Maybe Builders Need To Do Some Advertising

I've just been thinking about the last article I wrote regarding the huge drop in new home sales in May (see next article down), and it got me thinking about the tough recession we had in the late 1980's.

At that time, I was CEO of an advertising and marketing firm and had held many different positions in the advertising agency business over the years. At this agency we had a number of developers and builders as clients. When that recession hit, we urged each of our clients (and not just the real estate clients) to continue with their marketing programs just as if there was no recession.

Some did. Some didn't.

When it was all over, here's what we found out:

• Clients, including real estate developers/builders, who continued their advertising programs with us, did better during the recession than those who reduced or eliminated their advertising programs. Those who continued to advertise controlled a larger market share during the recession than their competitors who cut their budgets in the recession.
• Clients who continued their marketing programs recovered from the recession earlier than those who cut or eliminated their marketing activities.
• Clients who maintained their marketing programs gained an even larger market share during the economic recovery than their competitors who cut their budgets.

I think those who kept marketing actually stole business away from those who did not continue marketing, although I don't think we ever got any direct marketing data on that point -- it's just a feeling of mine.

What I am not seeing much of anymore is good old-fashioned advertising from developers and builders in this recession, and I haven't seen much of it since the real estate bubble burst in 2006.

I know financial times are tough for builders now and sales are way off. But you have to maintain some kind of media exposure if you want to come through this in any kind of shape at all.

There are still buyers out there, you just have to work harder to find them. Plus, you need to maintain and build your reputation so that when the economy improves people will still think highly of your company and your products. Advertising can do that for you.

If you don't do it, somebody else will and they'll take your customer base, reputation and livelihood along with them.

I've worked for a lot of builders and developers. But I used to do a lot of work for various divisions of one major U.S. developer who had simultaneous projects underway all over the southeast in the 1970's and 1980's. I was always very favorably impressed by their corporate culture and dedication to superior marketing activities. I'm going to give you the basics of their advertising rules. It was quite simple yet extraordinarily effective, and I urge every developer/builder to follow it.

They said every ad must include three things:

1. Product
2. Price
3. Floor Plan

Product: The product is the community in which you are building. Buyers want to live in a nice community, and your ads must always stress the positives of living within that community. Think of it as stressing the lifestyle advantages of the community in which you are building.

Price: Most buyers are shopping within a budget. You have to show that within that community buyers can own a lovely home and still stay within their budget.

Floor Plan: Every ad had to include a floor plan and exterior elevation drawing of at least one home. You can use photos of homes and product, but you need to have a floor plan. People love to review floor plans. They spend time envisioning themselves living in the house within that floor plan. So, every ad had a floor plan ... period.

If we didn't include these three elements in every ad, the ad got rejected. Period.

Look, advertising stimulates markets. That's really its sole purpose. The one thing builders/developers need now is to have some market stimulation to get prospective buyers excited about buying one of your homes in the community where you are building, and to keep your reputation positive and your name in front of people. Advertising is why the companies we represented did well during the 1980's recession and those who did not follow our recommendations to continue marketing, quite frankly, didn't do as well.

I know business is tough now. I know new construction just had a bad month -- the worst ever if you believe the reports. But now is the time to jump in with both feet and take advantage of a situation which may help you grow big-time during the next year or so while the market recovers.

What situation?

Simple. Your competition may not have read this blog article and might be cutting their advertising and marketing budget in order to save a few bucks.

Now's the time to assault your competitor's customer base by continuing your marketing program. You'll increase your sales by converting his customers. You'll improve and expand your reputation at his expense. You'll start coming out of the recession now while he wallows in it even longer. Most importantly, advertising throughout this recession will allow you to set your sights for even higher expectations in the future while your short-sighted competition is still looking for a way out of this mess.

You can do all that by stimulating the market with a well-orchestrated marketing/advertising plan. How do I know? I'm old. I've been there before. And I've done it for builders and developers all over the place.

Happy Selling.

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