Marketing in a Real Estate Recession

When the sky is close to falling in, what should you do when you need every penny to sustain your earnings? Stop advertising?

If you are new to real estate, you will probably kill your career. For ever. Studies of the last six recessions have demonstrated that companies which do not cut back their advertising budget achieve greater increases in profit than companies which do cut back.

This applies to real estate advertising, too.

In a survey of 40,000 men and women involved in the purchase of 23 industrial products over five years, it was found that share of market went up in bad times–when advertising was continued.

I have come to regard advertising as part of what you sell, it’s part of your real estate services, to be treated as a “production cost,” not a selling cost. It follows that it should not be cut back when times are hard, any more than you would cut any other essential ingredient in running your business.

Why Advertise at All?

Many agents secretly question whether advertising really sells their services, but are vaguely afraid that their competitors might steal a march on them if they stopped.

Others–advertise to keep their name before the public. Others, because it helps them to referrals.

Only a minority of real estate agents advertise because they have found that it increases their profits.

On a train journey to California a friend asked Mr. Wrigley why with the lion’s share of the market, he continued to advertise his chewing gum.

“How fast do you think this train is going?” asked Wrigley.

“I would say about ninety miles an hour.”

“Well,” Wrigley said, “do you suggest we unhitch the engine?”

Advertising is still the cheapest form of selling. It would cost you thousands to call a thousand homes. A yard sign can do it for $4.69.

The True Task of Advertising

Back in the early 80’s, one A. S. C. Ehrenberg of the London Business School said that consumers mostly ignore advertising for brands they are not already using.

He went on to say that real conversion from virgin ignorance to full-blooded long-term commitment does not happen often…sales levels of most brands tend to be fairly steady.

Advertising expert Dr. John Treasure agreed.

He said that the task of advertising is not primarily one of conversion but rather of reinforcement and assurance.

Sales of a given brand may be increases without converting to the brand any new consumers, but merely by inducing its existing users, those who already are sold out to the product, to use the product more frequently.

What This Means to You

Clients that you have already worked with are more likely to use you again in the future–and sooner–as long as you continue to advertise, since they are already loyal to you. [This is only true if you served them well.]

Your advertising maintains the awareness that you are out there and consistently available .

In other words, that you are here to stay.

Furthermore, advertising allows you to promote new services or suggest ideas, like a new development in a new area or a resort condos you caught wind of.

These are things your clients will never know unless you tell them. Thus you advertise.

Finally, what advertising does for you is allow you to win over those clients who are not loyal to anyone agent.

Perhaps they’d like to use their last agent, he did such a swell job, but their agent has fallen off the map and they can’t find his business card or phone listing…because he’s preserving his money.

See how that will drain your resources?

So many people back off of advertising in a recession that it really isn’t a surprise that those who maintain their advertising grow market share. The economy abhors a vacuum and those who fill it are rewarded, right?