I had the opportunity to see LoopNet’s Premium Listing pitch. That it targeted brokerages is interesting on its own, but that’s not what I want to write about this time. Of course it was a slick presentation full of impressive numbers. And just for fun, I thought I’d dig a little deeper into those numbers. Let’s take a look.
Only 2% of Those Who Search Loopnet Can See All Available Listings
That means 98% of visitors leave the site disappointed. How come that doesn’t happen on Apartments.com?
Wow, that’s a lot! They don’t tell you in the pitch how many of those are in your market, but you have to know that the listing volume is nowhere near that number.
367,000 Searches and 1.1 million Listings Viewed per Day
Wow, that’s a lot! They don’t tell you in the pitch how many of those applied to your market, but you have to know that the search volume is nowhere near those numbers. (Didn’t I just say that…?)
2% of What?
Is it 2% of the 367,000 searches each day or 2% of their registered members? The former means 7,340 of those searches were from paying members. But not all paid searchers search at the same time…so we don’t know the total number of paid searchers (and LoopNet doesn’t publish those).
But LoopNet claims it has 7 million registered members (down from a 2014 report of over 8 million). No matter that half are probably zombie accounts. But let’s give them their 7 million. That translates to about 140,000 paid searchers.
Which is it? Who knows? But we can safely assume between 7,000 and 140,000 pay to search.
About the 2%
The majority (76%) are tenants and buyers. The rest (24%) are agents and or are classified as “other.” LoopNet tells us that the most active searchers come from these markets:
1. Los Angeles, CA
2. South Florida
3. Chicago, IN [not sure if this is a spelling error or they mean Chicago/Indiana] 4. Houston, TX
5. Philadelphia, PA
6. Northern New Jersey/PA
7. Dallas/Ft Worth, TX
8. Long Island, NY
9. Atlanta, GA
10. Orange County, CA
Surprise! It looks somewhat but not exactly like the top ten cities by population:
1. New York, N.Y.
2. Los Angeles, Calif.
3. Chicago, Ill.
4. Houston, Tex.
5. Philadelphia, Pa.
6. Phoenix, Ariz.
7. San Antonio, Tex.
8. San Diego, Calif.
9. Dallas, Tex.
10. San Jose, Calif.
10,000 Leads Generated per Day
If there are 1.1 million listings viewed – and we assume by “viewed” LoopNet means clicked on/not just displayed in search results – that means less than 1 percent get the nod from visitors. But, if it means 1.1 million listings that just appeared in the search results, that means each search is returning, on average, 3 listings (1.1 million/367,000) increasing the lead likelihood to about 3%.
In terms of views, in the first scenario, a listing has to be viewed 1000 or so times a day to get a lead. In the second, you listing only need to be viewed 367 times. Either way, your listing will need a lot of daily views.
Using a specially selected sample, LoopNet will show you how presence in search results and clicks to view can increase tenfold with a Premium Listing (PL). As an example they choose a non-PL in a mid-sized market that showed up 5 times a day and was clicked on maybe twice every 30 days. They compared that to a PL listing that appeared 50 times a day and was clicked on almost 5 times a month!
But…was a lead generated in either case? Of course, they don’t tell you that meaningful statistic. We do know that on any of the days your listing was viewed, it has a one in 10,000 or 1 in 367 chance of generating a lead. And in the example case, when you consider that your listing is just one (or less) of the 1.1 million listings viewed daily…well, you do the math. Better odds if your market is one of the most searched on LoopNet, so that’s something.
Quantity not Quality
It seems logical that if something has more exposure, there’s a greater likelihood of an action (a lead) occurring. Using the example above, those two clicks in 30 days were from people who paid to search. The three that you gained were from free riders. That’s not to say free riders aren’t actually looking for something – or that just because someone shelled out a lot of money search means they’re better prospects. But…a click signals (mild) intent and, gosh, aren’t 5 clicks better than 2?
If LoopNet could show an increase in leads rather than these meaningless view and click metrics, maybe they could make a better case.
Let’s take the best PL cost scenario and a guesstimate on LoopNet leads that produce a deal. You’re on a single agent plan paying $3,000 annually for a 10 listing package. Each year, at least one of your PL’s converts to a deal, so your commission has to be at least that much to break even. Of course, if you’re also buying a search subscription, so you’ll want to cover that, too.
For brokerages, the best deal will cost you $30,000 a year for 250 listings. If one in 10 listings converts, those 25 deals need to generate commission beyond the annual cost. Doable? Only the agent or brokerage can say – and they can only say if they’re keeping track. LoopNet could if, when they called to get that comp from you they asked if the lead came from LoopNet. But they don’t.
Still, there must be someone getting something out of LoopNet because agents and brokerages keep paying for it. Otherwise, paying for LoopNet when the odds of getting a lead are so bad is like a gambler playing for the hopefully inevitable win that will make it all worthwhile. Good thing there’s lots of money in commercial real estate sales.