Today's competitive climate requires companies to think outside the box.
When record-breaking property sales make front-page news and 1031 and cap rate join the lexicon of backyard barbeque chatter, the industry has arrived. A collusion of economic and social trends is focusing today’s spotlight on commercial real estate. This offers an unparalleled opportunity for commercial real estate professionals to ramp up their marketing to capture some of the growing interest and turn industry watchers into buyers and sellers.
But the same factors that have given rise to a higher industry profile also have challenged small and midsize commercial real estate companies to stay competitive at a higher level. For them, the dual nature of marketing is both a blessing and a curse. To those who wish to grow their business, it offers a plethora of opportunities to reach new clients. But on the practical side, who’s going to write all those press releases, create the specialized e-mail lists, and upload the property photos? On a bigger-picture level, who’s going to be responsible for developing and maintaining the company brand — not to mention the Web site?
Although technology has made it easier to market more properties to a wider audience through various channels, just handling these marketing duties takes time. As to the question of brand identity, is that something industry people can tackle? “We are good salespeople, but not necessarily marketers,” says Priscilla S. Terry, CCIM, broker and partner of Prime Locations in Lacey, Wash.
Increased marketing duties could justify the hiring of a fulltime marketing director, but the cost of an additional employee may be prohibitive for some companies. Another alternative is to outsource marketing on a project-by-project basis. Again cost is a primary concern, but continuity and time are also important issues to consider. A look at both experiences reveals which may offer the most value to commercial real estate professionals.
A few years ago, Lockard Cos. in Cedar Falls, Iowa, didn’t quite need a fulltime marketing director but hired one anyway. “We were looking down the road five or 10 years,” says Brady A. Gruhn, CCIM, director of sales and leasing. “We decided if we wanted to take the step to grow the company, we needed to bring someone on fulltime.”
Like many companies with small-town roots, Lockard started 50 years ago as a construction company and has grown to include development as well as commercial and residential brokerage. And while the residential business is local and the commercial is regional, the development sector has taken on a national role. “We have five satellite offices around the country. We’re doing retail developments in Texas and Charlotte, N.C., and residential developments elsewhere,” Gruhn says.
The idea to hire a marketing director was a natural fit for the 30-person company, but determining what qualities to look for presented a challenge. “We weren’t sure what we wanted the job to be, but we wanted to find someone with graphic design skills who could grow into the position,” Gruhn says. “We also wanted someone who would fit into our company dynamic and would be a long-term team player.” The solution was Matt Dunkerton, who joined Lockard as marketing manager four years ago.
Dunkerton came to Lockard’s attention through a networking connection. Although other candidates were interviewed, Dunkerton had the design skills the company was seeking plus the personal recommendation. Real estate experience or knowledge was not a primary consideration, Gruhn says. “We wanted someone who was good at what we’re not [good at], so we really didn’t look for commercial real estate experience.”
That tends to be a sticking point for company owners thinking about hiring marketing help. “I wonder whether I need to hire someone with real estate expertise or not,” Terry says.
At Lockard, Dunkerton’s lack of real estate and sales experience actually “works to our advantage,” Gruhn says. “Sometimes you get so entrenched in what you do that you just see the tried and true. Matt has a perspective that doesn’t come from the same place, so that’s a valuable asset.”
The Bigger Picture
A brief survey of commercial real estate marketing positions listed on Internet job sites shows most companies prefer that candidates have some real estate experience. In addition, small to midsize regional companies often look for potential marketing hires with desktop publishing skills in programs such as Adobe Illustrator and Publisher, Photoshop, and InDesign, as creating brochures and marketing materials usually heads the list of responsibilities.
However, companies might be better off looking for a candidate who can see the bigger picture. Although Lockard wanted a marketing director with design skills, the position’s primary responsibility is much broader.
“Matt’s first responsibility was building the Lockard brand,” Gruhn says. He redesigned the company’s logo, outsourced the redesign of the Web site, “got us into both national and local press, and expanded the brand to the next level.”
Although Dunkerton reports to the vice president of the development division, he is responsible for marketing for all divisions. But that arrangement has had a tangible reward: “Because he works with the entire company, Matt’s been a unifying force within the company. He moves the whole company forward through brand identification, pulling everything together,” Gruhn says.
Outsourcing the Hard Stuff
Salaries for marketing specialists range from $30,000 to $60,000 for local or regional commercial real estate companies, with larger firms in major markets paying upward of $85,000. Hiring packages usually include benefits. Such a steep cost makes it difficult for some companies to justify a fulltime marketing salary.
For small companies, outsourcing may be an option. While going outside lacks the continuity of an in-house marketing director, it can work well for companies that know their direction and marketing strategy.
“I use outside consultants for my small mortgage brokerage company. My experience has been very positive,” says Edward Craine, CCIM, president of Smith-Craine Finance in San Francisco. “I use them for graphics, layouts, copywriting, editing, public relations, and e-mail and mail campaigns.”
Outside marketing assistance provides more accountability and better quality work than having it done in-house by a non-
marketing person, Craine says. But, he adds, you have to put in a little work upfront.
“Be clear about what you want and have detailed discussions about the scope of work and expectations. And put it in writing,” he says.
Costs for outsourcing marketing projects vary widely depending on the market and complexity of the project. Companies may offer hourly, per day, or per project rates. Craine comparison shops by getting bids and looks for budget consciousness when hiring. He also asks for references.
Along with outsourcing specific projects, commercial real estate professionals may want to consider contracting with a marketing or advertising company specializing in small business or professional services.
“I have found this to be the best bang for the buck,” says Nancy Bowen Wiggins, CCIM, of Nancy Wiggins LLC in Charlotte, N.C., who adds that her yearly $5,000 investment has generated more than $50,000 annually in commissions. “It paid for itself in business as well as savings. Their direction and expertise can be quite valuable.”
Companies that focus on the professional-services niche also may offer technology help such as search engine optimization and Web site design as well as media relations, new business development, and overall branding strategy. Professional services marketing can cost several thousand dollars, so companies need to be clear on what they expect from such help and they should ask potential consultants how they can measure the return on investment of marketing dollars.
Today’s Marketing Environment
Even outsourcing can be too expensive for companies the size of Terry’s 11-person Prime Locations. Like many small businesses, over the years she has put together a set of marketing materials that do the job, but “lack cohesion,” she says. “I designed our logo 20 years ago. We do in-house fliers. I have a brochure, but it doesn’t go with anything. I hired a Web person to renovate the Web design and make it friendlier, but it doesn’t reflect any cohesion with the design logo and colors. I have talked to a marketing/graphics person, but the bill is very high for a small company.”
But what should companies pay for marketing? “As much as it costs,” is the typical answer. Large companies often budget between 1.5 percent and 3 percent of sales to marketing costs. A 2004 survey of Minnesota professional-services firms found that 67 percent spent 2 percent or less of gross revenues on marketing-related activities.
While it may seem like only small companies outsource as a course of last resort, a survey of corporate marketing executives in 2004 found that 53 percent of large corporations outsource more than half their marketing duties.
The reason may foretell a sea change in the way companies market, says Harvard Business School professor Gail J. McGovern. Marketing increasingly depends on analytical skills, she says. “Marketing managers tend to be right-brain creative types with a fondness for mass-marketing campaigns, when what is needed are left-brain number crunchers who zero in on the ‘market of one,’” she writes in “Outsourcing Marketing” in the Harvard Business Review.
The idea that marketing has changed holds true for all commercial real estate companies, regardless of size. Today marketing is about finding the niche client base and serving the needs of those clients. While it may seem like an environment that favors small companies, in truth, marketing has risen to new levels in the industry.
The advent of technology has increased the need for technical skills: Web sites and posting properties to online listing services no longer are niceties, they’re necessities. New online marketing vehicles are gaining prominence and credibility: Search engine marketing, podcasts, blogs, and Web-based videos all are in use by commercial real estate professionals today.
In addition properties must be marketed through more than one channel. Many properties are marketed both locally, through signage and advertisements, and nationally, to national credit tenants and investors seeking footholds in niche markets.
New and rehab developments are marketed long before ground is broken or the shell gutted. Retail developments routinely are marketed to potential tenants, investors, and customers simultaneously as soon as the renderings are finished. Given the community backlash to new development particularly in multifamily and retail markets, developers must market to neighborhood groups and local officials to gain approval and zoning changes.
There also is the need to create and build the brand. As national and franchise real estate companies enter small and midsize markets, local firms must differentiate themselves to maintain or grow their client base. This may involve the creation of collateral marketing materials such as quarterly market reports and keeping a high profile among local business events and publications. Beyond advertising, brokers may report on transactions as well as write articles and make themselves available for comment in local newspapers. Many brokers and consultants also speak at local business meetings.
With the increased role of marketing in commercial real estate today, the most prized commodity is time, and as Gruhn of Lockard Cos. points out, that’s the main advantage of an in-house marketing director. “You have someone who understands the workings of the company and you have a foundation already built with that person. It’s a tremendous timesaver to be able to say one sentence in a meeting and know that your marketing director will pick it up and take it from there.”