There is vast terminology used in property dealings, particularly the usage of acronyms, which often leave the general public questioning and assuming what they might stand for. One of the most commonly used acronyms in Real Estate is ‘VPA’. Some of you may be thinking what on earth is VPA? Others that know already that it stands for Vendor Paid Advertising (VPA), generally have dealt with an agent in the past or present that has clear communication techniques in place.
Now that we have established the term VPA, let’s divulge into exactly what it is and why it comes with a certain level of importance in the Real Estate market.
Ask yourself why it is you buy the every day or luxury items that you do? It may be something you have a desire to want or a necessity. When deciding what you want, what is it that compels you to purchase that specific item? Here is an example: You want to buy a couch. Do you just strut into the local Harvey Norman and say to the customer service team “I want to buy a couch. That couch” and point to the first couch you see? No, I doubt that you would and it is clear as to why. Questions that linger in your mind could be; Does this couch seat 3 people? What fabric is the couch? Is the couch within my price range? Does the couch come with warranty? What are the specifications of this particular couch? Reality is, people like to know what it is they are spending their hard earned cash on. They tend to do their own comparisons whether it be on Gumtree, Facebook Market Place, Catalogues, Brochures etc. then from here begin shortlisting these items. Real Estate is no different. The visual aspect of purchasing a property is key and that is why marketing is kept as highly regarded in the property industry.
Crucial to the sale of a property is having a strong marketing campaign lined up. A core sale strategy is essentially maximising exposure. Now there is a fine line between an agent requesting and accepting VPA for exposure, these are: self publicity and property advertising. Let’s get one thing straight. VPA is not to be used as a tool for agent promotion such as an agency advertisement. Any successful agent will agree that self promoting is identified through how much value they place on themselves, by digging into their own pockets to increase public awareness of their services. In return promoting their current listings and/or recent sales. However, VPA is used and tailored directly to the clients property asset and is to drive engagement and views for their property only.
Do I need VPA and why can’t my agent pay for it? Another question that circles back around frequently and I am here to answer as to why. As technology improves, so does the degree of marketing, thus increased costs of advertising on online platforms like realestate.com.au listings; including premieres, features and highlights, which an agent understands can seem to be a big commitment. For an agent there is initially zero profit margin when guiding a client to agree to an accelerated marketing program. Agents do not make money out of getting their clients to pay for advertising there and then. The performance fee, also known as the agents commission, comes into play further down the track as the agent only gets paid once the property has settled. Long term speaking, the profit margin will increase with a steady VPA campaign due to more exposure and demand, increased offers and higher negotiations.
As exposure is fundamental in selling property, it is critical to have a substantial marketing package that considers a larger demographic and target audience. Studies have shown that being within a technologically advanced era, there is a large portion of digital enquiry source as opposed to back in the black, white and red days. Although this is accurate, a significant amount of enquiry branches from readership involving both digital and print.
See Figure 1. Below for buyer enquiry source statistics.
Factoring in diverse demographics sees us to Millennials, Generation X and Baby Boomers. There is an amalgamation of both digitally inclined users such as Millennials and Generation X, amongst print media enthusiasts typically deriving from Baby Boomers. By having the two digital and print marketing components working in conjunction with one another, will substantially reduce the days on market for your property and boost demand. As reported by CoreLogic RP Data in 2015, properties that utilised both print and digital advertising consisted of merely 33 days on the market, in comparison to the 66 days on market for properties that only provided a digital campaign.
Digital marketing is convenient, efficient and visually appealing. As the statistics depict in Figure 1. purely digital almost doubles the views of those purely print. You might find yourself asking why even bother with print media? The reason it is so valuable is because of one very simple notion: passive buyers. People read print even before they are aware that they want to buy, so characteristically it is applying the window shopping method. Majority of housing readership for print media, is predominantly locally based prospectives which tend to be your passive buyer; window shopping method is a tangible shopping experience where they cannot isolate specific requirements that they believe they want in a property. Suddenly glancing over a property that catches their eyes, they may have subconsciously narrowed down their search to that exact property.
What you can take back with you from this article is that VPA is a requirement if you want to sell your property effectively and efficiently, whilst driving the sales price up. It can feel like a rather large commitment spending money upfront for marketing, but at least you now know what the costs involve, and the priority of covering a broader demographic through media consumption of digital and print, therefore seemingly more costly than just one or the other.