Why local media should disrupt traditional real estate brokers

There is a reason you don't read a lot about digital classified ads on this site. 

While classifieds as a revenue category continues to limp along, that ship has sailed. Our advice is to park the category and build higher growth areas.

As we've noted before, the most over-looked area of revenue development is often direct sales to consumers. Think about it: Media companies still have great traffic (yeah for local news). In fact, local media have more online and mobile traffic than ever. The world is dangerous and on our doorstep, from weather to wars and from sports to healthcare and local economic issues. 

What really has been disrupted is the advertising model. The demand for banner ads - on both the merchant and consumer side - is never going to replace more than a small fraction of print and broadcast dollars. 

What customers want are new, easier ways to buy things.  Direct, "user-generated revenue" usually refers to lots of low dollar consumer sales that can replace classified private party ads, such as directory up-sells, stores, games and so on.  

But real estate is also in this category. And it is big, big money. 

Our case study this week explores how MediaOneUtah created an inhouse brokerage that will generate $1.6 million in revenues from real estate sales this year. That is NET revenues from commissions on selling homes,  and does not include another $40,000 a month in new revenue from new advertising (full case study here). 

That's after only a year and a half in business. Hmmm....

User-generate e-commerce does not have to mean only small sales, like selling Pittsburgh Steeler chotskies (although a cool six figures from post-gazette.com's store is nothing to discount). MediaOne of Utah already has 400 listings and 3% of the market, and has Coldwell Banker, the leader with 12% marketshare, in its sights. 

Is creating a brokerage hard? No. It's not hard. Having run a real estate sales division briefly (finger-in-the-dyke style) for one of the first media companies, MetroPublishing, Inc. to try this, I can attest to the ultimate simplicity and thrill.

However, MediaOneUtah has done it, not without glitches, but fundamentally the right way. Their approach is aggressive, well-promoted, inspiring and worth looking at.

It's one of the "Top ten" initiatives we are compiling for 2011, and may wind up on top. Besides the case study, we've also included steps to create an in-house real estate agency here.

I know. I know. The immediate reaction is: What about the risk to the existing real estate revenue streams, the shortage of staff and too numerous iniatives, the complexity of hiring brokers and agents - who are like some strange, money-oriented animals that eat dollar bills like grass. The general stasis of a staff with short term needs and their collective viewpoint oblivious to how swift a rapid decline in revenues can pass the point of no return.

But for those managers who are leaders with the courage and foresight to do the right thing: This is real money, it's available. Here's how to do it.

Many thanks to Brent Low, CEO of MediaOne of Utah for sharing his experiences with us, and to NAA's MediaXChange, which hosted Low as a speaker on this topic. 

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