Notorious R.O.B.

In my latest Inman column (link is for subscribers only, unless you made it in before the paywall dropped), I took issue with mobile for real estate, and called it the “eternal next big thing” for real estate.  I didn’t have the space really to address what I do think is the future of mobile in real estate, as I was already pushing my word count limit, so I thought I’d talk about it here.

I wrote in my column that:

Mobile is the eternal Next Big Thing is real estate – a tantalizing mirage promising untold riches that appear to be right over the next sand dune… until you get there and… oh, it’s right over there over that hill.  iPhone appears to me to be just the latest in the mirages built up about how consumers will use their mobile handheld computing devices to look for real estate.  The next one may be the Droid, or the Apple Tablet, or the Kindle, or… whatever is next.

But, what I was and am really skeptical about is consumer-facing mobile, the B2C applications:

I am skeptical about the impact of mobile on real estate, at least as far as a consumer application goes, because mobile has been the Next Big Thing for about as long as I can remember

What I did not have space to talk about is mobile as the future in the B2B market in real estate.  Let’s dive in, shall we?

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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.

That next chapter has been opened:

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.

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So my post about Twitter is generating a fair amount of commentary from readers.  The general tone appears to be that while one shouldn’t Twitter just to generate additional business, it’s still worth doing for a variety of reasons, such as being Web 2.0 savvy, being in-touch with non-client business associates, and personal pleasure.

Here’s a followup question:

Is it better for your business as a realtor to spend 10 hours a week at your local Starbucks, or 10 hours a week Twittering?

On a percentage of the population basis, it seems that Starbucks can safely claim 8% of Americans as at least a once-weekly customer, and as high as 22% of Americans if you include the “occasional” visitor.  That’s compared to the maximum of 6% of Americans that Forrester Research claimed use Twitter (and which people dispute).

Of course, you can Twitter at Starbucks, killing two birds with one stone.

But the following would be a great experiment for someone to conduct.

Spend a month Twittering 10 hours a week (2 hours a day).  Count # of leads, transactions, and $$ earned as a result from that month of Twittering.

Then spend a month hanging out at the local Starbucks 10 hours a week (2 hours a day), with a sign that says, “Local Expert” or “Realtor” or whatever on your laptop, your bag, your jacket, whatever.  Get into conversations.  Count # of leads, transactions, and $$ earned as a result from hanging out at Starbucks.

Let us know the result?

-rsh

Ben Martin at Agent Genius(an excellent site that I have now added to my RSS reader) has posted a trenchant response to my earlier post on proof in Web 2.0 type of activities.

He takes issue, it seems, with a few things, confessing himself further and further befuddled by the dialogue.

First, measuring ROI from blogging or social networking activities — Ben seems to believe — is inherently bunk:

How do measure “investment” in social media? A wordpress.com, blogger.com or ActiveRain blog costs exactly $0. Let’s say you get one deal per year by blogging. A facebook profile costs you exactly $0. Let’s say you convert one lead from your facebook network into a deal per year. Let’s see, anything divided by zero is… Infinity, I guess. That’s one hell of an ROI!

He then claims that time really isn’t a factor when it comes to blogging:

Okay, so there’s the time factor. Sure it takes time to write a blog or do the social networking thing. You can do this during unproductive times of the day. Nobody at the open house? Type. Waiting for a client to show up for a meeting. Type. Kids gone to bed and the spousal unit is watching a boring TV show? Type.

He then concludes that there is no cost to blogging:

Now, consider the opportunity costs of not sharing your expertise. If you don’t write about what you know, the only people who benefit from your knowledge are you and your current clients. Knowledge is a Realtor’s greatest asset and to not share it is to squander it. Basically, to not share your expertise widely is like holding your expertise in inventory, and everyone knows that holding inventory costs money.

I’m going to go out on a limb and say that the net cost of blogging is effectively zero dollars. Some will quibble with this, but remember to consider the opportunity costs of holding your knowledge closely.

There’s a lot of confusion here. Ben seems like a very smart guy, and very observant, but in this particular instance, I’m afraid he’s out of his depth — just as, I suspect, I would be if I started talking about how best to show a house.

First of all, measuring ROI in marketing is not a difficult concept. You measure “lift over control”. If you have a baseline established already, then measuring lift isn’t particularly difficult. For example, if my website gets an average of 300 visits a day, then I add a blog and see 3,000 visits a day, that’s a pretty clear lift over control (historical data).

If you have no historical data, then you try to find someone who is doing the exact same thing you are, then do your activity, and measure lift. So find an agent, or a brokerage, who is doing exactly the same things you are, except for blogging, and compare your two businesses. If you’re getting 20% more transaction sides, or your transactions are worth 15% more than his, then that’s pretty solid lift over control.

Yes, it gets tricky when you’ve got two heterogeneous companies, and the control group is hard to establish, and you have to start assigning weighted averages and such, but that’s the principle.

The “This cost $XX, and I made $YY from it, so ROI is $YY/$XX” is far too simplistic and often misleading — as is the case here. That a WordPress.com blog costs nothing, therefore getting one sale would make the ROI infinite is a ridiculous result. I suspect that Ben knows that, and was merely using it as a rhetorical device. No, the real question is, would you have gotten $YY without that zero-cost WordPress blog?

To further confuse the issue, Ben believes that the cost of operating a blog is the time it takes to type up some words. You can do this, as he puts it, during your unproductive dead time.

This is confusion because it implies that were you not blogging, you’d be sitting around twiddling your thumbs. That isn’t the case. Time spent notblogging could be spent doing more of the same old activities — writing Thank You cards to clients, or making a phone call, or reading up on the latest market studies. There are a nearly infinite number of things one can do during dead time that isn’t blogging or social networking.

How do we know that those activities are in fact not more valuablein terms of growing your business than typing, typing away on a blog?

The logic behind his claim that there is no cost to blogging is… well, bizarre.

First, it assumes that Knowledge is a Realtor’s greatest asset, not his personality, Rolodex, experience, attitude, or physical beauty. That may or may not be true. But even if it were true, the claim that not sharing that Knowledge is squandering it, because “holding inventory costs money” simply makes no sense.

Holding inventory costs money because storage costs money. This is a purely physical concept, based on the physical space that inventory takes up in physical space that you as a company must lease or own in order to store those items. In fact, for most e-commerce operations, “inventory cost” asymptotically approaches zero — particularly if they sell digital goods such as music or photos. That insight, after all, is the whole premise behind Long Tail. How much does it cost to store knowledge in your brain? If it isn’t zero, you need to contact your lawyer and sue yourself.

Further, Knowledge is not subject to spoilage. Knowledge isn’t fish that has to get sold within a couple of days, or it goes bad. You do not automatically forget things you didn’t blog about, or share with the widest possible public audience. Sure, it could get outdated as new facts emerge, as new knowledge is gained — but in that event, even the shared Knowledge gets outdated and “goes bad”.

So contrary to Ben’s thoughts, actually, there is zero cost to not sharing Knowledge, no inventory cost, and not sharing does not mean you squander it.

There is a significant cost to sharing such knowledge. I’m incurring that cost right now, by typing out this blogpost. I don’t see it as a cost, because I happen to enjoy blogging; this is partially entertainment expense for me, if you will. But that isn’t the case for an agent trying to drive more business via blogging or social networking. That is a real cost. And as such, it requires some proof of a return on that cost.

Applying the above, we can ask some questions about Ben’s personal experience:

Based on my personal experience, I’m also fond of saying that I can’t draw a straight line between my blogging efforts and any success I’ve had in business. But I can draw a squiggly line. 2007 was the most remarkable year of my career, and I attribute it in large part to social media. Did I get a new job just by blogging? Nope! I networked in real life. Did I get the freelancing and public speaking gigs just by blogging? Nope! I got papers published and spoke for free. Did I just blog my way into a photo shoot and get my picture taken for the cover of my professional society’s national magazine? Nope! I volunteered for committees, showed up for events, and followed through on commitments.

Could I have done all of the above without blogging? Maybe one, but definitely not all three.

Could someone else who isn’t Ben, who also networked in real life, also got papers published and spoke for free, also volunteered for committees, also showed up for events, and followed through on commitments but did not blog have gotten a new job, gotten freelancing and public speaking gigs, and gotten his picture taken for the cover of the national magazine?

If the answer is Yes, then I can go out on a limb and say that all of Ben’s blogging activities were worth precisely zip. He might have done better by spending a lot more time on the golf course.

What’s funny to me is that Ben and I are kindred spirits in terms of what we want to see out of real estate, and out of the agent population:

So I offer a different equation: Return on Engagement. Instead of thinking about return on investment, consider how you can engage your social media farm. The extent to which they’re engaged with you is the extent to which they’re likely to think of you when they need to move. And because referrals will come when there’s trust and engagement, even though you may NEVER convert someone in your social media farm into a client, they will be more likely to think of you to the extent you’ve engaged them through social media.

This concept won’t resonate with everyone, but I know many genius agents understand this intuitively.

Ever since I started this blog, I’ve been talking about the need for agents to become more professional, more honest, more authentic, more engaging, more human, more Cluetrained. So I’m 100% on board with what Ben is advocating here. And I’m glad to hear that many genius agents understand this intuitively. So do I. I’m really glad that there are agents trying the new methodology, even in the absence of objective metrics, based on what seems to work for them. God Bless ‘em.

But as a marketer, I want data and backup and proof. I’m not asking for scientifically valid proof here. I just want to see enough evidence, enough data, enough proof for a reasonable person to conclude that yeah, in fact there does appear to be a causal relationship between blogging and increased sales. Or increased productivity. Or something. I want to see lift over control.

Because without that data, we’re not engaging in marketing, but in hype. We’re not thinking about Web 2.0, but fantasizing about Dreamland 1.0, fueled by so much over-the-top rhetoric: OMGASM! DA BLOGS RULE!!!

Furthermore, may I point out that even Ben’s new, less objective metric, can and should be measured? It’s easy to do. I hope some marketing firm or ActiveRain or whoever does it soon.

It’s a classic brand recall study.

Get one group of 15 consumers who have used an agent for their last home purchase. Ask them who they would use for their next home purchase when they need to move. See if they recall the name of the agent they used.

Get another group of 15 consumers who used an agent who blogs and social networks for their last home purchase. Ask them the same question. See if they recall the name of the agent they used.

Get a group of 15 consumers who read real estate blogs. Ask them the same question. See if they name the agent blogger.

Measure the difference in the response. Voila! Return on Engagement metrics.

And may I say once again, if there is absolutely NO statistically significant difference between the three groups… then I will go out on a limb and say, blogging is absolutely worthless as a Return on Engagement tool.

-rsh