“Whoever gets to scale with data centric businesses has a natural advantage – a monopolistic tendency.”
These are the words of Adrian Turner of the CSIRO in a recent documentary on the ABC titled ‘The AI Race’ – where business leaders and tech experts explored how Artificial Intelligence is changing jobs and impacting the value of businesses in every industry.
Turner’s argument suggests that businesses ought to focus on owning their data and direct access to consumers or allow ‘monopolistic’ platforms to continue to thrive.
In this episode of Real Estate Pros, we discuss the current influence of our major property portals, the growing influence of Facebook and how some agents are leveraging its targeting capabilities to drive traffic to their own platforms and to generate enquiries at a lower cost.
This week I’d like to talk about a recent documentary that aired on ABC titled ‘The AI Race’ where all different types of industry leaders and tech experts came together to talk about how artificial intelligence will change the future of business.
There is a lot of talk in real estate right now about AI [Artificial Intelligence] and how the adoption of robots may impact the future of real estate at every level. But there was one particular part of the documentary that I believe warrants our attention. It was a topic that, in the opinion of the experts, is not only a threat to your job, but to the value of your business.
I’m talking about data.
In the ABC program, Adrian Turner from the CSIRO referred to data as ‘The New Oil’ and says that “as we move into a more digital economy, you can’t have automation without data.”
He continues by saying that “we’re now seeing value [of a business] moving from physical assets to data assets.”
Adrian uses the example, firstly, of Facebook and their market capitalisation of $479 billion – at the time of the documentary being recorded. Contrast to Facebook, Adrian uses the example of Qantas, who “has many physical assets but has a market capitalisation of $9 billion. But if you drill down into Qantas’s value, about $5 billion can be attributed to their loyalty program – which is essentially a data centric asset.”
Adrian says “the jobs of the future will leverage data”, and based on that example of Facebook versus Qantas, it’s not hard to understand why. It’s where the value of a business lies.
But Adrian suggests there’s something even more important than leveraging data – it’s owning the data. Owning your own data is more important than ever before because if you think about Facebook, and how Facebook learns more about you every day and how, over time, the service improves as you use it more. Adrian says that “whoever gets to scale with these data centric businesses, has a natural advantage – a monopolistic tendency.”
Hmmm… I wonder who that sounds like in real estate?
Real estate is one of the only industries in the world where we collect data, lots of it, and we hand it over to other companies who build audience centric platforms and then sell us access to that audience. You don’t need me to tell you who they are, but suffice to say we have a love/hate relationship with them. We need them because that’s where buyers and renters are hanging out. At least right now anyway.
Over the past 12 months, I’ve had the privilege of meeting hundreds of agents from all over the country through our Digital Marketing Essentials workshop who are doing outstanding work in the digital space. One particular agent who we’ve been following closely is Steve Creese from Arbee Real Estate Professionals.
Located in Bacchus Marsh, about 50km North-West of Melbourne, Steve recently ran a split test for a property he was selling to determine the difference in costs associated with the top package on one of our portals, versus a targeted Facebook ad to people in his community likely to be interested in the property.
At the time of this recording, three weeks into the campaign, his portal advertising, on the top package available in his area, has generated 3,658 page views of the property for a cost of $2,757.
In contrast, Steve’s targeted Facebook ad has generated 1,728 website clicks – people clicking through to the listing on Steve’s own website – for a cost of $62.95.
So if we break that down into how much it cost to acquire a single page view, it’s $0.75 per page view from the portal ad, versus Steve’s targeted Facebook ad, which generated clicks to the listing on his own website, for a cost of $0.04 per click – a difference of 94%.
Not only has Steve reduced his costs to acquire views of the listing through Facebook, he’s driving all that traffic back to his own website – free of distractions, competitors and banner ads.
I’m not suggesting agents stop using our major portals, nor am I picking on them, but this certainly does open up an important discussion in our industry on where our money, and our client’s money, is best spent. More importantly, who owns the traffic and the data.
I’m also not suggesting that every agent should start spamming people on Facebook with their listings because that’s not useful either. What Steve has done is think about who might be interested in this particular property and he’s used Facebook’s targeting capabilities to put an ad for the property into the newsfeed of only those people.
Case studies like this one, and agents like Steve, are the reason I believe it’s an exciting time to be in real estate. I also believe the future of our industry involves agents in a big way.
I don’t believe technology will replace agents. But I do believe we’ll see agents, like Steve – who are able to drive traffic to their own platform, measure data and leverage it to access an audience at a much lower cost – will replace agents who continue handing over their data and therefore need to rely on someone else’s audience, and someone else’s platform, to drive their business objectives.
What do you think?
I’m keen to hear your thoughts. Leave a comment below.