Category Archives: mortgages

The moral hazard of superheroes and social media


Say, perhaps in a dream, you are Catwoman. You have to chase bad guys through the middle of a city. On your way you need to smash a few walls, crush a few cars, but that’s OK — superheroes don’t have to clean up the mess.

That’s one example of moral hazard, the concept that people protected from risk tend to act in different and often unhealthy ways. History is full of unintended disasters caused by moral hazard — consumers or businesses who pollute the environment because they are decades away from the eventual impact; the recent subprime mortgage meltdown in which unaccountable sales agents or banks made silly loans; or the classic teenager driving his dad’s car way too fast, since he won’t foot the repair bill.

Which brings us to advertising. Marketers are itching to broadcast inside social media, and some of the best efforts involve innovative personal connections (Scott Monty at Ford is one shining example). However, many companies are beginning to simply buy their way into human networks, and the result is a growing pollution of quasi-authentic messages. We’ve written before in BusinessWeek on what a future world of sponsored opinions might look like. Since no individual consumer, or business, bears the cost of the broader clutter — they are protected in moral hazard — the barriers to entry are small. You can sign up now to have third-party companies broadcast inside your Tweets, and make a few pennies, so what’s the harm? The result often looks like this.

Yes, we’ve been critical of such paid pollution, which at root is different from advertising because it misrepresents the source of the message. So in the coming weeks we’ll explore some of the positive ways marketers are using social media, without damaging cars or buildings. Stay tuned.

Web location, location, location


Our phones have been ringing lately with calls from brokers of mortgages, windows, cabinets and siding services — all asking how to advertise now that the real estate bubble has burst.

We say go online. A new report predicts that real estate web spending will outpace offline media by 2012. Today, about 65% of real estate advertising is spent in newsprint vs. 35% online; that will soon be a 50-50 split. Google, behavioral targeting, videos in banner, and real estate content verticals should all be in your ad mix.

The web is also a treasure trove for home targeting data. WSJ has published free maps of areas of the U.S. where home mortgage defaults will be highest, when $600 billion in U.S. adjustable rate mortgages reset at much higher rates next year. (Note, even the affluent are going to get squeezed in 2008, and this will set off hot spots of home sales churn.) Companies such as Mediassociates can provide customized analysis of ZIP Codes where home values or market churn are highest (and of course tie it to brilliant media plans). You can also find interesting heat maps at Zillow showing areas of hot home values, such as these pretty pictures of Florida.


The average home price in Florida is $212k, but by zooming in, you’ll find orange and red highlights indicating homes of higher value ranges. Plot it against your own geo target, and even a small business owner can pinpoint home-service marketing at the ZIP Code level. Isn’t it nice to find such sweet tools for free online?