Can whether a rental prospect watches Dancing with the Stars have a material impact on where they want to rent an apartment? The Apartment List says yes, and asks most visitors to its website whether they are a fan of the show, along with another 20 or so questions designed to create a socio-economic profile of the prospect that helps to generate a list of the most suitable apartments available in any given market.
“We’re completely trying to revolutionize and redefine the way that consumers shop for apartments,” says John Kobs, CEO and co-founder of the San Francisco meta-search engine, which includes daily data feeds from most of the major multifamily Internet Listing Services (ILSs), including Rent.com, ForRent.com, and rentwiki.com.
Much like revenue management systems that set pricing by crunching vast supply-and-demand data reservoirs, the Apartment List uses prospect answers combined with how they navigate listings and ultimately select an apartment to feed a demand algorithm that is used to refine search metrics. “I don’t think there’s any secret that we’re using a dynamic selection engine here,” Kobs says. “Even our mascot is a little blue engine web animation that walks prospects through the selection process.”
While the Apartment List features millions of apartments across the country, its highest listing penetration is in the San Francisco area, and Kobs notes that the predictive quality of search results are refined as volume availability increases in any given geographic search parameters. “Obviously, the more urban a prospect wishes to live, the better the prediction engine works,” Kobs says, “but we think that matches up well with the younger renter demographic and where they show a preference to live.”
New Renters, New Faces
The Apartment List isn't the only online apartment marketer that’s getting creative in trying to tap into the Gen Y prospect demographic. On November 1, Chicago-based ILS Apartments.com debuted two television commercials decidedly pointed at the younger, on-the-move demographic. One spot features a Gen Yer and his date encountering his parents in a decidedly compromising position, and the other depicts the same young hipster shaving in the bathroom only to have mom and dad again make an appearance, this time from behind a steamy shower curtain.
“We definitely wanted to have an edge to the commercials but one that resonates with today’s consumer demographic on the move,” says Apartments.com vice president of marketing Susan Bryant. “We had been focusing a large amount of marketing energies the last couple of years on getting absolutely the most out of our website from an SEM and SEO standpoint as well as trying to leverage social media. What we are testing with the commercials is to see whether the audience that we are getting online is the total audience, or if there is more of the demographic out there to be had.”
Apartments.com has set up site analytics based on time and geography to measure incremental gains in traffic from the advertisements. That data will likely show that renter prospect demographics have changed dramatically over the past several years as younger consumers begin to make up a larger share of the total market and show a much higher likelihood to rent versus own their first homes. “There’s a new world of who is really out there renting now and the economics of homeownership in the past three years is really driving the younger group towards renting, and we want to tap into that as we think that crowd is really going to stay there over the next several years.”
One of the marquee names in single-family listing services is also getting serious about the multifamily side of the business. Seattle, Wash.-based Zillow has been building a comprehensive user interface that displays both single-family and multifamily rentals on one map. “24.4 million unique users came to Zillow's websites and mobile applications in September 2011, and more than 4 million of them were current renters,” says company vice president of product and strategy Chloe Harford.
Zillow's proprietary site in the multifamily ILS space is Zestimates, a carry-over from the firm’s single-family site that presents an estimated monthly rent price on all listings, generated from a proprietary algorithim that the company has historically been somewhat secretive about. “Renters make up 70% of movers every year, and Rent Zestimates are a valuable starting point to help determine a fair rental price and smarter decisions about where to live,” says Harford, noting that nearly two-thirds of renters do not research a fair rent price before signing a lease, according to a Zillow/Ipsos survey. “The Rent Zestimate is also useful for landlords to use when thinking about pricing their property and determining a fair and competitive rental price.”
Zillow and Apartment List join multifamily software titans RealPage and Yardi Systems as the latest entrants into the apartment ILS space. In February, Santa-Barbara, Calif.-based Yardi launched its internally developed RENTcafe ILS, followed by Carrollton, Texas-based RealPage’s August acquisition of San Francisco-based ILS MyNewPlace.com. For now, fellow property management software provider AppFolio isn’t likely to build in any competitive ILS functionality.
“Fundamentally, I understand why you want to do it: It ties up that circle of advertising and tracking advertising effectiveness and taking the applicant right into the lease,” says Santa Barbara, Calif.-based AppFolio president and CEO Brian Donahoo. “Owning that system from end to end is important because it can help you determine and manage the effectiveness of your total leasing flow. Our take is that through the right kind of data exchange partners you can do that as well as if you were owning and operating the entire circle yourself.”