Property sector poised as digital giants bare their FAANGs

This article was originally published by Unissu: http://www.unissu.com

To start with, let’s take a look at the current scenario.

In July 2019, breaking news spread around the US. It wasn't long before it spread across the globe. Was it true? Could it be true? Has Amazon really stepped through the door into the real estate kingdom?

Yes, Amazon had partnered with Realogy, a leading North American real estate firm. This is not science fiction.

Aly J. Yale, wrote on Forbes: “The offering — dubbed TurnKey — will allow homebuyers in 15 cities to instantly connect with a pre-vetted, high-rated real estate agents in their area. In exchange for closing with that agent, they’ll get anywhere from $1,000 to $5,000 in Amazon home products, services and other perks. The program was launched in partnership with Realogy, a long-time industry player and holding company for brands like Coldwell Banker, Century 21, Sotheby’s International Realty and more.”

Certainly not quite the effort one might be expecting to see from a multi-billion dollar company like Amazon, but it is true that things come one step at a time.

What about Google? Have they ever tried to get involved in real estate? Well, not specifically, but there are certainly some interesting things to look at. Do you remember Google Real Estate, the innovative service which was able to show available properties on a map? This project didn't make much of an impact and, as such, quietly closed down. But it doesn’t end there. In fact, Google Real Estate was just a starting point.

We can look at a tool called 'Google My Business' and clearly see how well-positioned real estate is to take advantage of it. The fit seems especially good for agents as they fit perfectly into the template that Google's tool works with: they are local and they are often searched for by users - i.e potential buyers and sellers.

This is a strong sign which demonstrates how Google has committed to draw a line, a new direction that can give real estate agents an alternative marketplace. Translated, it means traffic and leads go directly to the agents rather than an intermediary portal.

And let’s not forget that Google offers an advertising platform, Google Ads (previously known as Adwords), which enables real estate professionals to be found by their potential clients via keyword searches.

So, on one hand you’ve got the organic reach and on the other hand the pay-per-click solution. But that’s not the end of it. How could we forget about YouTube?

People don’t stop searching on Google, they increasingly continue onto YouTube as well. Buyers and sellers now want to have as much information as possible about a company or a professional individual, demanding a deeper understanding of what they do and exactly how they do it.

Obviously, in a scenario where video is becoming increasingly powerful, YouTube is a strong opportunity for companies in real estate to boast about their performance and their technology. It is a massive opportunity for those who are part of the biggest leading companies in real estate, but even more so for those professionals who represent small businesses such as local realtors.

So, Google certainly has an appeal and attracts people through its products and services, some of which offer a variety of potential benefits for real estate people. However, it is not necessarily what Google is doing today which is truly interesting for real estate, but rather what it could well be doing in the near and distant future.

Immense wealth, immense power

First and foremost, Google has unthinkable amounts of cash available for researching innovation, and plenty, too, to seriously start investing and expanding into new sectors and developing new business ideas. For instance, for several years now, Google has been throwing an awful lot of resources at augmented reality (AR).

Can you imagine how big AR will become for real estate in five years’ time? If Google has the best, most advanced, and most accessible AR software, we can't really underestimate the influence this could have on global real estate.

Google also runs profitable investments in startups through Google Ventures, in particular the Google For Startups program. In this way too, they have the potential to become increasingly influential in PropTech and real estate.

But, I think the most important thing for us to be looking at is the ambition that both Amazon and Google, among others, have to step into as many global living rooms as possible.

Smart speakers are becoming a big thing and our homes are increasingly connected to the internet, to our mobile phones, and to our apps.

Amazon and Google devices are probably most commonly associated with smart speakers, but Facebook is also in the game, a company with more than a billion customers worldwide. How can a database made up of over a billion users not have incredible value for real estate professionals who are looking to gain more business?

In fact, Facebook offers companies and individuals a rare alternative to Google's search algorithms and pay-per-click model which we all know favours those who have the most cash to spend on advertising. Facebook could well become the go-to place for SME real estate firms, not least because the platform is also popular with buyers and sellers themselves, providing the industry with an unusually engaged audience.

Facebook's advertising is massive. Every marketer knows that you can’t run an efficient targeted ad campaign if you don’t use both Google Ads and Facebook Ads, largely due to the vastly different demographics the two companies attract. Facebook's potential to disrupt real estate increases when we consider the aforementioned power of video in the modern world. Yes, YouTube is a leading force, but have you noticed how intensely Facebook is pushing us towards video content nowadays?

We now have faster, more stable internet connections, and smartphones are increasingly coming on tariffs with generous data plans: the in-your-face immediacy of video content is being harnessed by every industry on the planet, and real estate is no exception. Space is, after all, largely a visual thing, so Facebook's design of scrolling down a feed is ideal for real estate firms who want to grab people's attention - they don't have to rely on people actually searching for real estate related terms, they simply pop up on their feed and catch their eye, soon tempting engagement.

So far, this has been a simple overview of what these tech giants have already done and could do with the tools already available. It's important to realise how much is still left to come.

Data fuelling the influence of Big Tech in real estate

Data is a goldmine.

We, each and every one of us around the world, provide data as if there’s no end and there’s no harm.

Every time we upload a video, post an article, comment on a photo, offer up facts such as our age and hometown; even something as simple as when we 'like' a particular page, we are giving away precious information. The same goes for our property searches.

All of this information can be used by data companies for good or, unfortunately, for bad.

This stock of very relevant information is a goldmine for companies like Google and Facebook, as they create categories, profiles, and silos for people all around the world.

If they know what we like, what we don’t like, where we live, and where our children go to school, they can use this for better targeting.

When done well, in theory, this is the most acceptable use of personal data we have come up with, highly-targeted advertising. It's acceptable because it can provide a better user experience, and a more efficient user journey. Everyone wins.

So, today these tech giants mainly sell information through their advertising platforms, but what stops them from using information to directly fuel their own business instead of selling it for the benefit of others?

In other words, what is stopping Amazon from becoming a marketplace for property? Watch your back, Zoopla, RIghtmove, Zillow, and the like.

What's stopping Facebook from expanding its features and becoming a marketplace? Oops! They already did! Today, you can see thousands of properties being advertised across the platform.

If these platforms can find a way of better organising this aspect of their evolving product lines, thus creating a genuine service for real estate professionals, the decades’ worth of data the companies have will prove very useful indeed, a valuable resource that few others have access to.

It goes without saying that Google, if they wished, could probably have a go at doing anything they want, which includes property portals, marketplaces, even online agency. Just use your imagination.

All of these companies have immense financial power, expertise, and information. They can start competing with local professionals, online agents, portals, and even with the biggest real estate firms. They could take control of a huge chunk of the real estate industry.

Real estate is one of the main pillars of every developed economy and is a hugely attractive sector for companies looking to increase their revenue. Much like a Ferrari, everyone would like to sit in it and start driving.

In conclusion, how realistic is all of this?

I don't think this real estate takeover is inevitable. Big tech companies are very focused on their core business interests, and the products and services that make up this core are in constant need of evaluation and improvement. They are never ever static. So, personally, despite all of the potential there is, I still doubt that a massive and decisive shift towards real estate is on the horizon.

More likely, these big firms will pick up more and more 'side projects' which will see them invest in and co-operate with smaller real estate or PropTech-leaning firms to solve common industry problems around the world.

What there won't be is a real estate business with their name on the door or the letterhead. Selling their data is a much easier task than analysing and actioning it for themselves, easier than all of the effort required to position themselves in a new market.

Take a cynical look at it and you could also say that selling data to other businesses also mitigates the tech giants' responsibility towards the consumer, palming it off for others to worry about as they focus more and more closely on the specific wants, needs, and personalities of their users.