I’ve been intrigued by the dynamic of building lead volume in our Apartment Finder business over the past year.

As I’ve discussed before, the multi-family marketing business is a competitive, lead-generating business that is driven by consumer’s accessing print and online directories and inquiring about apartments for rent.

There are three ways that marketing companies like Apartment Finder hand customer leads over to its clients:  a phone call directly to the apartment community; an e-mail to an apartment community, either directly or through a leasing intermediary; a click-thru to the apartment community web site; and, a prospect who walks directly into the community leasing office without making prior contact.

This week, one of our biggest competitors in the space shared a few public metric related to their lead production.  According to their recent earnings release, the company increased leads 35% year-over-year, and currently produces more than 75% of their leads from their Internet and mobile platforms.

That made me curious.  How did our metrics at Apartment Finder measure up?

The chart to the right shows the increase in lead production at Apartment Finder over the past year.  Overall, leads gained 43%.  Phone leads were up 25%, e-mail leads were up 169% and click-thru’s to property web sites were up 71%.

This data is derived from two third-party sources:  CallSource, which manages our tracking number program, and Omniture, which provides us with web analytics.

Most interesting to me was the distribution between leads from print distribution and from internet and mobile distribution.

At Apartment Finder, 53% of our leads, including click-thru’s, are driven by our Internet distribution and 47% by print.  Subtract click-thru’s, which can’t be tracked back to a specific individual, and the ratio drops closer to 50-50.

But the key issue isn’t what source the lead comes from.  The issue is how useful the lead is.

I had an engaging conversation around the relative quality of leads with a leading apartment marketer at the National Apartment Association Conference this past June.  E-mails that are generated as a by-product of creating an appointment to see an apartment had a high conversion, he said.  Phone calls to the community were the second best kind of lead.  And e-mail inquiries were the lowest-converting type of lead.

That means there are other metrics that can point to how good the lead generation of a marketing partner will be.  A big one is the percentage of phone calls to e-mail leads.

At Apartment Finder, 80% of our leads from print and internet are phone calls.  20% are e-mails.   That’s an exceptionally good ratio, I think.

The components of residential investment in the fourth quarter GDP report (which is subject to revision, of course) is worth looking at more closely.

Single-family housing, which made up more than 3.5% of GDP at the peak, has declined precipitously, but registered a slight increase in the fourth quarter. Another driver of growth in residential investment was brokers’ commissions, which were sparked by the rapid rate of home sales. These drivers were offset by continued declines as a percentage of GDP in multi-family investment and residential improvements.

What should you read into the numbers? The recovery is in the timing; the new home and resale home market began its decline earlier than other segments of the residential investment economy. Improvements are driven partly by home values and partly by income; multi-family investment is driven by access to credit markets and property valuations.

Sustained improvement in the residential real estate market will help to drive increased investment in home improvements. The dynamic for the multi-family is somewhat more complex, but hinges to a large degree on stability in the employment markets.

Thanks to CalculatedRisk for the chart.

If you’re in the multi-family industry and are looking for some signs of hope, today’s release from REIS Inc. wasn’t very helpful.

Reuters reported on REIS’s newest look at market conditions:

The U.S. apartment vacancy rate rose to an almost 30-year high of 8 percent in the fourth quarter, and rents dropped in the biggest one-year slump in 2009, according to real estate research company Reis Inc.

The fourth quarter was the worst of the year, REIS said, and a pick-up in 2010 will depend on how consumers are feeling about the job market.

Yet, the apartment market may still turn around this year if those out of work become confident enough about a job market recovery to move into a rental, Victor Calanog, Reis’ director of research, said on Thursday.

The Wall Street talked with Rich Campo, the CEO of Camden, who laid out the current reality: it’s a buyer’s market.

Landlords now must entice tenants to renew leases. “We’ll shampoo their carpets. We’ll paint accent walls. We’ll add Starbucks cards,” said Richard Campo, chief executive of Camden Property Trust, a Houston-based real-estate investment trust that owns 63,000 units. He said the first half of 2010 should be “pretty ugly,” but was optimistic the sector would pick up later in the year.

Want to get a look into the crystal ball? Watch the consumer confidence numbers and see how they line up with the job reports. If the job market strengthens and consumers keep an improved outlook, then the market for rentals will turn up.

As the year winds down, I was curious which posts over the course of the year were the most popular. I was pleased to see that the posts that had resonated the most with all of you were ones that I felt like I’d achieved some clarity around an idea that I’d been working through. (It’s also interesting that these posts are among the most frequently accessed through search.)

The number one post was from March: Social Media Can be A Marketing Platform. This was when we were taking Network Communications into its Project Massive Network, an effort to get every person in the company using social media to broaden and intensify their professional connections.

Through the year, I kept meaning to come back to the concept of Evangelist. The word too easily connotes intense passion, while I believe that the most effective Evangelists are the ones who have completely integrated their nature with their passions, so that they communicate a relaxed enthusiasm that inspires and attracts others. Evangelism is too often associated with a mania and mono-focus that can be off-putting.

The number two most-popular post was a very detailed case study that I did in June about migrating our marketing strategy at Apartment Finder to a social media focus. My intent with this post was to demonstrate each of the steps that we had taken to extend our communications with the multi-family marketplace to multiple platforms, and our efforts to modify and adapt our messaging to the unique attributes to the platforms. This effort continues today and deserves a follow-up: the most challenging aspect of the initiative is maintaining continuity and assessing its effectiveness. Despite our intent focus, we have areas of spotty execution with our own program.

The third most-popular post was my first attempt to consolidate the thinking that I’d been doing about how a traditional publishing content workflow needed to adapt to accommodate the inclusion of social media platforms. In Thoughts on Evolving the Content Strategy in Publishing to Leverage Social Media I outlined the Sharing Model of content creation. This model outlined here as served as a framework for developing new processes at our regional home design brands, and in some instances we’ve seen significant impact on audience and enthusiasm. The process is a living work in progress.

The fourth most frequently viewed post is an down-and-dirty analysis of State Farm’s presence on Facebook. This was a period when I was trying to understand the challenges that face traditional marketing departments when implementing social media programs. The post was published in April and is one of the two most-frequently accessed posts through Google search. I recently re-visited the State Farm Facebook sites and little had changed.

In the Spring, I was doing a lot of work to try to quantify the impact of the economic decline on consumer spending, marketing outlays and media allocations. In an early April post, I pointed out the contradiction between industry research showing the effectiveness of TV and magazine advertising and the steep declines in revenue. The point: When marketing budgets shrink, the most expensive media goes first.

I’m kind of proud that a self-serving post doesn’t show up until the number 6 spot. Over a period of 6 months, we radically shifted our traffic strategy at ApartmentFinder.com in order to leverage what we percieved as our core strengths. This shift was rewarded in April when Comscore reported ApartmentFinder was solidly in the top 5 destinations for apartment shoppers on the Internet. Our work put us solidly in the consideration set for online-only marketing in the multi-family industry, and we did it despite being heavily outspent on search engine marketing traffic by our competitors.

The seventh most-popular post, from July, demonstrates how powerful social media can be. I described a disappointing customer service experience with American Express. A couple of days later, I heard from the Chairman’s Office. It doesn’t match Jarvis’ Dell experience, but it was an instructive moment in the new age of marketing and media.

A May post reporting on research that shows how effective print advertising is in driving web traffic came in at number 8. Despite multiple instances of independent research like this, many people insist of maintaing a very simplistic “Print Is Dead” position. At this point, I just shake my head and wonder why the concept of using multiple platforms to intersect with consumers to drive business activity is so hard to accept. [I very accepting of marketers who say they don't have the money to invest in premium marketing choices, whether they are online or offline. Then we can have a conversation about how to leverage their marketing resources to build their business. Just sitting around arguing about living or dead media gets old very fast.]

An October post made the top 10 and is a big search favorite: The Current State of the Economy in 5 Pictures. I realized doing this analysis that I should update the post in January to reflect the fourth quarter results. Lesson: People like pictures.

The number 10 position is taken by a post where I ranged outside of my limited sphere of knowledge to speculate about how social media platforms would change the way that people searched for information. The premise was that “human search” would develop through the filtering of content by overlapping social graphs. This is happening on Twitter and is expressed by many as crowd-sourcing. I had fun thinking about the problem and putting together the schematics. The post attracted a broad readership and started many conversations. I’m sure that those followers soon dropped off as I returned to my more mundane noodling about business models, business processing and marketing approaches.

Over the past 12 months, we’ve participated in a dramatic shift in the online market place in the multi-family industry.

As you can see from the table showing the performance of five top multi-family sites, the share of the top 3 has declined by 1.4 million unique users, or 21%, while the share of the next 2 (ApartmentGuide.com and ApartmentFinder.com) has increased by 694,000 users, or 45%. The overall market for the top 5 sites has declined by 716,000 users, or 9%.

The overall decline of the market is a by-product of reduction of demand for investment-grade rental units, driven by the economic downturn, as evidenced by the declining financial performance of leading REITs and the sober outlook for the year ahead. In fact, two other leading multi-family sites, MyNewPlace.com and ApartmentRatings.com, were down a combined 501,000 unique visits versus prior year in October 2008.

All of the media players serving the multi-family market have experienced operating pressure as property managers have reduced marketing budgets and increased their demands for accountability and concessions from the marketplace.

Over at the blog Being Present, Todd Dubner looks at this shift in a more discrete fashion, with details for each of the participants over the last 12 months. Todd speaks to the benefit to online traffic that the distribution of print copies delivers. A very small percentage of traffic at ApartmentFinder.com is driven by paid search; the majority of traffic comes from direct log-ins to the web site and from organic search. This trend is a result of a focused strategy to build traffic from our print distribution and by developing targeted content and a broad social media footprint in order to tap into multi-word searches from apartment shoppers.

I’m intrigued, however, by the order of magnitude of the shift and the relatively small shifts in share of marketing spend that have accompanied this change. I would venture that fewer than 4 points of marketing spend share in a $750+ million market have shifted over the past year, despite the 200 basis point shift in online audience.

The audience shift has definitely been reflected in significantly higher lead generation at the Apartment Finder business; anecdotally, we know that a similar increase, at least in terms of online lead generation, has been noted at Apartment Guide.

The surplus of marketing options, and the relative changes in performance, create an interesting dynamic in a tightly described market, such as multi-family.

From a purely objective point of view, marketing spend should shift to those media channels that are increasing their value by growing audience share and increasing lead share, while improving the quality of their leads.

In a declining market with seasonal variations, tracking this objective measure is challenging. And, ultimately, determining the quality of a lead in any market means being able to measure the conversion of hard leads — phone calls — into hard activities, such as visits or purchases.  Few businesses have the wherewithal to track these details accurately, never mind in the multi-family space, and, as I’ve noted before, trying to attribute leads to single sources in a market with multiple free information resources misses the benefit of saturating a market with branded messages.

From a subjective point of view, there is a lot of logic to slow shifts in market share.

An important part of working with a media or marketing partner is trust, reliability and continuity. When you shift from one partner to another, you take a risk that the benefit you’ve received from the service will be disrupted in the transition. During periods of shifts in market dynamics, businesses are slow to change their buying habits because of the relative risk of change.

Typically, price can be a lure, but price is rarely the primary reason for making a change from one partner to another.

What happens, then, is that market shifts develop over time, as emerging new forces in the market demonstrate reliability, productivity and trust.

The decision to shift is also influenced by a calculation about whether the market change is structural or marginal.

In the Internet marketplace, share can shift fairly rapidly as new entrants dilute the market or as existing entrants change their investment in acquiring customers. Ironically, the relative ease of transfer experienced by consumers is not equally experienced by the marketer: Each partner has different systems for order entry, billing, service and fulfillment.

In some respects, the changes in the multi-family internet market over the past year are structural. At Apartment Finder, we’ve built our larger audience base by changing our operational approach, not by increasing our overall spend on Internet marketing. We’re only half way through our operating plan and expect to see improvements in audience growth, lead production and lead conversion. Apartment Guide has also clearly shifted their operating model. [For insight into the Apartment Guide strategy, see the investor relations section of their  corporate web site.]

In this challenging environment, I would venture that property managers are acting logically in evaluating their third-party marketing spend by emphasizing  subjective criteria while insisting on accountability and concessions from their favored vendors. They are also acting logically in looking at solutions that can reduce their reliance on third-party marketing while bolstering their own control over lead generation and renewals. (At NCI, we have some interesting visibility into these conversations by virtue of our CommunitySherpa service.

The multi-family marketing landscape has been highly ordered and orderly over the past five years. This past year has witnessed  dynamic market shifts that will  have a profound impact on the size and distribution of marketing investments by property management companies. It is going to take some time to play out, but the landscape will look very different when it is done.

What it will look like and who will sit in which seats? I don’t have that kind of crystal ball!

I spent some time this morning looking through the transcripts of the Equity, AIMCO and Avalon Bay earnings calls and excerpted some sections that neatly summarize the current market conditions and outlook.

While revenue is down, declines in the rental rates of new leases are being offset by a widening spread between new lease and renewal lease pricing.

The pricing spread has increased focus on retention, the companies said.

Equity is renewing leases at 1% below the expiring rental rate, while the net effective new lease rate (a new metric Equity is tracking) is down 9% from the rates vacating tenants are paying.

AIMCO has experienced an overall decline of 1.3% in average rents, with new leases down 2.3% in price and renewal rent up 0.1%.

At Avalon Bay the spread is even wider, with new rents down 12% and renewal rents down 0.6%.

All three companies reported that rental rates have stabilized in the early part of the summer, and that generally traffic is up from significant dips in April.

The impact of the lower rents and lower occupancies drove down same-store revenue 2.4% at Equity and 2.3% at AIMCO. Equity reported occupancy at 93.7%, while AIMCO reported occupancy at 92.8%.

In other comments, Equity spoke in detail to the impact that increased exposure of listing information online has had on their cost structure.

Part of a bigger picture workflow transition that utilizes our web tools, engages the resident, transfers a lot of the work to the resident. When you put prices on line and you have that transparency kind of cut down your call traffic about 50% because, people know what your prices are. They don’t have to call. So, I think what you are seeing is really just the beginning stages of a longer-term focus that we have a fairly detailed plan that will take us probably the next three years to fully implement.

In addition, investment in their Equity web site has allowed them to significantly reduce their investment in paid advertising.

[Our] website is really a Ferrari, so to speak as far as the infrastructure. We’ve been able to move from page nine on a Google search as far as organic, all the way to page one. We’ve also taken more central control of a lot of the ILS spend, the Rent.com, the Apartments.com and you see significant optimization year-to-date on that expense.

I found myself asking a basic question when I looked at the Comscore/MediaMetrix traffic figures for the multi-family industry in May: How many people were looking for an apartment online in the month?

The answer was interesting and speaks to the power of diversifying marketing spend in order to reach the largest number of consumers.

In total, Comscore/MediaMetrix reports results for 55 sites serving the rental market, with total traffic of 20.2 million.  The top 10 apartment rental sites had total unique visitors of 15.1 million in May,  75% of the total audience..

Since January, there has been very little change in the total audience of the top 10 sites, although share did shift slightly. The biggest change in share was at Apartment Finder, which had 4% of the visits of the top 10 sites in January and 10% of the visits of the top 10 sites in May. Even though Apartment Finder gained close to 900,000 unique visitors in the period, the top 10 sites only gained 343,000, speaking to the incremental shifts in share among the leaders.

While total audience is useful in comparing sites to each other, the more relevant metric to use to scale the market is unduplicated audience: the total number of individuals who are searching for an apartment online that month. This is different from the total number of visitors to the leading websites, since consumers may easily visit more than one site.

An analysis of Comscore’s data shows that there were 11.7 million unduplicated apartment shoppers on the top 10 web sites in the month of May.

Notably, 8.5 million of those users, or 73%, went to only one apartment site in the month. The remaining 3.2 million, or 27%, consulted 2 or more sites.

The top 5 sites had 9.1 million unduplicated visits, or 75% of the total unduplicated audience for the top 10 sites. The percent of unduplicated visitors was slightly higher for the top 5 sites, with 77% of the 9.1 million visitors going to only one of the top five apartment listing web sites.

The duplication of visitors between specific sites is fairly low, an analysis of the Comscore figures show. The three sites with the highest duplication are Rent.com and Apartments.com, which share 15% of their users, and Rent.com and MyNewPlace.com, also at 15%. Generally, duplication rates between any other two apartment web sites in the top 10 was below 10%. For instance, Apartment Finder shared 6% of its traffic with Rent.com, 6% with Apartment Guide and 5% with For Rent, according to the Comscore figures.

The numbers suggest that the wide number of options available to consumers online has not contributed to heavy duplication of the audience. This is true also for the distribution of print magazines as well: of the roughly 5 million magazines distributed each month by Apartment Finder, Apartment Guide and For Rent, virtually none are distributed through locations where another apartment magazine is available.

A conclusion? For those marketers who are looking to drive a significant volume of leads, distributing your marketing spend across multiple marketing partners should give you relatively high access to a unique audience, given the low duplication of usage.

This scale of usage is interesting relative to the available stock of apartment housing. According to the National Multi-Family Housing Council, there were more than 12 million apartments in buildings with 10 or more units, and the top 50 property management companies managed close to 6 million apartment units in the first quarter of 2009.

The methodology of theComscore/MediaMetrix reports is laid out here, for those who are interested.

Also, to reinforce the disclosure on my blog, for those of you who are reading this out of context, I am the CEO of Network Communications, Inc., the publisher of Apartment Finder.

Go to any multi-family industry event and you’ll find a lot of people talking about Facebook, Twitter and other social media platforms. The buzz is that something is going on, and the consensus is that it’s still not really clear what.

Is social media your friend or foe? Does it drive leads? Help with retention? What does it mean to get involved in the conversation?

I’ve been enjoying a bunch of conversations in the multi-family space around social media.  The market is well-positioned to experiment with social media (after all, a group of residents is the definition of community!) and the dialogue that has developed is a kind of iterative inquiry that seeks to define the goals and the tactics simultaneously.

Following these conversations, one can appreciate the quicksilver nature of talking about social media and social networking as marketing platforms.

I have a bias toward those voices that are defining parameters and creating scalable environments, but learn something interesting from every one who steps into the fray.

If you want to participate, where should you go?  Here are a couple of suggestions about places to start.

First off, you can go check out Multi-Family Insiders, a professional social network and blogging platform for the industry.

Then, check out some key voices on Twitter:

@mbrewer
@30lines
@LisaTrosien
@Eric_Urbane
@BellPartners

Finally, you can get a feel for what some people are thinking about by monitoring the #AptChat discussion on Twitter every Friday at 4pm EDT. Lisa Trosien moderates the discussion, which has been informative and thought-provoking.

Don’t be put off if you feel like the conversation is dominated by a few voices.  They are welcoming and interested in new perspectives.

One of the great shifts in media driven by the Internet has been the emphasis on performance. After decades of loose accountability on the part of media providers to marketers, the Internet has introduced a suite of measurement tools that supply us with much more information than we’ve ever had before.

The apogee of measurement is Google’s Adwords system: as a marketer you pay what you think is fair, you get relevant placement and you can track each click. A perfectly transparent system.

Over the past several years, I’ve worked with a company in California to provide detailed call tracking to our customers, especially in the multi-family industry. The theory at the outset was that we needed to be as transparent as web providers in order to compete; a second motivator was a kind of morbid curiosity — did our integrated-media strategy drive a high volume of leads at a good price, or were we destined to be outperformed by the web-only players.

CallSource has been a terrific partner and we’ve been able to provide transparency to our customers.

Recently, CallSource released some interesting data about their call volume, its sources and how the leads were handled.

A first point: Integrated media — print & web distribution combined — is a big driver of leads.

In April, CallSource reports that it processed 493,500 phone calls for its multi-family clients. (This largely includes media partners and property management companies.)

Of those 493,500 calls, 32%, or 156,180 calls came from Internet-coded sources. 68%, or 337,320 calls, came from other advertising sources, primarily print and integrated print/internet advertising sources.

Our internal numbers bear out this trend: our print distribution typically drives 3x the calls of our internet distribution.

In its year-end report covering call trends in the 4th quarter of 2008, CallSource points to some holes in the way that many property managers are handling their valuable phone leads.

Leasing professionals often did not even ask for the caller’s name (only 74% of the calls), and only 23% of calls from qualified renters were converted into appointments.

Leasing professionals also frequently neglected to ask how the caller heard about the apartment community.

Leads are the outcome of a balanced marketing program

These statistics aren’t intended to show that the multi-family industry is doing a poor job. In fact, the awareness of tracking, and creating a level of accountability around marketing spend, is higher in the multi-family industry than in many other industries.

The statistics point to the challenges in creating a balanced debate around marketing investment in today’s media world — in the multi-family industry and beyond.

We have so many different marketing channels that we are able to tap. In some channels, we have a high degree of transparency. In others, relatively little.

The goal of all marketing is to drive sales and increase profits. The current evolution of marketing tactics is highly focused on the cost of each customer transaction. Measurement creates a strong platform for building that knowledge.

Strong marketing continues to rely, however, on a few simple things that require patience and sophistication to measure. First, the customer experience: Does it align with the brand promise. Second, the brand awareness: Do consumers recognize the brand and have an association with it. Third, availability: Is the brand available and easy to connect with for the consumer?

Executing these three elements of a marketing campaign requires internal and external consistency in how a product or service is described and delivered. Multiple media and multiple advertising impressions deliver that message in a way that drives results and improves profits.