Publishers Use Direct Approach to Sell Homes : Mailings: Irvine firm’s glossy booklets carrying ads from 165 builders target renters.
Merchants use targeted direct mail these days to sell everything from magazines to mausoleum spaces, from computers to credit cards.
So when Michael Peralta was thinking of ways to expand his business last year, it was natural for him to think of direct mail as a way to peddle new homes.
The resulting publications--four glossy booklets carrying $600,000 worth of ads from 165 builders--began arriving last week in apartment renters’ mailboxes throughout Southern California.
And Peralta and Paul Bierne, who share the title of associate publisher of Homes For Sale Magazine in Irvine, arrived at the annual National Assn. of Home Builders convention in Las Vegas earlier this week with a big success story to tell.
The reception by builders is part of it.
Peralta, the creative side of the management pair, and Bierne, the marketing specialist, initially planned a single 24-page booklet to cover all of Southern California. But the ad space sold out so rapidly that they added another, then a third and finally a fourth, dividing the Southland into four sections to accommodate them.
Another part of the story is in the early indications that the mailer, called Homes for Sale Companion, is being well-received by its target audience. Companion is a slimmed-down version of the much larger Homes for Sale, which runs about 400 pages per issue and is not mailed but distributed free to stores, banks and real estate-related businesses.
RecreActions Group of Cos. said salespeople at four of the Newport Beach-based building company’s San Diego and Orange County projects have already reported a total of eight personal visits and half-a-dozen phone calls from apartment renters who saw the just-mailed booklet.
“That much activity within a few days of the things hitting people’s mailboxes surprised us a little,” said Susan Shook, vice president of marketing.
Using direct mail to sell homes is unusual, according to Chet Dalzell, spokesman for the Direct Marketing Assn. trade group in New York.
“Because the purpose is to generate leads for builders” rather than sell products directly by mail, said Dalzell, “the targeting you can do with direct mail makes the message a lot more personal and relevant.”
Imran Currim, a professor of marketing at UC Irvine Graduate School of Management, said well-targeted, direct mail campaigns can be highly effective.
“If a mailing is done right, it can bring benefits that far exceed the costs,” he said. “The key is to identify the locations in which people are more likely to purchase the kinds of homes being advertised. Income is an obvious way to target, but there are others.
“For instance, in Newport Beach there is a large apartment complex called Park Newport that seems to be a place for people on the move, for executives in the process of relocating from one area to another. They are ideal targets for a mailer for new homes for sale.”
Peralta got the idea for an advertising booklet aimed at renters while he was seeking ways to improve Homes for Sale’s revenue in the midst of the recession.
“I knew we couldn’t increase our ad rates or sell more ads in Homes for Sale,” he said. “We are holding steady (with ad sales for the magazine), but we sure aren’t growing.”
Instead of pushing the big book, Peralta decided to broaden the publication’s appeal by giving builders an additional sales vehicle.
“Three years ago, during what I call the wonder years of the Southern California home-building industry, it didn’t seem to matter what you built or how little you advertised,” Peralta said in an interview. “If you had new homes for sale, the people found you and you were successful.”
The recession, which began for the building industry in late 1990, changed all that. By mid-1991, most builders were desperate for customers.
As new home prices fell, some builders began giving away freebies--vacations, appliances and even new cars--to lure buyers.
“I started studying field data from our nine sales reps, who visit every new home development in Southern California every month and collect as much buyer profile data as they can,” Peralta said. “And I started thinking that we needed to identify and provide builders with niches for rifle-shot advertising that got right to a specific target, instead of the broader shotgun advertising they were doing.”
The result of Peralta’s ponderings is the Homes for Sale Companion, a downsized version of Homes for Sale, targeted at high-income renters.
Each 24- to 32-page booklet--for Orange County, San Diego County, the Inland Empire and the San Fernando Valley--is mailed to 30,000 apartment dwellers per month.
Builders can buy one or more regions and must purchase ads in all three monthly issues during a quarter. The minimum investment is $1,500 for a single one-sixth page ad for three issues in one region. In addition, the builder must also be an advertiser in Homes for Sale itself, where the minimum purchase is $3,600 for half-page ads in three consecutive issues.
Most of the covers for the four booklets have already been sold a year in advance--at $5,000 per issue. A waiting list of advertisers is being compiled for several of the books, including the Orange County version.
“That’s one of the key selling points,” Peralta said. “We have promised to keep each issue to 32 pages and to give the initial advertisers right of first refusal for space in the subsequent quarter’s issues. So some builders that didn’t buy at first now have to wait until someone else drops out before then can get space.”
It’s a little easier to get a copy of the Companion.
Recipients are selected from a commercially prepared mailing list that is based on income and renter status. A renter must have a base income of at least $40,000 a year to get on the list, except in Orange County, where the minimum is $50,000 because housing prices and incomes tend to be higher, Peralta said.
Peralta said the privately owned magazine’s board of directors has been so enthusiastic about the apartment-directed Companion that it recently approved two more niche publications.
One, code-named “Rich and Beautiful,” is a direct-mail booklet that will be aimed at potential luxury home buyers, Peralta said. The target audience is Southern California residents who currently own a home and have at least $100,000 annual income.
“We’ve only been working on this a few weeks and the initial list already has 124,000 names on it,” he said.
The second publication will be called Active Living and will carry home ads for people nearing retirement age.
The booklets will be mailed to homeowners between the ages of 55 and 64 with annual incomes of $75,000 and up. The recipients must also have owned a home for at least 20 years, Peralta said.
And that’s just a start. Other direct-mail booklets might be targeted at ethnic groups, at people looking for resort and recreational properties “and a whole lot more,” Peralta said.
Direct-Mail Home Sales
If you’re on the mailing list, here’s why:
The target audience is renters with a minimum annual income of $50,000 in Orange County, where prices tend to be higher, and $40,000 elsewhere.
Lists of high-income renters are purchased from Direct List Technologies in Orange. DLT uses 27 sources to verify a person’s renter status and income, including financial statements filed when taking out a loan for a major purchase, applying for a credit card or from credit reporting agencies like TRW. They also use post office change of address forms and U.S. census data.
Editions:
Homes for Sale Companion comes in four editions, each mailed to 30,000 renters a month:
* Orange County: Including Long Beach, La Mirada and Cerritos in Los Angeles County.
* Inland Empire: Riverside and San Bernardino counties and the San Gabriel Valley and Los Angeles County west to Pasadena and down the San Gabriel River Freeway through Whittier and Downey to Long Beach.
* San Diego: All of San Diego County
* San Fernando Valley: Including Pasadena, Hollywood, West Hollywood, Thousand Oaks, Moorpark and Santa Clarita Valley.
Source: Housing Publications Inc.
