PropTech Marketing: The Importance of Educating Customers on Who They Are And What They Do

PropTech companies received a record $9B of venture capital funding in 2019, signifying that what formerly existed as a sub-sector of FinTech now stands as its own category. Even the term PropTech has subsumed the term Real Estate Technology to be more in line with disruptive startup nomenclature like EdTech, HealthTech, AdTech, and FinTech. 

The PropTech sector demonstrates many similarities to the growing “Direct-to-Consumer” or “DTC” category that has been successful at raising significant funding in order to make purchasing durable or commodity essentials easy to do online. The strategy here being that rather than pay fees towards middlemen, brands spend billions of dollars on marketing and advertising to educate and acquire customers. Companies like Casper, Allbirds, Tesla, Warby Parker, Harry’s Razors, and Betterment have all cut out the retail distribution channel to offer products directly to the end consumer via various digital channels. 

PropTech companies use technology to help consumers - and businesses - search, finance, transact, and manage their real estate needs. Through creative business models and artificial intelligence, many of the leading PropTech companies have invented new processes and solutions to match people with their next apartment, office, loan, or roommate.

The main categories of PropTech include: 

1. iBuying: Companies buying and flipping houses. Ex. Opendoor
2. Financing & Insurance: Quick, one-click loans and insurance policies. Ex. Lemonade, EasyKnock, Ribbon
3. Brokerage: Using technology to lower agent commissions and improve the buying and selling experience. Ex. Redfin, Side
4. Co-Working & Flexible Offices: On-demand, short-term office space. Ex. WeWork, Knotel
5. Property Management: Apps for renters that automate rent payments and streamline the use of building services. Ex. VTS, Zumper
6. Alternative Living Models: Similar to how hotel and apartment living are starting to blur, so is how people share living space with roommates or rent dwellings. Ex. AirBNB, Vacasa, Zeus

Outside of these main service buckets,  new PropTech business models are constantly emerging in an effort to offer streamlined, automated real estate solutions. Services like furniture rental, moving and storage and home improvement historically involving numerous phone calls, loads of paperwork and hours of time are now accessible via a similar user experience to buying from Amazon or using Apple iOS: slick, one-click, and simple to acquire. 

Just like the DTC consumer category, PropTech firms need to heavily invest in marketing if they want to scale. Word-of-mouth alone will not drive the customer acquisition that investors want to see. A coordinated and significant investment in earned, paid, and owned digital marketing is imperative. And, if the DTC category provides any learning lessons, and it does, it is that brand marketing is critical to customer acquisition, because: 

• Consumers aren’t willing to buy or use expensive real estate PropTech products from companies they have not seen, heard of, or understand. The learning curve for PropTech companies will be how to keep their CAC (customer acquisition costs) low while building a new brand in a new category without going bust. 

• Search marketing is limiting simply because how can consumers search for a product they don’t even have the awareness exists? (ie. ibuying, co-living, alternative financing)

• The PropTech category is banned from targeted advertising on Facebook and Instagram because it is considered part of the housing category by Facebook, meaning that it is subject to Facebook’s non-discrimination compliance as a result of their settlement with the FHA in 2019.

The Bottom Line: PropTech companies understand the power data has in fueling their technology-driven products. But not all PropTech companies understand it is just as important to utilize data when developing their marketing and advertising strategies. Using data to predict and communicate with new customers across paid, earned, and owned channels is the key to achieving scale and ultimately success.

LEARN MORE about Audience Town's PropTech marketing solutions.