Benn Rosales (@agentgenius) is one of the smartest guys working in real estate and social media today, and as the proprietor (?? – maybe czar? emperor?) of AgentGenius, one of the best real-estate industry sites out there, he brings a great deal of credibility to everything he says.
A few months ago, he and I had a tremendously exciting and stimulating debate on the telephone about measuring ROI from social media. I think we ended up disagreeing on some points, but the whole conversation was so enriching and so enlightening that I have been looking forward to the next chapter.
I’ve had this conversation with many people over the past 6 months about tracking ROI and at the time, no study, nor documentation really existed, however, in recent months this all changed with Dell, when they bragged about their $1 Million in sales from Twitter.
Interestingly enough, it was done through channels with channel specific deals which leads me to Trulia, Zillow, and local MLS Boards, as well as FSBO, REO, and other property aggregates and large Brokers themselves as a means to move volume inventory.
Benn goes on to hypothesize that “real-estate channels” may be
the beginning of the answer to real estate and social media above and beyond the agent but allow the agent the opportunity to participate with their particular social spheres.
All in all an interesting opening, and one well-positioned to move the discussion forward.
The first premise I want to take a look at is Dell’s use of Twitter to generate $1m in sales. Because one of the things I’m most leery of is applying what works in other industries to real estate without taking some of the peculiar fundamental facts about real estate into account. (God knows, I do it often enough….)
The first thing I noted is actually addressed by TechCrunch — that this sort of usage of Twitter is not much different from just opting in for email offers:
Signing up for what is essentially a marketing email on Twitter perhaps gives some consumers the feeling of being part of an exclusive club. (It’s so exclusive, anyone can join). Or maybe they simply don’t want this junk filling up their inbox, and can choose to pay attention only when they are in the market for Dell products.
I’m not sure that this qualifies as social media in any meaningful sense of the term. In fact, this sort of “channelization” of Twitter takes the whole “social” out of social media. It’s a giant corporation broadcasting offers to the masses. What’s social about that?
The second thing I noted is more of a question than a note. What sort of person would actually follow @delloutlet? Obviously, someone who buys or wants to buy a Dell. Furthermore, someone who is probably looking for deals. Third — and this is strictly a guess — someone who is tech-savvy enough and shops for computers often enough to know what they want, and what constitutes a good deal or not.
I mean, in theory, someone like my wife who is willfully ignorant of computers and things technological (“That’s your department, Rob”) could find some computer she likes on Dell.com, then go looking for deals on that computer via @delloutlet. Especially since such coupons and deals are Twitter Exclusives. I just can’t see it. I can’t even imagine such a thing happening. She’s far more likely to just hit “Buy” (well, she’d never shop for a computer in the first place, preferring to make me do it instead, but leave that aside for now). At most, she’d do a Google search for “Dell coupons” or some such.
On the flipside, some hardcore gamers interested only in highest FPS (frames per second) performance for the latest video-card-murdering shooters are not likely to be looking for deals on Dell computers. Like the Aspirational shopper, that guy is interested in saving money, but not at the expense of performance or “quality”. He’s your Falcon Northwest shopper, for example, or more likely, a custom rig-builder addicted to Newegg.
(<gamergeek>And yes, I am one of those people who is addicted to Newegg, but lacking time, I’d love to get a custom Mach V with a custom paintjob, and so on and so forth…. </gamergeek>)
So keeping the above in mind, consider what a “real estate channel” in social media might look like.
The immediate problem I run into is that quite unlike Dell, real estate brokers and agents (and even developers really) do not have “products”. Dell can sell 50,000 laptops over Twitter, because they’re all more or less the same. (Options like larger hard drives, etc. are just options.) Real estate on the other hand is perhaps the ultimate non-commoditizable good. Two identical homes right next to each other can be dramatically different in value, simply because one house might be sitting on top of contaminated water tables, or less dramatically, because the view out of the back porch is different.
Even if Twitter (or any other Channel) is used to sell a house, everyone except the buyer who was interested in that house is out of luck once it sells.
Plus, the model that Dell used to “channelize” Twitter is no different than any broadcast email, or even a TV ad: one-to-many broadcast of an offer. This model is already in place in real estate, and it isn’t clear that taking that model and moving it to a “social media channel” changes it in any real significant way.
The second problem I run into is the another “fundamental fact” about real estate: the consumer buying cycle. Companies like Dell can have concepts like “frequent customers” because the same person might buy a Dell for himself, then another for work, then one for his wife, and then another one for work… and so on.
In contrast, normal consumers (i.e., not investors) are not buying a home here, then another one there. Nor are they shopping frequently — the average time between transactions is seven years. A transaction might be three months from start to finish on average.
What that suggests then is that someone who is “following” (using Twitter as the example, but you can think about friending on Facebook, or reading a real estate blog) the real estate channel is doing so for perhaps 6 out of 84 months, and those six coming at the front and the back. For 78 months, then, the “follower” has to derive something of value out of the channel for it to have any value to her.
That there is a tall order and then some to fill.
So using social media as a “channel” to move volume inventory might happen, but strikes me as something of an unlikely scenario.
However, I think one can argue that real estate uses social media not to move houses, but to promote services. The agent isn’t really selling a whole bunch of houses; rather, she is selling her brokerage services to a buyer or a seller. The broker isn’t selling a bunch of houses; she’s selling the services of her legion of agents. The franchise brand isn’t selling houses; it is selling the services of its network of brokers who have legions of agents. And so on.
Consumers could reasonably expect to receive roughly the same level of service from the same service provider (at agent, broker, franchise, brand, and so on) and social media real estate channels might support that sort of claim. (By the way, that this expectation of receiving consistent level of service is not borne out by experience is a quality control problem that the industry must resolve.)
Even if social media is to be used to sell services rather than products, we are still left with the Seven Year Cycle issue. Why should a consumer “follow” an agent (or broker or franchise) if she is not in the market?
Furthermore, selling services raises another issue while it disposes of the “non-commoditizable products” issue: personality. I do not believe that someone following @delloutlet cares all that much about what the person behind that handle is like. It would be nice if the human being behind the moniker was a nice person, but since my interest is in the Dell product, and what kind of deal I can get, I don’t particularly care. It is exactly the opposite with professional services. Since what I am purchasing is not a product, but services, the personality, qualifications, experience, knowledge, and the humanity of the person providing the services matter a great deal.
Putting all of those personal traits ‘out there’ on the web is, to put it mildly, a delicate affair. How much sharing is too much sharing? Just how do you convey your voice to total strangers through a medium where anonymity is one of its greatest benefits?
The answer to these questions is precisely what hundreds of social media experts and marketers are trying to provide. At the same time, I do think one thing might be clear: if your personality is mostly conveyed by products you are pushing, then your personality will be defined as the pusher of products.
As Benn’s original post suggests, all of this is in service to understanding the ROI of social media marketing. Dell’s $1m from Twitter factoid notwithstanding, I maintain that figuring this out is one of the greatest challenges of social media marketers. This ROI thing is really, really hard. Here’s why.
First, to compute ROI, you have to have a return. Without dollars, it’s impossible to compute a return on anything. And in real estate brokerage, that return thing is a squirrelly little concept.
Second, to compute ROI, you have to have an investment. ROI is, after all, return on investment. Well, how do you compute that investment? If it’s tallying up the cost of FaceBook, Twitter, WordPress, and LinkedIn… the investment is zero. So even a dollar is infinite ROI.
The real investment, of course, is in the time that the agent (or brokerage marketer, or social media guru at some brand, etc.) spends on social media channels. But time has different value for each individual, even on a strictly financial sense.
A SVP of Marketing for a major national brand getting paid $250K a year costs her company $125 per hour. A new agent who is doing three transactions a year costs significantly less on a per-hour basis. And that’s just the straight financials.
The real cost, I believe, is opportunity cost. What else could the person engaging in social media marketing have done with those 10 hours a week? Would that alternative activity have generated more or less dollars of revenues?
I do not see that “channelization” changes this question much at all. Either social media marketing activities generate greater revenues per minute spent than alternative activities the person doing the activities could have, or it does not. That measuring this efficiency is difficult or impossible does not change the logic of the statement. Nor does the fact that it is difficult to measure such ROI make it any less imperative for marketers to think about how to at least tell a story about it, and how to let non-marketing decisionmakers know enough to keep investing in Activity X or to move the investment to Activity Y.
This got long. [ED: Yeah, what else is news?] The topic, however, is interesting and important.
I think right now, the conclusion to be drawn is that there is no conclusion to the debate and discussion. We all have far more questions and unknowns than answers and facts. I think that Dell made $1m from Twitter is sorta amazing… but also sorta ho-hum. And more importantly, what a product manufacturing and sales company does or does not do with a “social media channel” is of rather low relevance to real estate companies.
But we end with the same question we had at start: How to compute ROI for social media? We end there because the logic is unassailable. ROI requires return on investment. Without the ability to define either “return” or “investment”, any talk of ROI is not even fiction — it’s science fiction.
Marketers… we got work to do.