During the first nine months of 2007, residential building was down 24% from the year-earlier period. The nonresidential building category, which includes manufacturing, commercial and institutional structures, increased 3%, while nonbuilding construction, which includes public works, climbed 6%.
Russ Ellis, publisher of Hanley Wood Business Media's Architect and Architectural Lighting, said the commercial category is still very healthy. "There is some concern that the moderate decline in the housing market and the financial issues that are facing the housing market could have some negative impact on the commercial market, but we don't see it really slowing down in the near future," he said.
Commercial market growing
And, despite declines in residential construction activity, there are still plenty of opportunities for marketers. According to Hanley Wood, home builders Centex Corp., D.R. Horton, K. Hovnanian Homes, KB Home, Kimball Hill Lennar Corp., NVR Inc. and Toll Brothers. combined reported nearly $9 billion in sales and 35,000 new houses for the quarter just ended. "Given the volume of sales and building represented by these companies ... marketers should map out their strategy for getting their share of millions of windows, cabinets, faucets, fixtures, square feet of finished flooring, countertops, roofing—you name it," said Warren Nesbitt, group publisher of Hanley Wood's Builder/Multifamily Groups, in an e-mail.
Because the construction industry encompasses so many categories, it's crucial to segment the audience, said Julian Francis, VP-publishing director at Reed Business Information's Building Group. "The construction market is more than $1 trillion a year," he said. "It's a huge part of the U.S. economy, and just saying `I'm marketing to construction' [isn't enough] to identify who that audience is. What we're seeing is a much greater need to target very specific segments; so not just builders, but builders that are doing certain things. Not just contractors, but contractors that are in a specific type of contracting."
For instance, marketers looking to reach smaller contractors must consider the significance of retail home centers such as Home Depot and Lowe's, said Neil Brown, managing partner of marketing agency Fusion b2b, which specializes in marketing to contractors, architects and construction-industry manufacturers. Larger contractors will generally buy products through national distributors, he said, with a separate organization often specifying and purchasing products for them.
Brown said his agency helped client Ideal Industries introduce a line of wire connectors through both the distributor channel and the home-center retail channel, with each requiring a different approach. The product packaging was the same for each channel, he said, but the retail effort relied on merchandising options such as signage, while the distributor channel featured a display where visitors could take a sample bag of the connectors. "We could sample in the professional channel because we know these guys are going to buy thousands of connectors," he said. "In the retail channel, we wouldn't sample because one sample bag would complete my landscape lighting project this weekend in total."
Targeting the construction industry increasingly requires having a strong Hispanic marketing effort. For instance, Brown said, when Fusion b2b helped USG, a manufacturer of building materials, brand its SheetRock Tools line, the agency created all packaging and merchandising in English and Spanish. "We were able to identify through Census Bureau reports that something like 67% of drywall contractors are Hispanic," Brown said.
USG believed that number was even higher, he said. "USG was able to identify through firsthand knowledge of selling SheetRock wall board for 100 years that almost 90% of all drywall contractors are Hispanic. Talk about a major driver in your market."
Selling big-ticket items
Some companies selling big-ticket items find that nontraditional marketing efforts work best. Nick Mavrick, VP-global marketing at Volvo Rents, a division of Volvo Construction Equipment North America whose franchises carry equipment and tools for the construction, commercial, industrial and homeowner markets, said his division relies heavily on data to identify its most valuable customers and market to them with a highly personalized touch.
"To capture the attention of a VIP customer is not easy," Mavrick said. "[For Volvo Rents,] it's traditionally not done through direct mail or through magazine advertising because you have to be noticed among all of the noise of our competitors who are advertising in traditional media."
Instead, the company will invite those VIPs to events such as NASCAR races, or hunting or fishing trips, spending as much as $3,000 a year per customer.
Still, many marketers are successfully relying on print advertising and events—especially targeted, local events—while increasing their online spending. In particular, Ellis said, Webinars are gaining ground. However, Ellis said, most marketers in this industry are probably spending only 3% to 4% of their ad dollars online. "Advertisers that are pretty forward-thinking and are looking to use the Internet as a really strong tool are applying more like 10% to 15% [of their ad dollars online], and I think that's probably the range that most marketers should be in to maximize their overall messaging reach and frequency, and have those multiple touch points that allow them to communicate with folks through multiple media," he said.