of data and social media. Social media and that includes Facebook is selling ‘trust’ although among some trust is currently being tested.
This month, Facebook announced its desire to move towards private, encrypted messaging services, and that may signal that their News Feed may soon have reached its peak.
Property uses a wide mix of media including so termed ‘old-media’ and it’s also worthwhile looking at some of the trends beyond the frantic online.
Globally, successful brands spend more than 75% of their budgets on television and digital channels combined, although TV’s share is declining. In Australia we see the major banks spending big on TV to attract home-loan customers and to reinforce their corporate brands.
TV remains key in cross platform (TV and digital) campaigns, according to Nielsen, nearly 30% of 18–34 year-olds were reached by the TV only, higher than the reach for digital only. TV is larger for the 35–49 group, where 48% were reached by TV only and was higher still, around 61% for the 50+ age group.
TV remains the largest ad media worldwide, although there was a dip of 1.7% in 2018, to 33.5% of the global ad spend and a further loss of 1.8% is forecast for 2019.
We have seen prints share down an estimated 1.5% in 2018 to 10.6% and is forecast a further dip of 1.1% to 9.5% of total global spend in 2019.
Out of home’s share also dipped by 0.1% to 6.2% in 2018, while cinema’s share held at 0.7%. Radio, another property media of choice was down by an estimated 0.2% to 5.5%. Radio is a very popular media in Australia among residential developers often concentrated in the land and house & land markets.
There are also a number of general trends worth consideration. Internet ad growth is slowing as total expenditure moves from desktop to mobile.
Some 80% of the mobile ad market expenditure was created in the last five years, and while growth is easing, almost three-quarters of internet users are expected to be mobile-only by 2025. It’s been social media and search that have benefited most from mobile’s rise and that explains all those screen facing moments we see everyday on our streets and why public transport rides are now so silent!
With the exception of print, traditional (old) media growth remains steadfast. Traditional media still accounted for the majority of global advertising spend in 2018, at an estimated 56.6%. There’s been a 10% collective share decline by an average 3.7% each year since 2011.
Much of the downturn, 5% is because of the decreasing print spend; with print removed, the remaining share for TV, radio, out of home and cinema ads has dipped 1.3% each year to 45.9% in 2018.
Australian Figures & Trends
In terms of top ad markets by annual growth Australia ranks 11th and out TV ad market 13th at approx. US$3b and a decline of 10.% in revenue 2017 vs, 2018. Our internet spend ranks much higher in 6th spot at US$6b and a 10-year growth rate of 17.4% our per capita spend is US$244 and not that distant from the US figure of US$270 the world’s highest.
For mobile expenditure we also scored 6th spot at US$2.35b and as highlighted early the mobile growth has been strong up 38.5% 2016-17. Over the same period radio grew to US$969m up 3.6% while print stood at US$1.19b down 5.4% 2016-17.
Across the remainder of 2019 mobile internet is expected to be the fastest- growing ad spend, increasing by approximately 22.2%. with a lot of that growth driven by online video, However, this is a slowdown from an estimated 27.7% rise in 2018.
Other growth ad spend areas will include – outdoor +3.4%, desktop internet +1.7%, and radio +1.3%. TV spend is expected to dip by 0.8% in 2019, following a 1.4% rise in 2018. In terms of online ad formats, paid search is forecast to rise 10.5%, display by 4.7%, and classified by 3.0%.
Among the big advertisers real estate does not rank, the closest group would be Financial Services at US$13.2b however, the trends and figures do point to some important trends that we should be aware of.
We already know the essential role of online marketing and in the future we will see the impact of AI and better data management being key as we start to move to real-time formats. This will include better video formats and much more programmatic ad spends.
Informative video formats will be essential, and they need to add value. With the importance of online media, connections to quality and always current project and corporate web-sites will be critical as will engagement with Google and social media.
Search formats will be important however, there’s also a need to engage the wider audience as we better understand the role and value of each media options.
Which brings to my mind two quotes that relate to thinking about and reaching your target: “If you want to understand how a lion hunts, don’t go to the zoo. Go to the jungle.” – Jim Stengel (American businessman, author, professor, and public speaker. Global marketing officer of Procter & Gamble from 2001 to 2008.)
And perhaps when think social media: “A brand is no longer what we tell the consumer it is — it is what consumers tell each other it is.” – Scott Cook (American billionaire businessman, a director of eBay and Procter & Gamble.)