CSI: Marketing: Stop the Presses

IF FRED ROTHMAN HAD USED THE STANDARD measure—1 percent of selling price—to create a marketing budget for Wyndsong Isle Estates, a $50 million project in Boynton Beach, Fla., he would have had about $500,000 to spend to promote the community. It sounds like a lot of money, but in reality he could have dropped 10 percent of that amount in one day buying full-page ads in the weekly real estate sections of The Miami Herald, the South Florida Sun-Sentinel that cover his market. Since he only had 47 lots available, it didn't make much sense to put a message in front of more than a million people.

Instead, Rothman focused his efforts on appropriate signage, direct mail to the surrounding community and his existing database, and some small advertising in the New Homes Guide. “All cost-effective means of getting the message out,” says Rothman, president of Paramount Residential in Boca Raton, Fla.

All the marketing materials directed prospective buyers to register on a Web site. They couldn't call in to register, so Rothman didn't need anyone at the office to answer phones and take names. Once registered, all the prospects received weekly e-mail updates. By providing them with detailed contractual information they were asked to sign and return, Paramount was able to narrow down a group of 300 prospects to 30 serious buyers who were invited to the presales opening.

On that first evening of sales, 26 deals were signed. From there, Paramount's sales team went back to the prospects who had registered on the Web site to sell the remaining 21 lots, which sold in 30 days. The marketing costs for the entire community were less than the cost of one ad in a newspaper's weekend real estate section.

“I could close the sales office and move the salespeople to other communities,” Rothman says. “The layer of savings is outstanding.”

Across the country, builders are reaching a similar conclusion: Traditional newspaper real estate section advertising isn't cost-effective. Few of the readers will be qualified prospects, and the price continues to go up.

“Their rates are so high you're paying to reach 10 to 20 times the real readership we need to reach,” says real estate marketing expert David Hoke, a partner with Nashville, Tenn.–based BLF Marketing. “If you're a small builder in a large metro market, you're paying for a much larger amount of numbers than is necessary.”

To bring out a crowd for a grand opening, Hoke says, the best medium is radio, which reaches people in their cars, at home, and at work, and even while they're on hold.

When it's a targeted message to a narrow group of prospective buyers or a specific offer for a slow-moving community, Hoke says the best use of marketing dollars is direct marketing, including broadcast e-mails, direct mail, and invitation-only events. And don't limit your marketing to traditional media: Consider low-cost alternative mediums such as bus stop ads and vehicle wraps.

Here is some of that wisdom from builders who got tired of the high price of newspaper advertising:

Like many builders, Los Angeles–based Castle and Cooke is heavily using database marketing via the Internet, reaching out to people who have visited one of its communities.

“What we've really begun to do is speak to the database, find out what they're interested in, target messages, and qualify them as prospects,” says Hope Dilbeck, corporate marketing director for Castle and Cooke. “In marketing, communicating with the buyer is No. 1. Ultimately, if you're focusing on that communication instead of blind marketing in the newspaper, that's the difference.”

Castle and Cooke also places a strong emphasis on public relations, including events.

“Creating lifestyle events of interest to our demographic is very powerful,” Dilbeck says. “They don't have to be big events, just things that connect residents or potential residents to their neighborhood.” They've organized book clubs, children's play days and “fitness Fridays” with activities led by residents or vendors who want exposure to the residents.

She's had the most print advertising success with up-scale lifestyle magazines. Most national publications have zoned ads, letting builders put an ad in a well-known publication such as Golf Digest, Modern Maturity, and The Wall Street Journal. The ad only appears in limited markets, so the cost is a fraction of a national run.

Careful demographic studies should help determine the right placements, Hoke says. For a hip downtown loft project, look at weekly entertainment publications. For first-time, move-up buyers with children, consider advertising in regional parenting magazines.

Joyce Yakas, sales and marketing manager for Wilsonville, Ore.–based Costa Pacific Homes, says she still thinks it's important to have some presence in the Sunday paper because it's a good reference for new residents, but she can attest to the power of a smaller ad. For its award-winning transit-based community, Orenco Station, in Hillsboro, Ore., Costa Pacific decided it was pointless to explain the concept in an ad. The copy block said the story was too big for an ad and drove people to the Web site.

Today, with the community further along in its development, Yakas is still running small ads but uses them to start the qualifying process by targeting product types and price points with simple copy such as “Town-houses starting at $250,000.”

“It's a shotgun approach unless you're specific in your small ad,” she says. “If you can advertise single-level homes, it pulls in some people and cancels out others. ... A lot of traffic doesn't mean qualified traffic.”

For its newest master plan community, the 500-acre Villebois, in Wilsonville, Costa Pacific is focusing on public relations and television, Yakas says.

Jennifer Hurst also makes a pretty convincing case for scaling back on newspaper advertising. The director of marketing for Castle Rock Development in Castle Rock, Colo., cut her newspaper advertising in half, putting the money into radio and bus board advertising, and saw her traffic increase an average of 35 percent in a typical month.

She thought it was an important strategy for a master planned community. Her company is developing The Meadows at Historic Castle Rock, a 4,000-acre project with 10 builders. It'll have about 10,800 units at build-out.

She runs a newspaper ad about twice a month—most people will check the paper a few weekends in a row when shopping for a home. Bus board advertising increases the company's awareness for people who may be in the market for a house in the next 12 to 18 months. Those ads primarily drive traffic to the community's Web site.

Radio is a strong tool in the Denver market, she says. Her company selected stations with the right age and income demographics and then added some stations that people tend to keep on in stores, restaurants, and offices.

“I can't tell you how many people have told me they heard our ad while they were on hold,” says Hurst.

Cutting back on its newspaper advertising opened up the dollars to buy radio time for its ad, which recently took the Gold award for best radio commercial in The Nationals. “We had never utilized radio that much prior to this year,” Hurst says. “We're definitely using it again in 2005.”

Investigator's Notebook
The Case: Rising newspaper advertising rates drive up marketing costs.
The Investigation: searching for methods to create qualified traffic without paying hefty real estate section ad rates.
The Evidence: Web sites, radio ads, direct marketing, special events, public relations, and niche publications offer attractive options.
The Verdict: Newspaper advertising may still be part of your marketing mix, but it can play a much smaller role than you might think. A quality web site and a well-tended database of prospects can produce excellent results for a fraction of the cost of newspaper advertising.