The New Age of Marketing

This is a duplicate post from David Allison’s blog on BC Business

What keeps me awake at night? The answer – at least the one I’m willing to commit to a blog post – is below.

It’s in an interview I did to help promote the Canadian Resort Investment Conference (at which I am a speaker), and I’m posting it because, even though I’m talking about real estate, I think its marketing lessons are broadly applicable. Substitute some particulars, and this could be a how-to for branding barbershops or accounting firms. Hopefully, something in here makes you stop and rethink an aspect of your business communication and positioning.

Q: Marketing resort property has traditionally followed a formula – how and why is it changing? What marketing methods are now being used in the industry?

The recession has changed everything. The investors and flippers are now gone. Buyers remaining in the market are thoughtful end-users, and they are being cautious in their purchases. Education and information are the only antidotes to fear and uncertainty. We need to stop being “hype and jive” marketers, and instead become more like journalists – Marketing Journalists, if you will. We refer to our company as a Marketing Newsroom, because that’s the functionality we need to provide to our clients these days. We need to help them BE the media.

Q: What is the impact of social media on the real estate/resort industry? Is it a fad or is it here to stay?

It’s here to stay. The recession has sped up the mainstreaming of social media. At a time when we are a) looking for community and b) distrustful of traditional communications channels, there is suddenly a new way to talk to people and engage them on a meaningful level. What would more motivate you to buy a car today – a fancy ad campaign or two friends on Facebook recommending it? Eighteen million Canadians are on Facebook. Of those, more than 50 per cent are over the age of 35. That makes it exponentially more powerful than the CBC and Globe and Mail combined.

Q: Fill in the blank: “The future success of the second-home property industry is reliant on _______.”

Truth. And plenty of it.

Look, it’s simple. For years we’ve sold resort and recreational property by showing people a sunset with a couple in matching sarongs holding hands. That won’t cut it anymore. Today, our buyers want to know about construction quality, energy efficiency of the appliances, resale potential, demographics of the community, historical averages of weather, cultural opportunities, soundproofing of walls, insurance policies, census data for the area, population and immigration patterns, and so on. Be a journalist. Be the media. Blanket prospects with a nice warm layer of facts and credible information. They will respect you for it.

Q: Today, developers and hoteliers are trying to make their product more attractive and marketable. What can they do to achieve this in today’s climate?

Be reasonable. If you have a “C” site, don’t put in a Euro-kitchen and bidet and try to sell it at premium prices. Build a good entry-level product and sell it accordingly. Second, really think about the consumers and how they will use the space. There are many small questions about which you will have to answer but getting it right on the granular level gives you a strong and solid truth. It’s something your customer can gravitate to.

The Urban Development Institute’s Stance on HST

The Urban Development Institute is obviously very involved with helping members understand the impact of the HST on the British Columbia development industry. They recently sent out this email to all members. We encourage anyone in the industry to comment here on our blog, and we’ll make sure your feedback gets to the UDI. We need to present a united front to the government to mitigate the issues this tax will create. It WILL impact your business, if you are at all connected to housing and development in this province.

Dear Members:

As you know, we have been addressing the impact of the proposed HST on new housing – for sale and rental.  We have heard loud and clear your concerns and opposition to the new system and have learned that the vast majority of new family housing in the growth areas of the province (Lower Mainland, Greater Victoria, Greater Kelowna regions) will be priced over the $400,000 threshold that has been proposed.

Over the past couple of weeks, we have undertaken an analysis of the impact on a variety of family housing forms (2 plus bdrms) and have also analyzed the impact on new versus resale housing.  For purposes of easy comparison, we have chosen to use the mean (average) price of a variety of new housing forms and compared this to resale product at the same price.  However, it should be noted that the mean price of a new family condo in Vancouver, for instance, is $801,400 while the mean price of a resale family condo is $574,400. The mean price of a new single family Coquitlam home is $744,800 but the mean price for resale is $459,679.  The mean price for a new Burnaby townhouse is $472,900 but the mean price for resale is $427,900.

New housing costs include a variety of newer regulatory requirements and extractions as well as higher land and construction costs that may not have been applied when the resale housing was originally built.

In addition to the increase in regulatory costs, new housing is at a disadvantage when it comes to taxation.  GST only applies to new housing.  Now, with the introduction of the HST, the disparity between new and resale housing is magnified.  For example:

• When comparing a new versus resale townhouse in Burnaby, both valued at $472,900 (average price for new townhouse in Burnaby), the new townhouse will pay $32,983.70 more in taxes.
• When comparing a new versus resale single family home in Coquitlam both valued at $744,800 (average price for new home in Coquitlam), the new home will pay $52,300 more in taxes.
• When comparing a new versus resale family condo in Vancouver both valued at $801,400 (average price for new family condo in Vancouver), the new condo will pay $60,890 more in taxes.
• When you account for the increased financing costs at 6% over 20 years required to cover these taxes, the disparity is very dramatic – the townhouse taxes now cost $43,170.80, the single family home taxes now cost $80,519.80 and the condo taxes now cost $93,745.70.
  

Given this, our members believe they will face waning consumer demand for new product which may lead to an equally troublesome concern that more jobs will be lost until such time as the economy recovers and there is significant increased pressure for more housing.

We are currently working through the implications on rental housing but early comment from our members who build rental housing is that the HST will be a backward step at a time when our members were considering building rental.

1. We will be meeting with government officials and the Premier over the next week and we would like your input on our key recommendations which include:
2. Increase the threshold from $400,000 to a much higher number – at least $600,000 or  – the average price of family housing in growth areas of BC
3. Index the threshold so it increases with average price of family housing in growth areas of BC
4. Increase the current flat $20,000 rebate to a much higher number and index as above, or  – remove the cap and make rebate 5% of the tax collectible (this, combined with the estimated 2% input credits should bring us closer to tax neutrality).
5. Grandparent all pre-sales and projects (including phased development agreements) in the development process prior to July 1, 2010.
6. For projects complete but not pre-sold or those that need to be self-assessed for rental purposes, allow offset of any PST obligation that occurs prior to July 1, 2010, irrespective of the date of sale or self assessment of units.
7. To mitigate the growing disparity between new versus resale housing, eliminate the Property Transfer Tax on vacant land and new housing.

Do you support these recommendations?  Any other comments or questions?

Kick-starting a stalled project

This is the first post of many that David will be writing for RENX.ca, an online service for developers, real estate professionals and interested consumers, that provides news and commentary about the Canadian built environment.

You’ve spent a lot of money promoting your real estate development project.

You’ve got a fancy name, and a logo, and the logo is splashed all over a fancy brochure and website.You tried direct mail but it doesn’t seem to work anymore. And print ads seem like a huge waste of money for the meager traffic they are creating.

Signs on the road and at the sales centre are helping to build awareness, but after the initial rush of buyers in early 2008, things just ground to a halt. And now even the confirmed buyers are jittery, because they know if you can’t sell the rest of the homes in your project it will mean no project at all.

The bank is breathing down your neck, and your sales team (if you have one left) is threatening to mutiny.

What do you do?

There’s the slash-prices strategy. That causes some activity, but kills any hope of profits for you, and really stirs up the existing owners who paid full price.

There’s the head-in-the-sand approach. Don’t do anything and hope the economic recovery saves you. This can cause banks to get very upset, and the lack of momentum will make current owners jittery and more likely to walk away.

There’s a third way for some projects. It’s about extracting the additional story-value from your project and re-igniting interest with appropriate targeted consumers. Here’s how it works, in three simple but not-so-easy steps.

Step One

First thing you need to do is be brutally honest about your existing marketing materials and media plan.You might need someone from outside the project to give you an objective point of view.

Your sales team will likely have some thoughts that they have been too scared to share. It’s vital you do a reality check here, and know what you have on your hands.

In many cases you’ll find that what you have been using to market your project was perfectly adequate during boom times, when people bought new real estate as an investment, and only cared about resale value as it related to equity gains. Those investor/flipper buyers were easy to sell to. They weren’t that fussy. They probably wouldn’t ever see the inside of the homes they were buying. A slick looking marketing program that used the words: luxury, ultimate, destination, oasis, retreat, privilege, discerning, fortunate and sophisticated in various combinations was all you needed.

Step Two

Next, you must find the stories and the “brand value” that you missed the first time around.

Did you tell all the stories that an owner-occupier would want to hear? Did you discuss and explain the floorplans, and not just show floorplans? Did you think about the neighbourhood, and how cose/far you are from things that will make daily life easier? Did you behave like a journalist on assignment and ferret out all the good juicy news stories about every aspect of the project from a buyers perspective?

If you go to Chapter 3 in my book Sell the Truth, (available for free on the downloads page) you’ll find lists of questions to ask yourself. In truth these lists are just idea starters. But they may get you moving down the right path. During this step your role is to be a wide-eyed kid learning about the project for the first time. Collect everything you learn in one place.

Step Three

You now have a realistic overview of where your existing sales and marketing materials fell short, and a library of new stories and facts that you can add to the communication program to make it more robust. Only thing left at this point is to figure our how to cram all that new information into the existing materials and tools without starting from scratch.

Fixing your website isn’t hard. Get rid of any flash movies on the home page and pack it with facts and figures. Have a blog on your home page that you update every week with new stories. The blog is essential. It allows google search engines to find you more easily and it gives prospects a reason to come back over and over. Think of all the other information you could provide on your website that a buyer wants to know. Links to other competitive projects for example (yes! I said that!), information about traffic, about schools, about sports, about taxes, about sunlight, and immigration, and CMHC figures. The owner/occupier buyer wants to know all this stuff. Be the expert that provides them the information they desire.

Use your new blog as the starting point for a comprehensive social media program. Have the sales team set up with Twitter feeds. Use facebook ads. Do some blog outreach to online communities that share your interests. Don’t be scared of social media. But know the rules of engagement before you dive in. It can get scary, fast, unless you know what you are doing.
Brochures can be fixed up by adding a couple of pages, or printing a presentation folder that the brochure sits in; that allows for new information to be inserted as well.

Ad campaigns can be re-calibrated to point people to your new website. The website is the hub of the campaign. Everything else exists ONLY to drive people there. So don’t include anything in a print ad that isn’t driving people to the web. No maps, no hours of operation, no photos of the sales team. Just facts that will make people want to know more.

The same holds true for your presentation centre. Signage. Direct Mail. In fact, every component of your campaign can be re-tooled to focus on facts and news and what we call “Marketing Journalism.”

Why bother? Because this is the stuff people want to know to feel good about a purchase. Want proof? Download the free case study on the case study page for a project we did called “The Block”

Yes, all this effort will take time and money. But it will give you the best chance of success. And best of all, re-working a stalled campaign is a kind of training program: you will learn how to do things right for these new-market-consumers for when you launch your next project.