Multifamily Technology Expert Steve Lefkovits Analyzes Key Industry Mergers
- Mar 29, 2012
Oakland, Calif.—The multifamily industry recently witnessed two important deals: Primedia purchased Rent.com, and RentWiki rebranding as RentAdvisor. Multifamily technology expert Steve Lefkovits, CEO of Joshua Tree Consulting and partner at RealtyCom Partners LLC, spoke to MHN on what these deals mean for the future of the industry. Additionally, Lefkovits, who is the executive producer of the upcoming Apartment Internet Marketing (AIM) Conference explains what attendees can expect at the conference in April.
MHN: Describe the recent merger between Primedia and Rent.com and what it means for the industry going forward.
Lefkovits: I think that the merger really is very exciting for a number of reasons. I think from the perspective of owner/managers, it brings two powerhouse advertising networks and two different business models under one roof. And it potentially gives them the opportunity to innovate and create products and hybrid business models, and combine intellectual property, customer knowledge and knowledge of the rental space of two big organizations. I think it represents a tremendous increase in sophistication of marketing for an advertising network in the apartment industry, and the ability to leverage off the combined network. What each organization knows is extremely powerful and gives owners and managers potentially deeper insights into what works at each property in terms of a marketing solution. It gets us away from what I believe to be a false dichotomy: asking people to choose between “Do you want to pay for results,” or “Do you want to pay for subscription advertising?” A lot of organizations would say, “It depends.” I think this solves that.
The other piece that interests me about this merger is it brings their investor TPG into the apartment space. They’re the most sophisticated folks out there in terms of investments in general, and they bring a great crop of very, very smart and engaged investment professionals with deep hooks in other marketing sectors there for us. I’m super excited. To me, it’s not just a merger—it’s bringing together three organizations with experts at a variety of levels all together on behalf of apartment owners and managers. It’s very new and it’s very exciting. I think it reflects the maturation of the apartment industry as its own advertising world. It also reflects the fact that we create very high-value customer experiences. It’s a place, it’s a venue, it’s a sector where the customers can spend $12,000 to $50,000 a year, and they’re extremely valuable. This merger probably reflects awareness of the multifamily renter as well.
MHN: Do you think this is where the industry is headed, or is this an anomaly?
Lefkovits: There’s a constant innovation in marketing, so it’s tough to say that we’re going to see more consolidation. I don’t know that. We’ve already seen some consolidation with RealPage buying www.mynewplace.com, so is this a reflection of that? No, I think they’re independent motivations. What I do think that we’re seeing is an expansion of the advertising universe. We’re seeing more owners realizing the power of ratings and review and reputation management. I’m very excited about that new channel. It’s tough to say, “Is that the direction?” I think there are several directions going on at once as people are getting more scientific and more fact-based about proving the value of their different marketing channels and strategies. I think this is going to make it easier for people who play in these two areas to validate what they’re doing. And it’s probably going to make it easier to innovate across these platforms.
MHN: What innovations do you think are coming up the pipeline?
Lefkovits: Apartment Guide has spent the last several years working on innovations that have really tried to capture the essence of Web 2.0 and they’ve been very committed to getting customer feed back and trying to look at new business models. Apartment Guide just announced a reputation-making product, and I’d expect to see that more broadly across both advertising networks. I fully expect that within a couple of years we’ll see them use advertising networks to better qualify prospects by providing some access to ratings and reviews. I think we’re seeing that that’s becoming an increasingly valuable channel. The culture of innovation change that brought them together is probably going to include the same types of customer experience that you see on tripadvisor.com or kayak.com or hotels.com.
One of the things we’re hearing from companies that use ratings and reviews and actively participate is that the ratings and reviews themselves create a more-informed consumer who has more context about the property. So someone who decides to pick up the phone after they’ve read what 10 other peers have said about you has a lot more information than someone calling to see if there are any communities open. People who have the benefit of others’ experience are further down in the sales funnel, and they are more ready to buy. Ratings and reviews help with that sales qualification process by giving them the information they need to make an informed phone call to an agent.
MHN: Would you mind commenting on RentWiki rebranding itself as RentAdvisor?
Lefkovits: I think the change of name, and the change to a ratings- and review-based product is a sign of the times. When they started RentWiki back in 2008 it was felt by many that the industry was not ready to encourage ratings and reviews or to be publicly subject to having their customers’ services discussed online. It’s probably because it’s very challenging to deliver good customer service in a multifamily community, and for many organizations it’s not what they’re best at. We’ve seen an explosion of user-generated content and ratings and reviews online anyway, without the cooperation of the industry. I think this change of name and change of focus reflects the fact that as consumers, those of us in the apartment industry have become used to looking for ratings and reviews to make informed purchases. It seems like it’s become standard procedure and standard behavior in American life, so it really makes financial sense to work with a partner that has a structured review format that perhaps is curated and robust in the way we go to Zagats or other consumer guides for information. I look on aaa.com before I go book a hotel in a place I’ve never been, and that’s perfectly natural and easy to do. It’s become the same standard behavior in multifamily. And I think the folks at RentWiki understand that and have also identified the shift in the industry.
MHN: Let’s talk about the upcoming AIM conference. What’s in store this year?
Lefkovits: Every year at the AIM conference, we try to anticipate where the industry as a whole is headed and bring a lot of content to the operations and marketing leaders. For the last several years we’ve focused on themes and topics that were for the convenience of the owner/operator. This year we’re really focusing on the customer. We’re targeting the customer experience and what these people actually see and experience after they go to Google and type in [for example] “apartment for rent in Chicago.” There’s a long process, and there’s a lot of different places that the consumers and renters touch. And we’re only starting to pay attention to what that whole experience looks and feels like—are people having a good experience getting to us or are they showing up frustrated? We’ll be talking about the online experience vs. offline, as well as things like mobile technology, which has taken off and become critical. We’re seeing trends at apartment companies where mobile traffic has gone from nothing to 10 or 15 or even 20 percent of the total website traffic. That’s what AIM’s all about—looking through the things that make it easier for people to lease apartments, to make it easier for people to rent at the right place at the right time. It’s not your usual conference. We’re looking forward to presenting a lot of new material. It’s going to stretch people and make their heads hurt.