I read a very interesting article on RedFin’s blog this weekend – it mentions that the RedFin team did a usability study and observed the interaction of users with its website. It turns out that with regard to online “branded” (i.e., “banner” ads), the users didn’t even see these ads! Apparently, living in a world where we are bombarded with ads daily, from freeway billboards to coffee shops, we seem to have developed the ability to tune these out. Perhaps it’s the same ability that teenagers use to tune their parents out?
This is not to say that online banner ads are useless – certainly, it is a billion dollar ad market for a good reason, namely increasing awareness of one’s brand. But in real estate, given that most of us are individual businesses, the ROI on a banner ad isn’t justified in my opinion. By contrast, a search ad (e.g., an ad that shows up when a user searches for you on MSN, Google, Yahoo, etc.) has a higher ROI. This is because you only pay when someone actually clicks on your ad. If you assume that 1%-2% of people actually click on your search ad, then you are saving a lot of money compared with having to pay every time your ad is shown, regardless of whether someone clicks on it (which is the payment model for banner ads).
Financial differences aside, I also wonder how effective a banner ad is for most real estate agents. How much can you really differentiate yourself vs. your competition in a banner ad? In other words, if a user browsing a website comes across your banner ad next your competitors, what motivates them to click on your ad? Chances are, you and your competition have pictures of yourselves, as well as one-line of marketing text. Even if the consumer takes the time to look at your ad, does she really get a sense of what makes you stand out? By contrast, with a search ad, there is one big difference: intent. The user wants to find out more about a topic (e.g., homes on Main St.) and your ad shows up because you have something important to say about that topic specifically (e.g., a text ad stating “3BR / 2BA home for sale on Main St., Great schools, Open Sun 1-4pm”). In my opinion, this search ad would succeed because you are helping the user with valuable answers to his search.
What are your thoughts and experiences with online banner ads and search ads?
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