For anyone struggling to make their mortgage payment or whose house is currently upside down, the offer of someone paying your mortgage payments would seem like a dream come true. That is what an advertising company, Brainiacs From Mars, says it plans to do. They recently signed a deal with one homeowner to cover their home mortgage payment of $2000 for three months, and possibly up to a year. Before you get your hopes up that this is a solution to your current mortgage problems, it’s important to take a realistic view of what this offer is — nothing more than a publicity stunt. How do we know this? Because it doesn’t make financial sense.
This concept reminds me of car wrap advertising on a larger scale with fewer positives. During the dotcom bubble when advertising space was scarce and there was still high demand by advertisers, car wrap advertising became a popular way for companies to get their names out. The cars were basically wrapped in a company’s logo and the owner of the car could get paid several hundred dollars a month (and in some cases a free car to drive). As soon as the dotcom bubble burst, however, the demand for car wrap advertising disappeared to the point where it is now basically a small niche market where people can expect to get paid a small denomination gift card a month if they are even fortunate enough to find a company that doesn’t already have thousands of people in line to do this.
The problem is that house advertising for those who hope to get paid enough to cover their mortgage payments has many of the same problems that car wrap advertising has, plus some additional ones. Here are a few reasons why this concept is bound to fail as advertised, although it may become a niche advertising area where home owners will be paid much less than their actual mortgage payment:
Why Pay Someone Else’s Mortgage?
Think about it just a little bit and it quickly becomes apparent that paying off someone’s mortgage for advertising space on their house doesn’t make any financial sense. Why wouldn’t the company simply buy the house and make the mortgage payments themselves? This would give them complete control of the house plus they could rent it out to drastically reduce their costs. The simple fact is that if this type of advertising ever did become popular, the prices that the advertising companies would be willing to pay would be far below the full mortgage payment.
Houses Are Located in the Wrong Place
Where do you see billboard advertising signs? If you said, “not in the suburbs” you would be absolutely correct. Billboards are along high traffic roads so that as many people as possible will see them. A house that is covered in advertising in the suburbs is practically worthless because so few people will see each day, and those that do are probably the same people day after day. If your house was along a very busy street or a highway there may be a chance that this would work, but who wants to live with all the noise and pollution that comes with living next to a busy street?
Too Many People Interested
The fact that nearly 40,000 people applied for getting the single house advertising spot available shows that there are far more people that want to do this than there is ever hope of finding advertisers to fulfill the supply. The company says it plans to put house ads on 100 homes with the hope of one day covering 1000 homes in advertising. Even with their most hopeful projections, they already have far more people than they will ever need. This means that they will only pick the homes that best suit their objective leaving the vast majority of people without a chance of ever having this opportunity. This also means that the price that the advertising company needs to pay homeowners to do this will be a fraction of what the actual mortgage payment would be due to supply and demand.
Glut of Advertising Space
The only reason car wraps had a time of success was due to the extreme lack of advertising space at the time. That is not the case today. Why would advertisers choose an advertising medium that provides them less bang for their buck than traditional advertising avenues that are already our there? The only reason is that it would be a novelty and gain media attention — something that will quickly wear off once a few of these have been created. There really isn’t a path to bring this advertising medium beyond novelty advertising.
Problem of Backlash
While the homeowner that gets their mortgage paid may be happy with the advertising all over their house, chances are that all the surrounding neighbors aren’t going to feel the same way. In fact, the house could very well devalue the surrounding houses (who wants to live next to a huge advertisement?) causing a lot of negative reaction. While some celebrities may want any type of publicity they can get, most companies would rather avoid negative advertising at all cost. The potential for a lot of bad publicity will greatly limit the number of advertisers that would be willing to do this type of advertising.
What Will Likely Happen
What you can expect to see is a lot of scams around this concept pop up much like they did around car wrap advertising. What the house advertising scams will do is claim to offer an insiders track to getting advertising on your house (for a price) or a list of companies that offer this type of advertising (which is useless). This is how many of the paid to drive scams look today, and with so many people desperate to find a way to help lower their mortgage payments, they are prime targets for these scams.
Even with all the above warnings, those that want to apply to have their house turned into a billboard can apply here.
(Photo courtesy of Brainiacs From Mars)