The magnificent eight - of selling

Eight specialists working in real estate marketing and advertising and eight glimpses into their activities. our guest experts this month discuss the growth in the CEE markets, the changes and their hopes for the future

Emil Górecki, ‘Eurobuild CEE’:  The past year has been one of market turmoil, mainly related to the crisis on the USA property market. These problems are not as serious in Poland. Obviously they can be felt, as markets are now so inter-dependent. Has this affected the marketing of properties to a similar extent and does the situation differ greatly from the a year ago? If so, then what has changed? 

 

Beata Kokeli, member of the board and sales director of Centrum Development and Investments: These issues have to be grouped into two major segments. Property marketing for investment and selling is one thing, whereas marketing addressed to the possible users of such a property, e.g. the tenants of a shopping centre or office building, is something different. These two kinds of marketing are quite unlike one another. The impact of external factors is evident: for instance, the level of yields, which are currently rising. Investment banks are reviewing their lending policies in the wake of the credit crunch. The world’s macroeconomic situation certainly has an influence on the sales marketing of real estate investments. But does this have an influence on the other segment? I don’t think so. In Poland, the impressive growth of the economy, combined with the high demand for office and retail space, make the effects negligible

 

Andrzej Łapeta, strategy director of Firma Reklamowa Kuc:  That influence is much more apparent in the housing market. A change in consumer requirements is clearly visible, with few investment-type purchases and more for personal household requirements. No such drastic changes can be seen in the marketing of shopping centres. The problems being experienced by developers and investors with financing investments are not leading to
a dramatic slump in advertising budgets. Shopping centres are not in need of another formula or another kind of tall story to attract new customers or tenants. The market is experiencing quite a dynamic upsurge and is not likely to falter in the imminent future. A dramatic growth of commercial investments in small towns has recently taken place and is likely to continue, resulting in a further growth in the marketing efforts for these properties.

 

 

Mladen Petrov, ‘Eurobuild CEE’: Was the change on the investment market immediately felt by marketing departments?

 

 

Mariusz Filip, of the Fama advertising agency: It definitely was on the housing market, which is a good sign for us. We are now in an intermediate period, when marketing budgets are not yet restricted, but developers are already feeling that the market has become more difficult and customers more demanding. And that means marketing is becoming more essential. The stand taken by developers on such activities is now more serious. When we advertised the Dobra 54 investment, we set up a special campaign for it. Following the first meeting, 30 pct of the apartments had been reserved for VIPs. So the contractor said we could deliver the planned advertising materials, but at half price since the need for advertising was not all that great. The investment was sold nevertheless, and there was no effect on the prestige of the company’s brand. If we are trying to say how the market is going to change, then it is that a campaign can no longer simply be a question of selling a given product, but it also has to be one of building the firm’s long-term image. Had these investors then tackled the question more seriously, we would have been able to see the effects to this day. Developers are now starting to wake up. They want to run their campaigns in a more professional manner and have started to sign long-term contracts with us for the whole marketing and advertising service.

 

Maciej Komarczuk, Media Forum ‘s PR manager: It should also be added that competition has increased a lot. Developers are starting to understand that the location and an estate’s name do not do the selling by themselves. A customer should be offered something more, not only cost-free parking or a garage. Customers are no longer looking for products, but rather products need to chase the customers.

 

Wojciech Gepner, Echo Investment’s PR manager: On the one hand, customer expectations are increasing; on the other, more possibilities are available for reaching them. A few years ago, for instance, it was impossible to organize virtual tours. New solutions are appearing by the day and should be made full use of.

 

Michał Witkowski, Atlas Estates’ marketing and sales manager: A closer look should be given at the budget for marketing residential properties. At least 80 pct of that budget has been paid out to the press in the past three to four years, 90 pct of which is on advertising in the Wednesday edition of ‘Gazeta Wyborcza’. Competition between daily newspapers is much more intense now, and moreover, all are searching for new ways to reach customers: outdoor, radio and internet marketing are all evolving. In a nutshell, it is going be the necessity that will drive us towards a ‘diversification of methods’ approach to customers.

 

Marcin Samek, director of S4 Advertising Agency’s strategy department: More investors recognize the need to create a cohesive marketing mix, in which all the sections, from product to communications, correspond with each other. The practice had been
for the developer to prepare a project and to divide it into the maximum number of stages, since prices were constantly growing. Then an agency entered the scene, usually with a minimum budget and thought up some kind of communication strategy “to make everything click smoothly”. That proved possible in a small number of cases. Today developers notice that creating a coherent image is very important from the viewpoint of long-term policy. When new projects appear, the question asked is, who is the project for? Now it is at the project drafting stage that thought starts being given to the marketing. The result is that the whole communications strategy can be brilliantly planned.

 

 

Emil Górecki: So much for the residential sector. How are things looking for retail properties?

 

 

Beata Kokeli: The case of shopping centres is different, in that it has never been possible for work to get started without firstly ordering a market analysis from a consultancy company, so as to define where the centre should be located and,
on that basis, to prepare a selection of tenants. Only a positioned product with a specific set of tenants could be presented to a potential investor. The decision to invest was taken at the market analysis stage and after defining the target group of tenants. We had such a wild retail properties market in the early 1990s, when whatever was built found a purchaser. Then came the post-2000 collapse which was when we started to think about to whom we addressed
a product.

 

Marcin Samek: In the case of shopping centres and their communication with the end-customer, a very great change has occurred in recent years.
At present we have a network of shopping malls whose communication in individual cities is not coherent. Shopping mall communication is focused on short-term campaigns, which usually range from poor to very poor. A change can be seen today: communication is constructed in a well thought-out manner, is interesting and attracts attention. Competition is growing in larger towns; the qualifications of people working in marketing sections are improving; and the knowledge is increasing about the area occupied by a shopping centre in context of the urban environment and what functions
it performs.

 

Beata Kokeli:  First of all, however, what should be built is the developer’s trademark and from that point the marketing strategies for separate products should emerge.

 

Wojciech Gepner: In my opinion, the developer’s brand is not all that important for shopping centres. The end-customer is just not interested. But in the case of tenants it is the most important factor of all. For them it is not the name but the developer which is important, what back-up, knowledge and experience are offered, as well as the brand. But you cannot complain that things were once much worse. They were just different and in ten years from now we shall probably be saying the same about today’s marketing.
At the end of the day, good marketing is not about whether you like it, but depends on whether it generates good sales.

 

Andrzej Łapeta: When looking at most housing advertisements in the papers you do not have to be a specialist to notice that 80 pct of them are announcements and not advertisements. There are still no campaigns
of any great quality, apart from offers for top-shelf homes. Developers still do not feel any need for such advertisements for mid-range flats, which is why advertising such products is in a period of stagnation. The same is true of shopping centres: where there is no need for anything better there will be only the simplest of campaigns, the sort that go: “opening for business on 15th September. All are invited.” Clearly that is not the case in Warsaw, Kraków or Wrocław, where the markets are well developed. With regard to advertisements addressed to investors, they are usually well designed from the very outset, and often based on models copied from the West. Polish investors also like to create their own image and encounter few problems in so doing.

 

 

Emil Górecki: And can everything be sold?

 

 

Beata Kokeli: Of course. Whatever the location, every product can be sold. All that is needed are fundamentally strong preparations and a good marketing strategy. Should agency-developer communication function correctly, then the sales of products which may be flawed still experiences a very strong response. They say: location, location, location – which is true, but it sometimes happens that two shopping centres stand next to each other but only one is successful. What I, as a representative of a developer and investor, expect from an agency is its support in the marketing and sales operations. Selling an excellent product is no problem, but much greater energy and skills are required to sell a property in a worse location, where the competition is strong or the situation in the city is complex.

 

 

Mladen Petrov: Can something be over-advertised?

 

 

Mariusz Filip: We talked in my company about a specific investment in the Wilanów district in Warsaw. There are those who say that an aggressive campaign such as the developer is running there can only frighten customers away; but, on the other hand, it is almost impossible to name all the developers currently active in Wilanów. On the one hand, the desired effect was achieved; but on the other, a certain target group may have been frightened off. Only a very fine line exists between over-advertising and dissemination.

 

Maciej Komarczuk: I know an agency which drew up a strategy for a certain developer’s residential project, which was to sell at PLN 15,000 per sqm. Later, the developer decided to target the offer to a less wealthy customers, wanting to sell it as quickly as possible. This Spanish company spent a month wondering what steps to take. The whole matter boiled down to the fact that the marketing plan had been drawn up in Spain, while the investor had built in Poland. The marketing didn’t therefore take into account the differences between the two countries. It only goes to prove that it is not worth using copies. A copy is only sometimes a good thing – when it brings something new to our communication.

 

Michał Witkowski: Don’t forget that a marketing strategy should stem from the company’s own strategy. Should projects fit into the developer’s overall vision, then no problem exists over selling under one brand. Conflicts arise when target groups are very different. This is when you may have to keep your logo partially under wraps.

 

Marta Busłajew, marketing manager
of Colliers International Poland: Many brand operators entering the Polish market, or looking for new locations, ask for an address as well as who the developer is of a given shopping centre. Questions about a specific product are only asked during the next stage of the talks.

 

Andrzej Łapeta: It is quite obvious to me at least that a housing developer’s brand is all important. Customers are aware of developers who have participated in various shady contractual dealings, and even today, when such cases are few and far between, a respected developer with a recognized logo is in possession of a rare commodity.

 

 

Mladen Petrov: How would an investment be treated were a developer known for lower standard homes to decide to build expensive apartments in Warsaw city centre?

 

 

Mariusz Filip: Such a company would have to change its strategy and not highlight its logo in the investment. It could establish another company to carry out the project, since the label of a developer of huge blocks of flats might have a negative impact on how such a project is received, particularly since such customers are very demanding.

 

Maciej Komarczuk: The Włodarzewska company, one of my clients, is recognized as a developer of homes sold at reasonable prices. Recently, it decided to invest in a deluxe project near Warsaw. We are not advertising it under the Włodarzewska logo, but we cannot avoid it completely. So we have created the name Sobienie Królewskie for that purpose.

 

Andrzej Łapeta: Orco started a residential investment in Warsaw with an estate in the Bialołęka district, but is now developing Złota 44 – and this does not seem to be putting off any potential customers.

 

Mariusz Filip: You must remember that the Złota 44 logo is better known than Orco’s own.

 

 

Emil Górecki: The issue of advertising and marketing budgets has been touched on a few times since the start of our meeting. How should these be drawn up?
Do they differ from those of a year ago?

 

 

Andrzej Łapeta: Residential property budgets differ, since it is known that the investor gets the money returned almost immediately; whereas retail development budgets are different, since the money invested is returned only after several years, and advertising is designed on the basis of contracts signed with tenants…

 

Beata Kokeli: … and on experience, since previous expenses and their effects are used in drafting budgets for future projects.

 

Wojciech Gepner: It has always been a quota method, though quotas keep changing.

 

Andrzej Łapeta: The effectiveness of money spent on advertising and marketing is important, but it is difficult to find simple, unambiguous quotas which allow companies to plan for such expenses.

 

Mariusz Filip: One of our customers has said that apartment sales have been falling for two months, so why are we doing nothing? The thing is we have received no data on sales, but
I think we should get them each month. If we did, we could react immediately to those falls, since sales are the result of our work.

 

Michał Witkowski: When a market is so mobile and multi-dimensional, calculations are just impossible. Theoretically one could imagine, for example, how much it costs to win a customer – a calculable figure. However, it is demand which largely dictates potential sales. When the situation is as stable as it is today, even investing large sums may not influence sales. There is one barrier which a customer cannot overcome – the price. No marketing activity can help in this regard.

 

Beata Kokeli: So that could be when a developer should write off part of his profit margin?
It is not a matter of what cannot be sold, but rather what the profit could be. Another situation exists when, with an increased marketing budget, a developer reduces his profit margin. For prices there are no strict threshold above which sales cannot be made. The real question is
– how much can prices be reduced to beat the competition?

 

Andrzej Łapeta: Lord Leverhulme, one of the founders of Unilever, once remarked that: “I know that half the finance spent on advertising is wasted, the trouble is I don’t know which half.” We do many things, but cannot always tell which has any effect.

 

 

Mladen Petrov: What do you think of some of the concepts used in property advertising?

 

 

Marcin Samek: 80 pct of the advertisements in daily newspapers are still sales announcements. The figure once was 95 pct, so some progress is being made. But these are not the sort that could ever be entered in advertising competitions. With shopping malls, some employ excellent advertising, for example Warsaw’s Arkadia or Poznań’s Stary Browar.

 

Mariusz Filip:  A kind of index is achieved when comparing our products with those of a foreign origin. Five years ago our market was focused exclusively on its own backyard, ignorant of what was happening outside Poland. It was only later that we started to take notice of and copy what was going on in Europe and the rest of the world.

 

Andrej Łapeta: I am not afraid to state that, as a country, we are at the cutting edge of real estate marketing. This year the International Council of Shopping Centres announced that four of the six European Shopping Centre Prizes awarded for overall achievement went to Poland. This year, 10 of the 46 nominated campaigns for the European marketing ICSC Solal Award are from Poland. It must be remembered that this is exclusively a marketing award. Arkadia’s launch campaign won two ICSC prizes: the Maxi Merit Award in 2005 and the Solal Marketing Award in 2006. This is why I think that, together with Slovaks and Czechs, we are becoming something
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