As 4,000 real estate professionals converge on the Gold Coast Australia this weekend for the AREC Conference 2017, I want to talk to you about a trend that will most likely not be covered at length. It’s a trend on the rise in a number of other industries around the globe and one that I believe we’ll be hearing a lot more about in real estate over the coming months and years.
On this episode of Real Estate Pros, we discuss why brands are buying (or building) media companies to earn attention and drive revenue.
The trend I’m alluding to is the growing number of brands who are buying (or building) media companies.
According to the Oxford Dictionary, the definition of a media company is:
A company that provides broadcasting, film, and Internet services.
Media companies make money from these services in any number of ways but predominately by charging consumers for access, or advertisers, for access to those consumers.
Netflix is a media company.
Realestate.com.au and Domain.com.au are media companies.
Facebook (whether they say it or not) are a media company.
Red Bull (famous for their extreme sports videos) is a media company too.
Anyone who generates revenue from content, whether from advertising or subscriptions, is a media company.
So why would a brand want to buy (or build) a media company?
Well, largely so they can own direct access to an audience. Instead of what we typically do in business, which is to pay a media company to rent access to their audience.
Armed with a smartphone and an internet connection, anyone today can become a publisher or a reporter. Anyone with a Facebook Page can advertise to a clearly defined audience. These are two major reasons why our newspapers are shrinking rapidly – much of the advertising revenue for newspapers has dried up as brands can now access the same audience on their own.
Take Whirlpool for example – the world’s largest home appliance maker. Founded back in 1911, Whirlpool recently acquired Yummly – a visual recipe search engine with 20 million users. Yummly also lets you create shopping lists and, in some locations, you can order food for delivery and equipment to make a meal.
Terms of the Whirlpool/Yummly deal were not disclosed, but to give you some context, Yummly was last valued in 2015 at $100 million.
So what has a recipe search engine got to do with white goods? Well, everything. Everyone needs appliances to cook right?
By owning direct access to an audience of people who love to cook, Whirlpool can now deliver relevant product messages directly to its customers and prospective customers without the need to rely solely on media companies to give them access to an audience. They have their own media company now, with access to an engaged audience of people who are more likely to buy from them.
Proving this is not an industry specific trend, another example is Arrow Electronics.
Arrow Electronics has spent more than $40M buying 51 media properties in the electronics media space over the past few years and now has the largest audience in this area. They no longer have to rely solely on media companies to advertise their products and services, they are a media company with direct access to consumers who are interested in what they sell… Electronics.
Following so far?
There are countless other examples of this happening all over the world right now, in so many different industries, it’s hard to imagine that real estate is immune.
At the scary end of the spectrum, one of our major portals – who are self-proclaimed media companies – could become an agent themselves and start selling real estate direct to the consumer. I’m not suggesting this is going to happen. But it could.
On the more likely end of the scale, and more of an immediate threat to agents and traditional real estate businesses, is if brands or franchise groups start buying small local media publications, or, build their own internal media company.
In fact, it’s already happening.
One example is Place Estate Agents in Brisbane who have multiple full-time content producers across their 14 offices covering real estate advice, events, lifestyle topics, celebrity interviews and hyper-local news. Their media team publish regularly on their content website and they use various channels, such as social media and email, to drive traffic back to their site for brand exposure and awareness of their team. They do an amazing job of creating content that people in their local communities actually want to consume.
I would argue that Place Estate Agents is no longer just in the real estate business. They’re in the media business. And as it becomes harder every day to earn attention online from consumers, or it becomes more expensive to advertise our products and services on someone else’s platform, becoming a media company in order to own direct access to an audience makes a whole lot of sense, doesn’t it?
Are you in the real estate business? Or are you in the media business?
Place Estate Agents is only one example of a real estate brand adopting a ‘media company’ approach, but there are many other case studies I share in my presentations and workshops. So it’s not as rare as you think.
When we talk about disruption in real estate (and it gets talked about a lot!), a media company approach is a business model that, in a very short space of time, could be very disruptive indeed. If you own direct access to an audience and you can spend a significant amount less than your competitors to reach that audience, that is a huge business advantage.
So… What do you think?
Is the future of marketing about owning direct access an audience, rather than relying solely on renting access to someone else’s audience?
The three companies I’ve shared with you in this episode certainly think so and I’m willing to bet that we’re going to see more and more brands follow suit.