Company: MediaOne of Utah, a JOA between Deseret Media and the Salt Lake Tribune
Brokerage site: UtahMore.com
Traffic: 500,000 page views
Core sites: DeseretNews.com and Tribune.com
Traffic: 50 million Page Views, and UV's 5 million
Key executive: Brent Low, CEO
Summary: MediaOne of Utah responded to the real estate crash of 2009 boldly - by creating an in-house real estate brokerage. The new company gathered through an MLS bot in the hero position on a new real estate "super-site", UtahMore.com, and fielded them through three brokers and 65 contracted agents, who rented desks in the mostly empty classifieds department. Today, the company tops $3.5 million in real estate brokerage fees, only counting commissions earned.
This report walks through a road map of how the company grew from $1.6 million to $3 million in commissions since 2011. It has leveled out at 3% market share for the last several years.
Is there still an opportunity for other local media companies to start in-house agencies? Brent Low, CEO, says yes, if two criteria are met: First, that the media organization has already lost most of the brokerage/agent revenues and second, there is a growing real estate market in the local area. New companies powered by media advertising need more than to simply acquire market share, and a growing market floats all boats.
Getting started selling real estate in Salt Lake City
Here are the key components of the original plan to launch a real estate brokerage:
1. Starting premise
The brokerage concept originally appealed to Low because the newspaper was seeing consistent year-over-year declines in brokerage and agent advertising revenue in the category. Additionally, he felt the market undervalued the power of the newspaper and its sites to drive real estate sales.
Additional factors applied to real estate were also appealing:
• Low barriers to entry
• Low brand loyalty
• Variable workforce
• Needs the newspaper audience
The new brokerage could leverage the media audience to launch a new company in an industry with low brand loyalty and low start-up costs. In fact, ads from brokers and agents lost could also be made up by supporting industries, new construction and FSBO's that could advertise on the brokerage's new "super site".
2. Key components of the UtahMore.com super site
The new company was co-branded with a new UtahMore.com super site, which benefited from links to other massive media-owned properties.
The core lead generator originally was the MLS bot on the super-site. Joining MLS is not difficult but critical to owning a complete daily feed of searchable listings. Federal law prevents MLS services from picking and choosing between brokers, so MediaOne of Utah – and any media for that matter - cannot be excluded as long as it meets all the other state requirements.
(Media companies can plan to employ two licensed brokers so as to have an extra back-up to secure the feed. Liability is an issue, so it's better to build a real estate organization in-house, rather than ask a Realtor to hang an unused license with an arms length relationship).
Today most leads come through the agent sites which are also heavily advertised, another way to leverage the core media properties.
The site also includes featured listings and ad spots for related businesses such as new construction and mortgages as additional upsells. But the main revenue is commissions, generated when leads are distributed by coordinators among the agents on a rotational basis.
The number of "good" leads - for both buyers and sellers - that come through the sites totals 30 per week, for a total of 1,560 leads a year, powering the $3 million in sales.
The original strategy of discounting fixed-price listings was dropped when the market proved to be less price-sensitive than expected. Fixed price listings are still available, but the majority of the business is handled via a traditional commission model. Similarly aggressive, anti-industry advertising around price with the headline, “Selling Homes isn’t Rocket Science" was dropped, along with a buyer-side rebate from the seller's commissions.
"We came right out of the gate with the ads that were over the top and right in the face of other brokers and agents," Low says. "I wouldn’t necessarily suggest that.”
While market share has leveled at 3%, as the real estate market recovered, prices and sales increased on their own more than enough for all the players to do well - and brokers who originally dropped their advertising to return, although not at pre-brokerage levels.
3. Core team
The core team has not changed much over the years. In fact, the number of brokers is two, plus a general manager. The number of agents is up a bit - 70 instead of the starting 65 - all housed, fittingly, in the former classifieds department. UtahMore employs a full time recruiter; efforts include contacting real estate schools, newspaper ads and socials.
Agents receive independent sites nested within the main site, as well as advertising for themselves and for their listings online and in print - a selling point when recruiting reps.
When people list a house with UtahMore, the package includes everything a traditional broker will offer, including photos, tours, signage, flyers, etc...
Extra perks leverage media assets: Homes listed are advertised in the newspaper and on the web site. One day a week Deseret devotes a full page ad to homes, and throughout the week showcase ads feature certain homes.
"That helps us recruit agents, because agents also get advertising in the paper via being part of the brokerage.
Advertising revenues which topped $40,000 a month in 2011, continues to grow. Another revenue stream is rent affiliate businesses, aligned with real estate, who want to be close to the brokerage, which now has two locations, one on the East and one on the West side of town. These side businesses add $500,000 to the revenue pie.
Lessons learned for other local media companies
• Launching in a down market was a plus because it cleared out hundreds of Realtors from the market, and poised the company to start where the highest growth was about to begin.
"The real estate business overall has gotten a lot better... so we have gotten a lot of good lift. People tend to launch businesses when things are good, but they may be launching at the peak."
• A growing market is also critical - the real estate market itself in Salt Lake City has more than doubled in the last four years. The difference is steady double digit growth, in spite of a stable number of agents and market share. Low suggests that local media considering a real estate play look at the strength of the market in terms of projected growth - areas with growth in at least the teens have the best chance - as well as advertising loss from agents and brokers who may pull out.
• Leveraging the newspaper assets is a powerful competitive advantage. The newspaper can "spend" more on push marketing its agents and listings than other brokerage companies, espeically ones that have pulled out of print.
Many thanks to Brent Low, CEO of UtahMore for sharing his insights with us.
Brent Low, President and CEO at MediaOne of Utah