LPS going to bat for Franchise Organizations

In an op ed column released today, LPS suggests that NAR’s MLS Policy Committee made a poor choice in forbidding Franchises (like Century 21, Coldwell Banker, RE/MAX, Keller Williams, et al) from allowing them to display advertising around IDX listings.

Here is the article

Why the NAR’s IDX Policy Kills Competition

By Shiraz Vartanian

With the publication of the NAR Handbook on Multiple Listing Policy in January of this year, the National Association of REALTORS policy has changed to now allow national franchisors to index IDX listings on their Websites. While this is a positive development – and one that should be applauded – there are also some problematic elements to this new policy.

Primarily, the issue lies with the prohibition by NAR for these franchisors to advertise around these listings. The logic behind this restriction seems to be that advertising would somehow compromise the integrity of the listings and/or the MLSs themselves.

While on the surface this may seem a valid concern it is really demonstrably false.

In fact, studies have shown the exact opposite to be true. Consumers actually invest siteswith advertising with a greater perceived authority than those without.

In our opinion, limiting the ability of franchisors to leverage their traffic and data to sell advertising is anti-competitive. Times are tough all over. Franchisors – and indeed, everyone on down to the individual agent – need to take advantage of every opportunity possible.

The NAR’s policy on advertising around IDX listings eliminates a significant business opportunity for the franchisors (and the rest of the industry) that has been controlled by national real estate portals.

What the NAR’s indexing policy accomplishes more than anything is ensuring that further innovation from franchisors will be difficult, if not impossible.

Money is Being Made

For quite some time now, the major national real estate search portals (REALTOR.com, Trulia, Zillow, etc.) have been capitalizing upon the listings of individual REALTORS, agents and brokers to capture the attention of national advertisers.

In the process, they’ve been pulling in millions of dollars that – in theory at least – could be going to the brokers and MLS’s who willingly provide the portals with listings.

The portals have also sold (and continue to sell) product placement to competing agents and brokers, essentially allowing them to advertise their services in connection with listings they have nothing to do with.

Portals are making money of an individual’s listings by selling advertising space to national brands, but they’re also selling advertising to the agent/broker’s competition – on their own listings.  Though it’s condoned, this practice has always been controversial and not necessarily appreciated by the industry.

“Level the Playing Field”

We suggest NAR removes the restrictions against advertising alongside IDX listings across the board. That way, everyone from national franchisors to industry organizations to individual brokers and agents would be able to take advantage of currently available advertising platforms geared specifically toward the real estate community.

Without having to hire outside advertising sales organizations, real estate professionals of all sizes can lay claim to their own fair share of national advertising dollars. The opportunity to generate new, viable and renewable sources of revenue would be in their hands.

Vertically focused media organizations help agents, brokers, franchisors and MLS sites effectively and easily leverage their traffic to target in-market real estate consumers in a way that the national portals can’t.  If the playing field is leveled by NAR, local and regional real estate professionals will actually have a leg up on the national portals.

There’s a tremendous opportunity here. It can be quite revolutionary and could put these sites on par with the national portals for advertising sales opportunities. The only thing standing in the way of this revenue is the industry organization whose own mission statement states its role as helping its members become more profitable and successful.

Here’s a very simple and logical way for the NAR to do so. The ball is now in their court.