It's an old adage. "We know that half of advertising doesn't work. The problem is… We don't know which half."

Realtors® are fortunate in this regard. They do know what advertising doesn't work. Or, if they don't, at least they have the information available to them.

The information can be found in the annual National Association of Realtors® (NAR) Profile of Home Buyers and Sellers. Unfortunately, the information about advertising effectiveness - or the lack thereof - is easily overlooked, as it is somewhat buried in a literal mountain of other data. There are lots of gems in the Profile that are, similarly, easy to overlook.

NAR has been publishing the yearly Profile for more than a decade now. There has been an overall consistency to the questions asked and the topics covered, so that, in many cases, definite trends have emerged. This is clearly the case with respect to advertising effectiveness.

Think of advertising as an information source about a particular product. In the case of residential real estate, the product would be a home that is for sale. For a typical listing, many different forms of advertising will be used. Among the more common forms: placement in the MLS, posting on Internet sites, yard signs, newspaper ads, home books or magazines, and open houses. Of course there are other less common forms such as television and even bill boards.

With the exception of the MLS, what all of these advertising forms have in common is that they are meant to provide at least initial information about the availability of the property to an audience of potential home buyers. In the case of the MLS, information is provided to other agents who, in turn, will provide it to potential buyers.

We say that an ad is effective if, from among that audience, it provides the information to a person who becomes interested and ultimately purchases the property. If the ad doesn't do that, then, no matter how lovely or costly it might be, or how large an audience it reached, it is ineffective.

(O.K. Timeout. I know that real estate advertising may have other purposes as well. One of its other purposes may be to provide an agent with good leads - regardless of whether they purchase the particular property advertised. Another purpose may be - as in a splashy ad in the Sunday paper - to enhance the listing agent's reputation among some target group of readers. Here, we are considering the purpose of the ad from the perspective of the client - the owner and would-be seller of the property.)

We learn a lot from the Profile about the use of ad forms by home buyers. Not surprisingly, they tend to use a variety of types of ads as sources of information. The Internet is the most widely used source of information, whereas real estate agents are the second most used source of information. 51% of home buyers said that yard signs were an important or very important source of information to them; on the other hand, only 23% thought that of newspaper ads.

But what about the effectiveness of advertising forms? Through what form of advertising did buyers find the home that they ultimately purchased?

The effectiveness of Internet advertising continues to grow. This past year (July, 2012 - June, 2013) 43% of buyers found on the Internet the home that they ultimately purchased. (Note: they didn't buy the home on the Internet; they found it there. Almost all buyers used an agent.) The information source second to that was real estate agents, which would be attributable to the MLS. 33% of buyers learned of the home they bought from an agent. The third category? Yard signs and open houses at 9%.

85% of the effective ads come from these three sources: Internet, agents (MLS), and yard signs. The others, not so much. Only 1% of buyers found their home through a newspaper ad. Another 1% from a home book or magazine.

In real estate, at least, we know what advertising works and what doesn't. But we sure spend a lot of money on what doesn't. The explanation of that phenomenon I will leave to others.

Bob Hunt is a director of the California Association of Realtors® and is the author of Real Estate the Ethical Way. His email address is This email address is being protected from spambots. You need JavaScript enabled to view it..