Big news! Redfin launched a glorious new version of our website this morning. Some of the changes are on the back-end, to help us handle more demand for our partner program, which had been held together behind the scenes by string and bubble-gum until today — now all our partner agents can use a web dashboard to keep us in the loop on what’s going with their Redfin clients (we worry a lot about how you’re doing).
But there are also plenty of features for folks just visiting our website: smart text-matching for misspelled searches, free-text search of marketing remarks, better neighborhood stats, meatier listing alerts and more accessible ways to get that data by RSS too. Oh yeah, and we also no longer give Chrome users a hard time, which we used to do even though lots of us here at Redfin haved used Chrome from day one. Same for Firefox 3.5. Let’s take a peek at some of these features in a little more detail…
If you misspell a neighborhood or city name like Westminster or Murrieta in Southern California, we figure out what you really meant:
We’ve also made it easier to see how a neighborhood is changing from month to month. When you search Redfin for a city or neighborhood, we show an inventory graph beside the map that now includes key facts about whether inventory is up or down, and about whether homes sold for above or below the last asking price:
If you drill into a neighborhood, you can see how the number of listings and the number of homes sold in the area has changed over the the past year. The layout looks a lot better now, with house and condo graphs on different tabs. There’s also new data in the table below on how the number of listings and sales has changed year over year:
Even though the year-over-year feature is up and running, we won’t have the actual year-over-year data until later tonight; a job is running right now on our production database to calculate all the numbers. We also built stats pages for entire counties, which is mostly useful for journalists who tend to look at the big picture. In general, we’ve invested a lot in neighborhood reports because we got a lot of bankers and investors who are now using our site to analyze the market, and they suggest a lot of features by emailing tech support. We also think good stats are important to our overall mission to be the most authoritative real estate broker in the markets where we compete — we can do a good job here because we have direct access to broker data whereas most analysts don’t.
One area of the site that we haven’t done much with has been the listing alert emails we send out every night to tell people when prices drop or new listings hit the market. It used to be you had to click through to Redfin.com to see the number of beds and bathrooms and the square footage for each listing but as of today that stuff is right in the email. Here’s the new format:
Compare it to the old version which didn’t tell you how many bedrooms or bathrooms there were, or how big the property was:
Not only does the email contain more info, it also behaves nicely when you forward it: the file is five times smaller, and you aren’t typing against a blue background that makes your own comments invisible.
If you want to cut down on mail, we’ve also made it easier to get new listing alerts via RSS — which is how web pages share information with one another — right in the MyRedfin page where you manage all your saved searches:
To give you the scoop on which agent is best for you, we also added a bunch of features to make agent reviews show up in more places; already agent reviews have increased demand 116% since reviews launched in February. Now we highlight our agents’ experience with bank-owned properties and first-time home-buyers — we’re seeing a lot of both these days — by putting badges on all the relevant reviews:
We could go on and on because this release is a big grab-bag of pleasure — we suggest homes for our clients to tour for example — but the other change we should tell you about in this post is the new registration requirement for Long Island and Westchester County. This one doesn’t go in the pleasure category.
The MLS in Long Island has given listing agents there the ability to withhold the address of a listing from the Internet unless we register the visitor as a client. Weirdly, about 68% of the listings have been marked so as to require registration (dual agency — where a listing agent also represents the buyer — is common in Long Island). So that means we can show the property on our map, but we need to get your email address and a password to show you the street address. Nuts! But don’t worry New Yorkers, we won’t spam you; just sign up, browse all the addresses you want and you’ll never hear from us again unless you want to.
OK, that it’s — there’s a big Redfin happy hour at Elysian in Seattle, which I am missing because of this blog post! So if there’s anything I missed — or a feature you wish we had added — please leave a comment below! Many thanks to all the engineers and product managers who worked their tails off to make Redfin better and better; we love you guys.
The Case-Shiller numbers on April 2009 home prices came out this morning. Case-Shiller is a measure of how prices have changed for houses that have sold before without having been remodeled since; the goal is to measure only how demand changes, not how houses themselves have gotten bigger or better. Because it was originally developed by economists and is still calculated by a financial analysis business, Standard & Poor’s, Case-Shiller data are considered more reliable than data from real estate agents or home-builders.
The Case-Shiller report has some limits. It measures prices for an entire metropolitan area, like the entire Bay Area, not an individual city like San Francisco or Oakland. And we only have prices for April 2009 since it takes S&P a few months to gather and analyze the data. The absolute numbers themselves are arbitrary; like a stock market index, what matters is how the numbers go up or down. S&P set the base-line for each market at 100 in January 2000, and they’ve increased or decreased from there.
That said, the news was good! Even when seasonally adjusted — economists subtract from summer prices and add to winter prices to account for seasonal ups and downs in demand prices – prices were flat or increased in Chicago and Washington DC areas. And only New York and LA areas saw significant month-over-month price declines. In all markets, declines were much smaller than last month. Last month, almost all markets saw month-over-month declines greater than 2%.
The table below shows when each market peaked, and then presents the “equivalent month,” which says when prices were last at their current levels. So for example in the Bay Area, April 2009 prices dropped to where they were in July 2000, and in Seattle, April prices dropped to May 2005 levels. We also show how far the market has fallen from the peak; in California prices are down 41% – 46% from the peak, and then show year-over-year and month-over-month declines.
Metro Area
Date of Max
Equivalent Month
Change from Max
YoY Change
MoM Change
Last Months MoM Change
LA
Apr-06
Aug-03
-40.9%
-21.2%
-1.2%
-1.3%
San Diego
Mar-06
Jul-02
-42.2%
-20.0%
-0.8%
-1.4%
Bay Area
Mar-06
Jul-00
-45.6%
-28.0%
-0.5%
-2.7%
DC
Mar-06
Dec-03
-33.3%
-16.9%
0.1%
-1.3%
Chicago
Feb-07
Aug-02
-26.8%
-18.7%
0.0%
-3.0%
Boston
Nov-05
Nov-02
-18.4%
-7.7%
-0.4%
-2.1%
NY
May-06
Apr-04
-20.9%
-12.5%
-1.5%
-2.3%
Seattle
Jul-07
May-05
-21.4%
-16.8%
-0.6%
-2.3%
20-City Index
May-06
Apr-03
-32.0%
-18.1%
-0.9%
-2.2%
All the data in the table has been seasonally adjusted. Just looking at the straight numbers without the seasonal adjustment, San Francisco, Boston and Seattle also saw month-over-month improvements. As the Case-Shiller report (PDF) notes, “every metro area, except for Charlotte, recorded an improvement in monthly returns over March.”
Given how busy Redfin and other brokers have been since April, our own take is that Case Shiller numbers won’t decline much for May or June, but it’s still a mystery what will happen later in the year when more bank-owned listings hit the market — there was a moratorium on foreclosures through March that is still working its way through the sytem — and when the home-buyer tax-credit is scheduled to run out.
The folks at Redfin got into real estate to make the industry more efficient. But if anything, the market has just gotten less and less efficient. And most of it isn’t the Realtors’ fault but the banks. Banks selling a home don’t trust one another’s credit. They reject appraisals for a price that a buyer is willing to pay. They’re slow to put homes on the market, but aggressive about pricing other sellers out of the market, even as buyers are frantic to strike before the tax credit expires. The California economy is in the tank but we only have 4.2 months’ supply of listings.
I am not trying to talk the market up. (After years of saying that prices were too high, I was virtually crucified for saying, when no one else would, that prices in Southern California may be nearing a bottom; three months later, prices began to increase). And my point in writing this is not to blame the banks, who have good reason for an abundance of caution. My point is just to state the obvious: the market has become distorted so much that it is ridiculous to pretend that it is a free market. It is instead an oligarchy, controlled by the government and the banks to limit price drops, which in turn frustrates consumers and limits price recoveries.
Human nature being what it is, there are some folks who have already figured out how to profit from this skewed-up system in interesting and not entirely ethical ways. Here are just three phenomena in the real estate market that only make sense if it isn’t really a market at all:
1. Banks are hoarding listings to avoid writing down their losses: individual home-owners who want to sell can’t compete with the banks on price, and so hold their properties off the market. As a result, banks have effectively become the sole supplier of homes for sale in many distressed areas. We routinely see bank-listed homes with 30, 50 sometimes more than 100 offers. And yet even as sales volume in California is up 35%, prices are down 30% over last year, despite modest recent gains. Supply and demand have been slow to find a new balance because there is an enormous backlog of homes that could be sold, and most are not being put on the market. Banks have good reasons to withhold inventory: staff reductions, the need for repairs, concern about flooding the market. But another reason banks withhold inventory is that they can avoid acknowledging the loss on their books until someone puts a new price on the listing. Dribbling out the inventory may prolong the banks’ survival, but it means a recovery will take longer, too. The major source of uncertainy in today’s market is that nobody knows how much of the inventory iceberg is under the water.
2. Real estate agents may be hoarding listings to save them for their own buyers, doubling their commissions: the shortage of listings in a market where asking prices have not significantly increased distorts the incentives for real estate agents, too. In multiple Redfin Forums posts, several eagle-eyed consumers recently noticed that listing agents are accepting an offer on a listing literally one minute after it debuts on the the market. Then a month later, the listing agent returns the property to the market saying the previous sale fell through, and again immediately acccepts a new offer before anyone else can strike. The second time around, the offer is from a buyer represented by the listing agent, so she stands to earn double the commission. The concern is that the listing agent is hiding a listing from other buyers until he or she can find her own buyer. The fact that we’re even having these skirmishes over inventory suggests that the market is not doing its work; normally when there is a shortage of supply and an excess of demand, prices increase and supply increases.
3. Banks refuse to accept what the market tells them is a fair price for a home: for a long time, banks have aggressively priced their own listings to create a bidding war between buyers that results in final prices hundreds of thousands of dollars over the asking price. That was strange enough, but now in the Inland Empire our partner agents are seeing banks refusing to take the highest offer, for fear that the home won’t appraise for the value offered by the buyer. Rather than risking that a loan will fail because of the appraisal, the banks take a lower offer from an all-cash buyer. What this means is that the market establishes a price for the property and the banks on both sides of the deal — the one selling the property, and the other lending money to a would-be buyer — refuse to believe it. Now cash has always trumped other offers at nearly the same prices, but when we see a bank reject offers 10% or 20% higher it means that the credit markets are still hindering a recovery. Perhaps soon people will be offering two chickens and a goat for a house.
So what’s the solution? The government could require that banks receiving federal assistance put real estate up for sale within nine months of taking ownership, or at least mark the assets to market using the Case Shiller index where available; failing that, we should at least extend the home-buyer tax credit so that we don’t create demand exactly when the foreclosure moratorium reduced supply.
And banks themselves obviously need to require listing agents to keep a listing on the market for a minimum length of time — say three days — so the market can do its work. But as for banks that refuse to accept a price for fear it won’t be supported by the appraisal, we shouldn’t worry. We’ve all had enough of banks being pressured to make deals they’re not comfy with. If we get the inventory on the market when the buyers are ready to buy it, the market can start to do its work again.
Walking out at 2 a.m. from the paparazzi-lined Chateau Marmont last fall with a few of the world’s nerdiest people*, I was nearly run over by two young women who careened through a parking lot in a brand-new Pontiac to ask us a simple, breathless question: “Do you want to party?”
I’d reached the point in my life when I no longer knew what this question meant. I held up a splayed-out hand to show them my wedding ring. Behind me, a friend said, “They’re professionals.” Another said, “They want to harvest our kidneys.” And a third: “They think we’re movie producers.” We stood there, petrified, staring at them. They stared at us. Then they tore off into the night.
But it has always stayed with me that I never answered their question. Because the answer is “Yes, I do want to party.” Which is why Redfin, Madrona, Fenwick & West and Square 1 Bank have organized another big Naked Truth event for Seattle’s tech community:
What: The Naked Truth: Show Me the Money When: July 9, 6:00 p.m. Where: The Olympic Sculpture Park on Seattle’s waterfront How Many: 400 people; the park limits attendance, so you have to sign up. Why: Understand how different revenue models for online consumer companies work Format: panel + party Panelists: Damon Darlin, Technology Editor, New York Times Fred Wilson, Union Square Ventures, author A VC Michael Arrington, Founder & Editor, TechCrunch Jonathan Sposato, CEO, Picnik Brad Jefferson, CEO, Animoto Ethan Lowry, Co-Founder, Urbanspoon Glenn Kelman, CEO, Redfin Livestream: by Seattle 2.0; check back here the day of the event for the webcast How Much: $0 Hashtag: #nakedtruth
This Year’s Theme: Revenue Models for Consumer Internet Companies The topic for this year’s event is revenue models for online consumer businesses. We’ve asked entrepreneurs from a few of Seattle’s funnest consumer services** to talk about how they make money from ads, transactions, subscriptions, downloads. Using real numbers – on the cost of traffic, on the ratio at which that traffic converts into customers, on the revenues yielded per 100,000 visitor — we’ll dig into what makes different revenue models really work.
We’ve also got a few folks to report on what’s happening in the world beyond Seattle: Damon, Michael and Fred have probably seen more revenue models for Internet-consumer businesses than anyone.
Together, we hope we can give some useful advice to entrepreneurs trying to figure out the best revenue mix for their own companies. It’s something Redfin is still working through, too, so it’ll be good to get some help. Even though Internet companies everywhere are in a put-up-or-shut-up situation, you could go to a hundred Internet conferences and never hear a word — let alone a number — about revenues.
What You Need to Bring
So we hope everybody can come. The panel will run ’til 7 or 7:30, then we’ll start the party. We’ll try to commandeer a taco truck to set up at the park entrance, and the Olympic Sculpture Park folks will run the bar. If the grass is wet or your pants are white, you need to bring a blanket to sit on in the park’s amphitheater.
But you should try to make it. At the last Naked Truth, people fell in love, scores were settled, grudges were forgiven, the fur flew over all sorts of dingbat startup ideas, everyone was smiling, and folks dressed up like it was the prom. I need a haircut now but I’m waiting two more weeks so it will look perfect for the big night.
If you’ve got ideas for spicing up the event with jugglers, sword swallowers or tambourine troupes — or if you have questions you want to ask the panelists — leave a comment and let us know what you can bring to the party. Many thanks to Madrona & Fenwick for putting this event together, to all the speakers for agreeing to participate, and to Seattle 2.0 for streaming it.
(Photo credits: Chateau Marmont by John and Keturah, Olympic Sculpture Park by Jacobc on Flickr)
*Myself included! We were all nerds, especially compared to the rest of the Marmont’s clientele.
**We’re claiming Animoto as Seattle-based since the team went to high school here, and one of them still has an aunt in Tukwila!
I’ve never liked VIPs. At big moments in our lives – buying our first home, applying to college, seeing a doctor – it seems like we should all be equal.
It isn’t always that way. Friends in medicine told me that when the Clinton campaign or the Rolling Stones came to Seattle, their security detail asked Harborview to set aside emergency-room beds (the final car in a presidential motorcade is always an ambulance). But legendary ER director Michael Copass flat-out refused: the only VIPs in his world were firefighters and paramedics.
Here at Redfin, we’ve tried to avoid VIPs too, even though dozens of my friends have at this point become Redfin customers. It hasn’t been easy: in a multi-million dollar negotiation, everyone wants a leg up, and I don’t like to say no to any customer.
But that doesn’t mean that there aren’t VIPs at Redfin, or at every other online-savvy business for that matter. The difference is most of them come not from my social network but from online social networks in general: Twitter, Yelp and the blogosphere.
Redfin agents & engineers spend all day on those sites so when a client live-blogs every twist & turn of her real estate search, we all notice. And if one of our agents screws up with a customer who Twitters about it, a half dozen Redfinners are immediately emailing that agent to find out what happened (about 15% of the time the review is from a competitor who never used our service).
We’re not alone. A recent study in the Journal of Real Estate Finance and Economics found that “an agent is more likely to bargain aggressively and capture a portion of the gains to trade for a client when the house’s sales price is closely related to the agent’s reputation and future business (referrals).” Other industries are no different: Redfin engineer Dan Fabulich told me that a fringe benefit of his mother’s food blog is white-glove service at any LA restaurant.
Translation: some customers are more equal than others. We judge their importance not by the old measures — the heft of their wallet or the fanciness of their title — but by the extent of their social network. More than any CEO, a stay-at-home mom with 2,000 Twitter followers is a force to be reckoned with. One of my favorite Seattle-area CEOs, Alex Castro, takes a screenshot of every Twitter complaint lodged against his competitors and mails it out to prospective clients.
And increasingly, consumers aren’t afraid to throw around the weight of their social networks. When Internet impresario Jason Calacanis tweets about the fantastic service he got from Tesla or asks someone at Apple or Dell or Canon to hook him up with new stuff, I can’t help but wonder if their response says more about the kindness of those companies or the power of his 70,000 Twitter followers.
What that means is social networks’ participants have sometimes figured out how to monetize those services ahead of the services themselves. Twitter may not host ads but Twitter’s users advertise good service all the time and are often rewarded for it.
I don’t like to think about how this affects the objectivity of Twitter as the new CNN, but it will have one big benefit: companies will invest more deeply in customer service not as a cost center but as a marketing channel. As Redfin’s Sasha Aickin argued in a recent directors’ meeting, we all need to stop worrying about how to make it easy for consumers to Twitter about us and just focus on giving them something good to Twitter about.
So how does Redfin square all this with our efforts to treat every customer like a VIP? We try to give everyone a voice by surveying every customer for a review, regardless of whether there is a close, and publishing every review on our site. Less than 1% of our clients have the gumption and the online following to review us on Twitter or Yelp, but 56% fill out the survey — which is so high that our agents have to assume any given customer can affect their reputation.
We’re used to running into one or two other couples or families if we’re in a well-priced house, but this weekend… we’ve never seen anything like it. There were 10 pairs of shoes outside of one home, another home had one couple or family in every single room while we were there.
Then an hour later, Marcella Branniff, who runs a customer support organization here at Redfin, mentioned in a meeting that she was touring open houses this weekend in Seattle and noticed that “every single one was packed.”
Meanwhile requests to tour properties and meet agents have remained at peak levels for Redfin in the first week of June, when normally we expect to see early-stage demand slacken from May.
Now of course, most of the folks in an open house are neighbors or looky-loos — and our clientele are notoriously careful to make a move — so it’s hard to figure out how much of this is real. This morning Redfin’s Adam Wiener queried our customer database to find out whether the competition was translating into more offers.
His findings: 71 of 108 (66%) offers that Redfin made in Southern California this May faced competition from other offers. We know that many other clients chose not to make offers after hearing about the competition, so the real numbers are in some ways even worse.
In a post-script to his email laying out the numbers, Adam mentioned that many of the agents in our partner program were “frantic,” a word I haven’t heard in years.
This isn’t to say we’re at the bottom of the real estate market. Because of the foreclosure moratorium that ended in March, a big new wave of foreclosed homes is scheduled to come online later this summer, on top of an interest-rate increase. And traffic on some large real estate websites has started to decline (though Redfin’s unique visitors in May still increased significantly over last month).
All the same, it seems like demand is up; some is seasonal, some is the result of the $8,000 first-time home-buyer credit, some is just tire-kickers; some is because banks are carefully titrating the supply of foreclosed homes to avoid flooding the market with supply. We don’t know how much demand will last beyond July or August.
So we thought we’d ask: what are you seeing out there?
Every time I Twitter, which is more and more often these days, I think about what evolutionary psychologist Geoffrey Miller told the New York Times a few weeks ago about a different topic, the futility of consumerism. It seems like he should have been talking about Twitter:
“Evolution is good at getting us to avoid death, desperation and celibacy, but it’s not that good at getting us to feel happy,” he says, calling our desire to impress strangers a quirky evolutionary byproduct of a smaller social world.
“We evolved as social primates who hardly ever encountered strangers in prehistory,” Dr. Miller says. “So we instinctively treat all strangers as if they’re potential mates or friends or enemies. But your happiness and survival today don’t depend on your relationships with strangers. It doesn’t matter whether you get a nanosecond of deference from a shopkeeper or a stranger in an airport.”
Since we don’t have to worry about dying of starvation and most Twitterers are safely post-celibate, all we have to live for now is that nanosecond of deference from strangers, which is why so many folks take the measure of their prestige each morning — it is a simple number now — by counting the number of Twitter followers they won or lost.
Another way of saying this is that Twitter has turned us into a nation of Tila Tequilas, the woman who was first to get a million MySpace followers. Whatever fig-leaf of intimacy Facebook tried to protect for us non-Tequilas by securing our updates to a select group of friends has been traded in for a shot at small-time celebrity.
It’s hard to say whether that will really make us happy. Redfin’s Sasha Aickin somehow persuaded me to watch Tila Tequila’s MTV reality show, a grotesque affront to human dignity that he now claims to have recommended in an ironic way; what made it hard to bear wasn’t how silly everyone was being, but just how unhappy they all seemed vying for attention.
Would they be happier if they were competing in a real jungle for sex and food? Or is it better to fight for the attention of strangers?
I’ve been spending the weekend at a 40,000-person oncology conference in Orlando and finally wandered into a Saturday-night session on using the body’s immune system to fight melanoma. It’s the first time I’ve ever been to a conference outside of tech, and it struck me as immediately different and in some ways better:
It was so scientific. Speakers presented data from studies that supported and contradicted their conclusion. They presented data that they couldn’t explain. They hardly talked about anything except results, and they never talked about results without using data. I hadn’t realized how much mental energy it takes at most conferences to defend yourself from self-promotional hoo-ha until I walked into a room that seemed free of it. It was like Hawaii must have been before the mosquitoes showed up. How much further could we advance the state of the art if software conferences were more like this?
Speakers disclosed their conflicts of interest at the beginning of every talk, quickly and matter-of-factly.
Nobody used the word revolutionary. The gains a lot of oncologists fight for are measured in an extra month of life for 2% or 3% of patients. Instead of big eureka moments and public offerings, the state of the art advances by a thousand little increments. I wonder if that’s where we’re headed.
No celebrities: Big names are recognized, but nobody knows what they look like. There was no Mark Zuckerberg, and no Michael Arrington to interview him either, so a little zing was missing.
These people have no idea how to have a good time. It’s Saturday night, and the melanoma symposium was packed. Everyone was drinking iced tea. Almost everyone was wearing suits. I’ve never seen a software conference that wasn’t at least a little boozy by now.
I felt like a Yahoo visiting the land of Houyhnhnms, intrigued and a little awe-struck, but also glad after an hour to hit the pool, and still glad to be in software too… I’m not sure which type of conference is better, but I learned a lot from seeing this one.
It has all the big things I wished we knew three years ago when we first started tinkering with Redfin’s map…
Sasha talks about how we stopped piling on all the layers of data and graphics just so we could make the map page load four times faster (sometimes you have to ignore what consumers ask for and just look at what they click for)…
…and the incredible Alice-in-Wonderland quality of a web-based application that expands or shrinks to the size of your browser window so you never have to scroll around…
…and what to do when you have 3,000 houses for sale in San Francisco but only enough time and space to show 500, a problem that the mad scientists in Redfin’s San Francisco office are still trying to solve in a way that everyone can understand.
The writing in the essay is pure Sasha: worked so carefully as to seem effortless, awfully smart but approachable, and always fun to be around. If you’re in San Francisco next week and you’ve ever wanted to meet one of the big stars behind Redfin, swing by Sasha’s demo.
Happy Memorial Day Weekend from all of us at Redfin!
It was a curious response to what may be a titanic shift in how advertising works. Twitter seems ready to depart from the business model of every Internet media giant that preceded it, including AOL, Yahoo, Google and Facebook, which comes as news that many folks who are deeply invested in current media models just don’t want to hear.
Rather than inserting ads into, above or alongside the stream of authentic consumer voices, Twitter seems likely to charge its clients for being able to monitor and channel that stream. As Biz explains, “facilitating connections between businesses and individuals in meaningful and relevant ways is compelling.” Imagine, for example, a stream of tweets about how great Redfin is that Twitter would associate with the Redfin keyword or that we would integrate into our own site. Redfin would pay for that.
But we’d never pay for traditional ads on Twitter. The whole idea behind many ads — drawing me to a site with A then forcing me to sit through B — doesn’t work in a world where the consumer increasingly controls when and how he consumes media. It’s too easy just to skip ahead via Tivo or install an ad-blocker in Firefox. And even if I see the ad, many ads just don’t compete with the truth very well these days, which on a Yelp or Avvo now often appears right alongside the ad.
Subjective and Objective, Together for the First Time Ten years ago, in the absence of reviews from people who seemed just like me, ads once held enormous sway on my purchasing decisions. Sure I could have looked at Consumer Reports, if I really needed someone else to tell me to buy sensible shoes. But even Consumer Reports never had the temerity to put the objective and subjective alongside one another. What’s the point of buying an ad when your product already had the highest rating? Or the lowest? This is the problem that all review sites — that the Internet itself — has to solve. It’s hard to be a truth-teller and an advertiser all in one place.
This is not to say that advertising is dead, only that it has to evolve into a more subtle, emotional medium. What matters isn’t the reach or frequency of a media purchase but the ability of an ad to communicate at an almost atavistic level. Geoffrey Miller, a University of New Mexico professor who recently published “Spent: Sex, Evolution and Consumer Behavior,” argues that most marketers don’t know how to speak to the primitive brain’s true needs for prestige and better breeding opportunities. These are feelings beyond the dispute of a review or a Google search.
Focusing on Feelings, not Demographics
It seems like Professor Miller understands better than Madison Avenue why some ads lodge in our consciousness. Rather than slicing and dicing consumers into traditional demographic buckets based on age and income, Miller encourages advertisers to think in terms of how a product expresses the traits evolution has programmed us to value: openness, conscientiousness, agreeableness, stability and extraversion.
The photo-editing website Picnik is a perfect example of this emotional sensitivity; while the Flash application loads, the site talks about “buttering the bread” and “warming the breeze” for a picnic. And that’s what I like most about the site, is how its silly little progress bar makes me feel, which is overwhelmingly agreeable. I wish Redfin as a website was that emotionally coherent.
Internet marketing in particular, and ads in general, have enormous power to make us feel. Some of the last things I will ever forget aren’t leaving home for college or driving a U-Haul out of San Francisco, but a cloying jingle like “ring around the collar,” which gave me one of my first intimations of the most powerful human emotion, shame.
It seems obvious that the most effective ads are involved in the formation of our personality, in large part because we re-broadcast those ads as an expression of ourselves. If you’ve ever listened to adolescent boys talk to one another, you know what I’m talking about: their entire conversation is an exchange of ad jingles and movie lines. Twenty years later, I’m not much different. I’ve watched the exquisite Sony Bravia ad 40 or 50 times (only later to discover that its soundtrack was once my mother’s favorite song).
As Google AdSense and its analogs in television and display advertising, Spotrunner and AdReady, have lowered the cost of placing an ad, we shouldn’t forget what really makes an ad powerful, which is the quality of the ad itself. There’s a reason why a television ad costs more to produce per frame than even the most elaborate special effects movie, which is just another way of saying it is more finely worked as a piece of art than many pieces of actual art.
Already using YouTube, an ad is distributed more by people who love the ad than by the media giants who are supposed to be cramming it down our throats. It seems like advertising needs to use pleasure rather than force, activity rather than passivity, focusing on what we want to see and interact with, channeling what we ourselves have said or wish we could say, rather than on the old blunt instruments of display advertising, intrusiveness and repetition. The Internet seems better suited to address this problem than any other medium, but we have to be awake to it.
Redfin's corporate blog is the place to read what Redfin employees have to say about Redfin, the real estate industry and other topics such as life at a startup or usability and web design.
