Digital Transformation — Real Estate (Example)

Property portals are increasingly becoming the norm in the property market.

Exhibit 12.11   Property portals such as are increasingly becoming the norm in the property market.

For a moment, reflect on how your world has changed.

While new rules and perspectives of the digitally transformed world afford great opportunities, they also pose huge challenges.

Consider real estate. You probably recall the age when classified advertisements ruled, and brochures were prominently window displayed at agency offices.

Classifieds have since dwindled, and real estate agency offices are no longer as omnipresent as they used to be. The advertisement of properties on billboards, yellow pages, telephone directories, and radio/TV is also declining.

Instead of what used to be the property marketplace, we now have property portals such as mas-HomeFinder (Exhibit 12.11), agency websites, property apps and virtual tours.

While not all countries are experiencing the same pace of transformation, they are all moving in the digital direction.

The new industry is reliant on search marketing, the optimization of online platforms for search engines and the practice of inbound marketing; and it is heavily dependent on search advertising.

In this digitally transformed world, property agents depend on property portals, which in turn depend on Google and other search engines.

In countries like Singapore, the multitude of real estate agencies have little leverage over the dominant online property portals. As customers increasing go online, the portals are amassing greater influence. They are able to command higher subscription fees, and earn a greater proportion of the profit from the sale of properties.

As for the agencies and their agents, the subscription fees are adding their cost of doing business. And while most of them are saving from the reduction in conventional advertising, this essentially results in their loss of control of a key element of their marketing mix — advertising. The property sites are the advertisers, and they advertise their portals.

To make matters worse, if their influence continues to diminish, the traditional jobs in the real estate industry are likely to be displaced by automation through existing and new technologies, including artificial intelligence and blockchain.

Faced with these transformations, real estate agents need to adapt to survive. They must transform from agents to consultants, and continue to add value by saving their customers’ time and money in the digitally transformed marketplace.

The portals’ current subscription-based business model is not only unfavourable for the agents, it is also highly inefficient. Having paid their fees, agents choose to maximize their “quota”, even listing properties that they are not engaged to sell.

As a result the portals are overloaded with hundreds of thousands of properties, a large proportion of which are duplicate, spurious or unrealistic listings. Customers and agents end up wasting time and energy, and the portals’ reputation for quality gets stained.

It doesn’t help that brokers tend to replicate their traditional advertisements and brochures onto cyberspace. Their failure to appreciate the nuances of digital marketing, further erodes quality standards and impairs search optimization. They need to be trained to reframe content for the internet in a manner that pleases customers and is optimized for search engines.

The foundation of effective online business marketing should be built on collaboration between property consultants and property portals to pursue their mutual interests. These business partners must work together to build marketplace equity, practice co-op advertising and share analytics.

Co-op advertising demonstrates commitment. If an agent is prepared to invest in advertising a property on a search engine, chances are that it is real estate that is genuinely up for sale. Besides the obvious advantages of genuine listings for all stakeholders, agents stand to benefit as traffic is directed to their advertised property pages. (To learn more about co-op advertising refer mas-HomeFinder. While most portals are primarily subscription based, HomeFinder relies on advertising commission).

The business world is in a state of flux. The digital transformations that I have outlined in the context of the real estate sector, prevail across industries and are resulting in the disruption of old business models. As marketplaces digitally transform, business processes and business practices must also digitally transform, and workers must be re-trained.

New business alliances need to be forged. Marketers need to embrace the new media. They need to practice inbound marketing, optimize their content for search engines, and leverage analytics to continually improve their business.

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