Reality Check Ahead: Data Mining and the Implications for Real Estate Professionals

MLS is a 100-year old institution that expertly aggregates and houses most, if not all, of real estate’s most critical data. Today, our data is currently being leveraged, sourced, scraped, licensed and syndicated by a grand assortment of players, partners and members. It’s being utilized in ways never imagined just a decade ago. Or, for that matter, six months ago.

The result: a plethora of competitive, strategic, financial and security-based issues have surfaced that challenge every MLS, as well every single one of our members/customers.

I think about this all the time. During my recent visit with my son KB – a college junior – he told me about how Google recently came to his campus offering everyone free email, voice mail, Docs (to replace MS Office) and data storage – an impressive list of free services for all.

I asked him why this publically traded company would give away its products for free. Despite his soaring IQ and studies in information systems technology, he couldn’t come up with an answer.

Searching Google on my laptop I presented KB with the following Google customer email (September, 2009) that read: “We wanted to let you know about some important changes … in a few weeks, documents, spreadsheets and presentations that have been explicitly published outside your organization and are linked to or from a public website will be crawled and indexed, which means they can appear in search results you see on Google.com and other search engines.” Note: once data is available on Google searches, their business model calls for selling advertising around that search result.

Bear in mind this refers to published docs and not those labeled as private – a setting within Google Docs that of which not all users are aware.

I also presented him with the specific EULA (End-User Licensing Agreement) language that states how a user grants a “perpetual, irrevocable, royalty free license to the content for certain purposes (republication, publication, adaptation, distribution), extending to the provision of syndicated services and to use such content in provision of those services.”

 

I recounted for KB how back in March of 2010, we learned in the national news that: “A confidential, seven-page Google Inc. “vision statement” shows the information-age giant is in a deep round of soul-searching over a basic question: How far should it go in profiting from its crown jewels—the vast trove of data it possesses about people’s activities?”

Source: Wall Street Journal August 10, 2010

This chart above shows that nearly 85% of respondents are concerned about the practice of tracked online behavior by advertisers.

Then, a Wall Street Journal article titled “What They Know” was posted which discusses how companies are developing ‘digital fingerprint’ technology to track our use of individual computers, mobile devices and TV set-top boxes so they can sell the data to advertisers. It appears that each device broadcasts a unique identification number that computer servers recognize and, thus, can be stored in a database and later analyzed for monetization. This 3-minute video is a must-see!

By the way, they call this practice “Human Barcoding.” KB began to squirm. As we all should.

 

Data. Security. And real estate

So what do “innovative” data mining and monetization methods now in use by Google and others, mean to real estate – specifically the data aggregated by an MLS and then shared around the globe?

We all must first grasp what happens to listing data when it’s collected and syndicated into “the cloud”, as well as the human transaction interactions that follow from start to finish (and beyond, actually).

Second, we need to understand how business intelligence and analytics are being applied to the data generated by real estate transactions today. If there is a monetization to the data without the knowledge and permission of the rightful owner, then, potentially, agreements need to be negotiated (or renegotiated) and modified to get in step with today’s (and tomorrow’s) inevitable ways of doing business. I’m not in any way opposed to data mining per se, the issue at hand here is fair compensation for the data on which it is based.

Here’s why the latest developments regarding Google (and others) are vitally important:

 

  • The world of leveraging digital information is changing very rapidly. As businesses push harder and deeper in their quest to monetize data, information, bits/bytes and mouse clicks, we must establish clear and informed consent on who exactly owns the data, who should control it and how it should be monetized. Protecting OUR “crown jewels”, if you will.
  • What do you know about “Human Barcoding”? It’s time for industry leaders to research this new phenomenon and begin to establish the basis for an industry position as it pertains to residential real estate.
  • How do we, as an industry, determine the real value of data beyond the property-centric context? As true business intelligence and data mining progress in our industry, we need “comps” to build upon to derive a valuation model.
  • What exactly is the MLS’s role? Are we the “stewards” of the data (on behalf of our customers) that emanates from the property record and the subsequent transaction and electronic interactions between all the parties connected to it?  How should the MLS industry confront the challenge?

We all certainly remember when the national consumer portals planted their flag(s) on this industry and, by association, MLS territory. Their rationale then was that they would help drive “eyeballs” and traffic to the inventory. Indeed they have. But, looking back, it all came with a pretty steep price tag.

For example, referral fees were subsequently replaced with advertising revenues that more often than not started chipping away at the edges of the broker’s affiliated business models (mortgage, insurance, etc). Now, as a result, the margins of the business are perilously thin from a broker’s perspective.

The roots of the MLS began as a business to facilitate a fair distribution of commissions and compensation amongst brokers. It’s safe to say, dear Toto, that we are no longer in Kansas anymore. Given the digital landscape, where value can be derived in so many unique ways, the fact that others whose motives for increasing the value of the asset are potentially suspect, it’s critical that we convene right now to assert an intellectual lead on what is happening here, or at least make the conscious decision to step aside.

I’m sure there are many other questions and reasons why this is “mission critical” to us. But what I’ve offered, with the help of several really smart folks in the industry, provides a good starting point. We welcome all industry commentators on this topic. Thanks in advance for sharing ….

John L. Heithaus Chief Marketing Officer, MRIS (john.heithaus@mris.net)

Ps – a “tip of the hat” to Greg Roberston of Vendor Alley for starting us on this path after his excellent post “Inside Trulia’s Boiler Room”*. I also benefited mightily from the comments of David Charron of MRIS, Marilyn Wilson of the WAV Group and Marc Davison of 1000watt Consulting, and I extend my appreciation to them for sharing their perspectives.

* After this story ran, the You Tube video interview with a Trulia staffer was made “private” and is now inaccessible. Vendor Alley’s analysis of the video provides an excellent overview of the situation.

 

Yardi acquires InternetCrusade and its RealTown network

 

In yet another foray into the residential real estate space, real estate investment and property management software company Yardi Systems has acquired Real Estate Electronic Publishing Company Inc. (REEPCO), the company announced Tuesday.

The San Diego-based publishing company better known as InternetCrusade, operates the RealTown online real estate network and created the National Association of Realtors' e-PRO certification program. InternetCrusade's contract with NAR ended in December, the company said. InternetCrusade also offers e-mail, blogging, and domain services for real estate professionals.

"With access to REEPCO's sales channels, publishing and content syndication resources and educational training infrastructure, this acquisition will make many of our new products available to a large number of real estate professionals," said Anant Yardi, president of Yardi, in a statement.

The company's 16 employees will remain in their current positions, the company said.

"It's business as usual for RealTown and InternetCrusade. That's one of the nice things about Yardi -- they come in and don't upset the apple cart," said Saul Klein, president and co-founder of InternetCrusade and CEO of Point2 Technology Inc., which Yardi acquired four months ago.

Historically focused on the commercial and multifamily real estate sectors, Yardi expanded the scope of its operations when it acquired Point2 and real estate data website PropertyShark last year. 11/01/25/yardi-sues-competitor-realpage" target="_blank">filed a lawsuit against a competitor, RealPage Inc., charging copyright infringement, trade secret misappropriation and unfair competition, among other claims. RealPage responded in a statement that it "believes that Yardi's hidden intent in filing this lawsuit is to inhibit EverGreen (RealPage acquired assets from EverGreen in 2009) from competing with Yardi's consulting service organization and that this lawsuit is a tactic to limit alternative choices for Yardi clients.

"RealPage intends to defend this action vigorously and to protect EverGreen's right to provide services to clients that they share with Yardi," according to that statement.

 

 

Facebook Ads Perform About Half as Well as Regular Banner Ads [STATS]

Ads on Facebook cost more but got fewer click-throughs in 2010 compared to 2009, and performed about half as well as traditional banner ads, according to a new survey.

A study conducted by Webtrends looked at more than 11,000 campaigns on Facebook to try to establish benchmarks for brands looking to advertise on the platform.

According to Webtrends, the average click-through rate (CTR) for Facebook ads in 2009 was 0.063% and 0.051% in 2010 — half as much as industry standard of .1%. The cost per click (CPC) was also $0.27 and $0.49 for those periods, respectively.

Webtrends also detailed the cost-per-thousand (CPM) and cost per fan (CPF):

According to the study, not all visitors to Facebook interact with ads the same way. “The older we get, the more we click,” the survey notes, adding that there’s a falloff, however, after age 65. Women and men click at pretty much the same rate.

Similarly, there are few geographic variations, except for Hawaii, whose residents click through at almost half the average and North Dakota and Wyoming, whose residents click at double and triple the average rate.

Not surprisingly, users are also more apt to click on an ad for a category they consider fun, like media and entertainment or blogs, categories that trounce laggards like health care and software.

As the report notes, Facebook is projected to post $4 billion in advertising this year. Part of the appeal, aside from the network’s huge base of users, is the ability to get friends of targeted consumers to give their thumbs up. That apparently combats ad burnout. According to the study, ads targeting friends of fans last three times longer than standard ads because new fans keep coming on board, adding more friends and thus more potential ad targets.

The takeaway? Facebook ads may not get a lot of click-throughs, but for the moment, friends’ recommendations make them last longer.