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The State of Things, Part 2

Our industry had its best year since 2007!

My last blog, titled "The State of Things," reported on the housing and non-residential construction economy, 2016, with a peek at the outlook for 2017. It was based on an AIA report, The AIA Firm Survey.

Now I am reporting on new information from the NAHB. Then I'll talk about how media is transitioning to meet the information needs and interests of your customers and prospects.


According to both the NAHB (and AIA), our industry had its best year since 2007, which was the "peak of the market." Most forecasts predict an even better year in 2017, so we'd better make hay while the sun shines. The next dip looms ahead in 2019.

NAHB housing market index

Housing Market Index (Dec. 2016)

Single-family home starts were 781,000 and multi-family were 397,000. YOY 2016 v.s 2015 saw better growth in SF than in MF with particularly good growth in the "luxury" home and apartment segment. Luxury homes are defined as 4,000 sq.ft. or bigger. Luxury apartments are defined as 1,800 sq.ft. or larger. This is the sweet spot of the market for all of us, so this is good news.

NAHB Housing by type graph

Housing starts by type (Dec. 2016). Single family v. Multifamily starts.

Likewise, there was, and is, particularly strong action in kitchen and bath remodeling. Kitchen remodels are getting bigger again, with cabinet installs around the house.

Buyers are baby boomers, NOT millennials. Everyone is wondering when millennials are going to buy houses because there are 83 million millennials, the largest population cohort in history. Some wonder if they will buy houses at all. They will, but it will not be the production townhouses in the exurbs. Millennials are more likely to live in cities and close-in suburbs, which is very good news for us, moving forward. Why?

Because millennials will buy "location, location, location"... existing houses in walkable neighborhoods with good amenities and mature trees. This will drive remodeling growth to north of $300 billion annually, especially since the sales of existing houses is now approaching 6 million units annually.

When a house changes hands it gets remodeled, usually within 18 months of taking ownership. Paint, hardware, flooring, lighting, finished basements and attics, water heaters, kitchens and name it...will be needed for these remodels. You can already see this in older cities like Pittsburgh and Detroit, Chicago, New York and Washington. D.C.

Millennials like a city with good architectural bones and amenities close by. It's about good "experiences." Millennials also crave convenience.

On the commercial/institutional side of our industry, 45% of the market is R&R. In the Northeast it’s over 50%. The action is, once again, in the commercial sector: hotels, office, retail. Institutional has flattened out a bit because of struggling state and local government budgets. But private schools? It's a building and remodeling arms race! In fact, the hottest housing market for younger residents is college dormitories! And these are not the dorm rooms you and I remember. These are luxury resorts!

The forecast for 2017 is 855,000 single-family and 384,000 multi-family. Interest rates on fixed mortgages are expected to go from 3.6% to 4.5%. I don't believe interest rates have that much to do with our high-end business. The stock market, a better indicator of our customers’ confidence, is doing fine.


In 1995 right before the internet revolution, I had a media business that did $10 million with one magazine and one trade show. Today, a $10 million media business will have 10 magazines, 10 websites, 15 trade shows, 52 e newsletters, 3 social-media platforms, web seminars, in-person seminars and trade shows, hardcover books and videos. Everything is "fractionalized." Likewise, the #1 rated TV show used to have 40% of households; now it has 14%.

The point is, we all have to do more: create more touch points for our customers, more choices, more convenience, more user-friendliness.

media types

Media types search cloud.

Back in the day, you ran an ad with us and we sent you 300 sticky labels from readers who circled your bingo number and asked for your catalog. You'd slap a sticky label on an envelope, stuff it with your four-color catalog and send it out. You could predict that 300 catalogs would result in as many as 15 orders. That customer probably got one or two catalogs from your competitors, so your chances of getting that order were pretty good because the customer was choosing from among one to three suppliers.

Now, you run a magazine ad and what happens? You don't really know! Half of your advertising works but you don't know which half! What does the reader do when he likes your ad? He goes to your website. Because he's too lazy to type in your web address, he googles you. Then what? Now he's got 10 pages of information about all your competitors. Especially the low-cost competitors.

This is the media challenge we ALL face. How do we stand out from the crowd, grab the attention-deficit customer's attention, win over his heart and his mind? I want him to read ME. You want him to read YOU. So you and I are taking turns grabbing the customer’s attention. Or, we can do it in partnership.

I have more customers than you do. Home Group audience total is 10,000,000. AIM, our parent company, is even bigger. Now I shouldn't gloat, because a lot of the information we sell, we sometimes give away. Yes, consumers pay for Home Show tickets and magazine subscriptions or newsstand copies, but they can also get it for free, from our websites.

YOU underwrite this free education for buyers with your advertising and your exhibit booths.

But I digress. Here are 10 things you can do to cut through the deluge of information available to your customers, and stand out as the quality supplier:

1. Take good photos

2. Be authentic. Tell stories. Be interesting. Don't "hard sell."

3. Use all the media tools, the touch points, because when a customer wants to buy your product, they will research it to death, looking at magazines, visiting websites, watching videos, attending trade shows, following your social media, reading e media and logging on to online education. There is no "generational divide" between print and digital. Both are used by all age groups.

4. Take an editor to lunch. Return his/her phone calls. Be a resource for the media.

5. When you set revenue goals, calculate how many sales leads you'll need to get to that number. Work backwards from the number of leads required to set a marketing budget. 3% of revenue spent on marketing is a minimum. 10-15% makes you ubiquitous. Ubiquity matters when breaking through the clutter and reaching customers. Don't over-think marketing ROI. Marketing works. Apple, Coke, ATT, GM... the companies with the best branding...they aren't all stupid.

6. Re-think your message. Most of our messaging does not consider the WIFM (what's in it for me?) Who cares? Put your audience's interest first. You know from dealing with clients what they care about. Address this in your messaging.

7. Stop looking for the magic bullet. You need the whole round of bullets to hit your target. Take aim with an integrated media approach.

8. Don't be adversarial with advertising sales people. Ask them to bring you ideas based on doing their homework about your business. If you treat them right, they will be motivated to bring you the best ideas. Otherwise, they’ll take those ideas to your competitor.

9. Think about media the way you do about making sales calls. It's about creating trusting relationships. Most of the time it's not just a price-driven transaction, it's about delighting a customer.

10. Sell off your front foot. The recession is over. The election is over. People want to buy, even if they don't want to be "sold." Never apologize for the cost of good quality. Take time to explain why your product is worth it. Tell this story often, in as many different ways as your media allows.

Together we will inform and inspire our mutual clients.

Buying Guide Spotlight

Crown Point Cabinetry

Crown Point Cabinetry

Manufacturer of custom cabinetry in period styles: Shaker, Victorian, Arts & Crafts, Early American & traditional styles.

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The State of Things

Magazine subscriptions, newsstand sales, website traffic, online education attendance, e-cast open rates, social media engagement are all up as much as 100% year-over-year.