The fallout of Internet companies since the $2-trillion stock market meltdown last March has given real estate people and others who felt threatened by online companies a chance to sit back, breathe, and review the cyberspace situation.

Dot-com Fallout

Dot-com advertising during Super Bowls XXXIV and XXXV serves as a yardstick for measuring the fortunes of Internet companies in 2000. Of the 17 dot-coms marketing themselves in Super Bowl commercials a year ago, seven shut down, and only three advertised during the Big Game last month.

A 30-second commercial aired during Super Bowl XXXIV cost an average of $2.2 million. Many of the dot-coms, fueled by venture capital, sank a disproportionate amount of their resources into the advertising, hoping to increase their brand awareness among a television audience exceeding 100 million.

Today’s results confirm the business knowledge that, with few exceptions, one ad won’t put you over the top. You just don’t build brand and image in a single shot. It usually takes years of cumulative advertising to establish a company or personal identity.

The single-commercial strategy characterized the unrealistic expectations of hundreds of all-clicks-and-no-bricks operations at the beginning of 2000. These companies violated not only advertising principles but the old business truism that to make money, you have to develop a product or service that somebody will buy.

Online marketplace Webmergers.com reports that 210 online firms folded last year, more than half of those during the fourth quarter. Seventy-five percent of those targeted consumers, while 21 percent were business-to-business sites. The Web site of The Industry Standard magazine has estimated that 51,000 Internet employees have lost their jobs since December 1999, nearly 16,000 in January 2001 alone.

In all, 2000 was the year of the “dot-bomb,” or “dot-compost.” But the failure of so many sites hardly portends the death of the Internet. After all, three dot-coms returned to advertise in Super Bowl XXXV. Both Monster.com and HotJobs have now aired Super Bowl commercials for three years running, and E-Trade not only advertised a second time but even sponsored the half-time show. And much of the information in this column is from Web sources.

No, the Internet’s not going to go away. For all the job loss, there are still 2.5 million Internet employees – more than in the federal government, the insurance industry, or in real estate.

Online Real Estate

Real estate-related sites have suffered right along with the others. Since early last year, closings, cutbacks and new alliances have been common in our sector, from the shutdown of CyberHomes to eHome’s bankruptcy announcement last month.

But as the weaker sites drop out and the field narrows, the remaining operations just get stronger.

Homestore.com, a real estate portal, is one of the most successful. Partnered with the National Association of REALTORS®, the company passed the profitability milestone in both the third and fourth quarters of 2000, and its revenues have continued to grow.

Realty Times has reported that the number of unique visitors to the top 10 real estate sites grew 60 percent between the last two Decembers, nearly triple the visitor growth rate for the total Web during that same period. Also, while only NAR’s Realtor.com (operated by Homestore) attracted more than 1 million unique visitors in the month of December 1999, Homestore and HomeAdvisor joined the NAR site in passing the million-visitor milestone in December 2000.

Then there are the transaction management platforms, which will streamline the real estate sale process from contact to closing – and beyond. Homestore is developing eRealtor.com for NAR, and HomeAdvisor is in the process of testing Realty Desktop. The experts say these and other platforms will revolutionize the way Realtors do business.

Now that a handful of major real estate-related online companies have survived the early dot-com frenzy and the 2000 debacle, real estate professionals finally have the chance to evaluate competing sites before making a critical commitment.

Published: February 15, 2001

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