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Marketing of Real Property Using the Internet
Supply Driven Models to Demand Driven Models
Michael D. Blaschuk,
AACI, P.App - Canada

Director, Real Estate Services,
Public Works & Govt Services Canada
1. Executive Summary
The advent of the Internet has already changed the marketing of real property. Initial uses were based on models that allowed for the continuation of tradition marketing approaches adapted to this new electronic media. The Internet replaced traditional approaches and augmented paper-based advertising such as catalogues and newspaper advertising. The development of more sophisticated search capabilities allowed for greater interaction between the supply side and the demand side of the market, however, information was largely created and distributed by the supply side of the real property market model. As greater degrees of interactivity are developed and markets realize that new marketing structures will replace internet-adapted paper-based models, the demand side of the real property market will play an increasingly important role in the transfer of real property information. The Canadian Government has looked at its information needs as the major real property owner in Canada and has recognized the need to develop and pursue both supply-side driven and demand-side driven marketing of real property. The introduction in 2003 of "Leasing On-Line" will be the first "demand-driven" marketing application within the Canadian Government. This paper looks at traditional approaches within current internet-based marketing applications and highlights the needs for new "demand-driven" solutions using this electronic media.
2. Introduction
The commercialization of the Internet allowed for the introduction of marketing opportunities to many commercial operations. The real estate community was one of the first parties to embrace this new medium and to realize its marketing potential. The first uses were simple web pages detailing the skill sets of the agent and, perhaps, a number of their listings. As real estate boards embraced this new technology, the collection and distribution of real property information to prospective purchaser proliferated. Today, the traditional uses of the Internet continue to enjoy various degrees of success. As users become more sophisticated and as owners become more sensitive to the privacy of information, there will be a shift from "supply side" marketing to "demand side" marketing.
3. Marketing Options
The Internet is more than static web pages. It is a portal that allows for various means of electronic transmission to market real property to clients. The most typical uses are:
  3.1 E Mail Lists
Commercially e-mail lists are available that identify potential prospects. Although this marketing method has been used to a limited degree it has met with significant resistance from the Internet community. The increase in the amount of "spam" on the Internet has resulted in a proliferation of computer programs designed to "filter" this type of promotional activity. In some cases Internet users have actively, and aggressively, used other applications to "re-spam" senders.
  3.2 Web Page
Many agents have their own web pages. These typically serve to market the skills of the agent rather than the properties they market. With over two billion web pages on the Internet it is becoming increasingly difficult to find individual sites, even through the use of sophisticated web pages. Thanks to the development of programs that allow users to easily design and update their own web pages there will be a continued expansion of this use.
  3.3 Newsgroups
The use of "discussion groups" as a marketing tools has had very limited success with more agents than prospects on many of these sites. This use appears to have greater potential as an information exchange within the profession than as a marketing tool.
  3.4 Online Marketing
This is probably the most popular and successful use of the Internet to date. The use of single portals that allow users to search for property by their own selection criteria has changed the way property is marketed. Most uses today are "supply driven". That is, suppliers add the information to the database and users of the information, the demand side, can access all the data without discrimination. This has been used with success in the residential community, however, the commercial-investment community is loath to publicly publish critical information for all potential purchasers and competitors to view.
  3.5 Internet Search Engines
The use of various search engines has found some success with the identification of potential prospects as purchasers of special-use facilities. Where there are a limited number of purchasers for specialized-use properties, it may be possible to develop contact lists based on information in the potential client's web page.
As mentioned above, each of these uses has met with some degree of success in allowing for the marketing of real estate in cyberspace. Each of these uses is expected to continue, however, it is anticipated that there will be a shift from static or one-way "supply-side" marketing to more dynamic and customized "demand-side" marketing.
4. Supply-Side Marketing
Most current models used for on-line multiple listing services employ supply-side marketing for the distribution of real property information to potential clients.
Some sites are simple web applications that provide a list of properties for sale and some information on each property. Other applications use more sophisticated search capabilities to allow purchasers to narrow their market search. Most multiple-listing services use the more sophisticated search model that allows for a logical series of steps that takes the marketing of the property from the seller to the buyer through a series of electronic pathways. These are, as follows:
Agent collects information on property from owner and through inspection
Information is correlated and stored to a common data base
Selection criteria is developed for potential purchasers
Potential purchasers search all available properties for those that meet their criteria
Potential purchasers contact the agent to view the property.
This is the method currently used by most residential marketing programs. This allows potential purchasers to access the information needed to refine their search for the appropriate property. The ease and simplicity of this type of application is evident, however, there are some shortcomings. These are:
Difficulty to track potential purchasers
Lack of confidentiality of information
Neither of these two limitations has been of significant concern to the marketplace for residential uses, however, there has been a reluctance for the commercial-investment segments of the marketplace to embrace this approach.

The Government of Canada, through its Real Estate On-Line initiative, has used this method to market simple non-residential properties. The limitations of this type of approach are evident when we are involved in the more sophisticated segments of the market place, particularly as we acquire property by lease. Suppliers are reluctant to publicly supply all necessary market information over an open website format. This has lead to the introduction of "demand-side" driven applications.

5. Demand-Side Marketing
The inability of most current internet-based real property marketing systems to specifically target market segments within the non-residential marketplace will lead to the development of demand-side based applications. Instead of the current method wherein the database of properties available for sale is offered and the purchaser filters the database to meet their needs, demand-side based systems will electronically warehouse the purchaser's needs and suppliers will respond to this demand. Many governmental organizations have operated quite a long while on similar based systems, albeit in paper versions using more conventional media. Typically, a government institution would determine its real property needs and advertise these needs through the newspaper. Suppliers would respond to these "tenders" and a deal would be consummated, assuming mutually satisfactory objectives can be achieved. Currently, this is the method that is used by the Government of Canada when it wishes to lease space. Although it has been successfully used for a number of years, the process is slow and expensive with advertising costs forming a large part of the overhead costs. In addition, there is little information from the market until the results of the tender-call are analyzed. This allows for little "strategic thinking" in the process. Realizing the limitations of the demand-side marketing using conventional paper methods and paper-based media, the Government of Canada has decided to implement an internet-based application to modernize its leasing process. The initiative is known within the government as "Leasing On-Line".
6. Government of Canada "Leasing On-Line"
The "Leasing On-Line" initiative is part of the Government of Canada's "Government On-Line" program. This application is designed to replace the paper-based system with a high-speed Internet based information, tendering and contracting system. Under the current paper-based system expensive Market Surveys are completed within a general market area to determine the price and availability of space. This allows the government to make decisions on whether to continue to rent space in existing occupancies or to seek space in other buildings. Usually by the time these surveys are completed, which can take up to four weeks, much of the data is stale and inaccurate. After the decision the seek tenders for space from the market place is determined, newspaper advertisements are placed seeking offers of space. This, too, becomes a time consuming activity and can add up to an additional four weeks to the process.

The "Leasing On-Line" initiative seeks to streamline this process while at the same time significantly reducing costs. In this new model suppliers (landlords or agents) provide regular inventories of available space to the government by populating the internet-based database with details of available space and asking rental rates. This data is linked to existing property information, such as the age of the building; its class and condition; location; etc. The leasing officer can then quickly survey the database by a number of criteria and determine the availability of replacement space. This eliminates the expensive market surveys and provides accurate, up-to-the-minute results. The leasing officer can then select those suppliers that best meet the selection criteria. Electronic messages are then sent to those suppliers indicating that they meet the basic selection criteria and that we are seeking space of a specific size. The suppliers are asked to refine their asking price to a specific tendered amount and electronically submit this figure within a short time period, usually 48 hours. The leasing officer can then make the selection and enter the electronic contracting segment of this process.

The Building Owners and Manager's Association (BOMA) Canada are being consulted on the implementation of this initiative and are supportive of it. From their point of view this acceleration of the leasing process means that their space will be vacant for a shorter period of time and that their space offerings to the Government of Canada are not public offerings known to their existing tenants and competitors.

7. Private Sector Opportunities for Demand-Driven Systems
There was some consideration to utilizing private sector applications for the Government of Canada's "Leasing On-Line" initiative, however, a review of existing systems indicated that the current systems did not allow for suppliers to specifically target the government as a purchaser. We believe that as a "beyond AAA+" tenant we receive better than market rental rates and that existing systems would only yield general market rates. The issue of the building owner being able to target specific users has been the limitation with most internet-based supply-driven systems. Developers of "demand-based" systems that allow for secure targeting of specific client segments will likely lead to new market opportunities within this market.
8. Conclusion
The Internet has allowed for the conversion of many paper-based supply-driven applications to be converted to this new media. This has been successful in the traditional residential fields, however, has achieved limited success in the non-residential market segments. The introduction of secure "demand-driven" applications will be the next wave in marketing opportunities using the Internet. Organizations and entrepreneurs that can quickly grasp and adapt this new media to the demand-driven part of the market will be those first to profit.

Mr. Blaschuk has been involved in the real estate industry for 25 years in the fields of brokerage, appraisal and taxation. His educational background includes diplomas in Real Estate and Appraisal. He is a professionally accredited member of the Appraisal Institute of Canada. Until recently he was the Chief Appraiser for the Government of Canada and was just appointed as the Director of Accommodation and Real Estate Services. He has introduced a number of computer-based real property applications to the Government of Canada and his "Book Value Calculator" was recently awarded the Minister's Excellence Award; the Deputy-Comptroller General's Innovation Award; and the Real Property Institute of Canada's Award of Excellence.

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