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Presentation prepared for Kelsey's Interactive Local Markerplaces conference on March 16, 2009 in Los Angeles.
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A CASE STUDY IN
MARKETPLACE DISRUPTIONS &
TRANSITIONSDaniel McCarthy
Chairman & CEO
Network Communications, Inc.
www.nci.comwww.viralhousingfix.comTwitter: danielrmccarthy
InteractiveLocalMarketplacesConference The Kelsey Group
Los Angeles, CA
March 16, 2009
THE MODULARITY OF THE NEW LOCAL MARKETPLACE Growth of consumer expenditures and access to inexpensive
capital fueled local marketing budgets in key categories Auto Real estate Retail Home products
Growth fueled expansion and innovation in local market media Entrepreneurial growth Venture-backed growth
Within climate of media expansion, distribution of consumer attention has dispersed broadly
Current economic contraction severely reducing local marketing spend
Local media competing on price and results during period of deteriorating financial performance Social media expansion provides enticing low- to no-cost impact on lead
generation Current status: rapid re-engineering of business models and
market-facing tactics
CASE STUDY – REAL ESTATE:BUBBLE-BURSTING ECONOMICS
Bubble economics created 3 – 5M additional transactions during boom. Average price has declined
25% from $229K to $170K. Total price decline likely to
level at 40%
Incomes dramatically eroded by rapid decline
in transactions and price.
Transaction Value Peak Today
Home sales 7.1 M 4.5M
Avg. Price $220K $175K
Total Transaction Value
1.56T $822.5B
Commission rate 5.75% 5.0%
Commission value
$89.5B $41.1B
Transacting agents
600,000
500,000
Avg./Agent $149.2K
$82.3K
CONSUMERS HAVE UBIQUITOUS ACCESS TO INFORMATION
Any house online at any time.
Independents include Trulia, Zillow, Homegain, RealtTrac, Homes.com,
NCI Interactive
Approximately 3.6M homes for sale
All independent sites have millions of duplicated listings.
Brokers present broad view of market
MLS distribution expanding and becoming consumer facing.
(in 000)Unique Visitors
% of Total
Networks 12,408 32.0%
Move 7,425 19.2%
Top brokers 4,862 12.6%
Top 5 independents
12,108 31.3%
All others 1,915 4.9%
Total 38,718 100.0%
INCOME DECLINE IS SHIFTING MARKETING PARADIGM
Average inventory: 9.6mos.
Intermediary bears no inventory risk in existing home sales
Reduced market activity diminished lead volume during leanest period
Top agents invest approximately 8.5% of commission revenue in marketing 60% of agents invest
less than $3000/yr in marketing
Peak Today$0$1$2$3$4$5$6$7$8$9
Marketing spend
THE MEDIA VALUE MATRIX:REAL ESTATE
Hi Cost
Lo Cost
Traditional
Media
NewMedia
Specialtymagazines
Newspapers
Radio
Directmail
YardSigns
MLSInternetListing
Services
BrokerWeb Site
E-mailMarketing
Socialmedia
Blogs
Personal Income
COMPARATIVE LEAD VALUECategory Activity
Avg. leads per listing 2 per month
# transactions to earn $100K
22
Average time on market 180 days
Total leads required 550
Annual marketing investment
$7,920
Marketing investment per lead
$15
Required monthly leads: 45
Free sources generate 20 – 25% of total activity
Paid sources deliver leads at approximately $20 per lead
MEDIA CHOICES OF TOP REAL ESTATE AGENTS
Source: Real Estate Agent Study
Conducted by OSR Group for NCI
Spec.mags.; 24%
Internetmktng; 24%
Agent web site; 23%
Newspapers 16%
Other media; 13%
Spending dis-tribution
Media % Use
Yard signs 98%
E-mail 91%
Broker web site 88%
Personal web site 86%
Specialty mags. 84%
Internet listing service
77%
Direct mail 76%
Newspapers 66%
SEM 61%
Social media/blogs 25%
Cable TV 12%
Billboards 9%
Radio 7%
SOCIAL MEDIA TURBO-CHARGES WORD OF MOUTH Agent
requirements:Content creationPersonalityAuthorityRelationship
Outcome: Massive personal networks
Platform
JanuaryUsers
# of Agents
Facebook 57.2M 156,000
MySpace 75.6M 80,360
LinkedIn 7.7M ???
Twitter 2.6M ???
Active Rain 930K 136,195
THROUGH THE CLOUD Advertising spend will increasingly focus on
differentiation Customer contact management will become a
point of excellence Social media applications will increase word of
mouth leads by 10-15% Listings enhancement will be supplanted by
personal presence Increasing proliferation of content
generation/management tools Publish once to many Original quality
Professionalism will require greater commitment and expertise.
ABOUT NCI Leading local media
provider serving the housing market Rental markets: 48% of
revenue Resale markets: 35% of
revenue Remodeling: 17% of
revenue Integrated media platform
Distribute 10M+ publications each month in 600 markets
2.1M unique users to multiple brand-specific web sites
NCI Real Estate Brands
The Real Estate Book
TheRealEstateBook.com
Unique Homes
New HomeFinder
Your Life By Design
Your Home By Design
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