Determining a budget for your marketing can be difficult. The market can fluctuate, and your needs could change day-to-day. As a real estate professional, you aren’t necessarily a trained marketer and many of the marketing techniques you’ve been using could quite possibly be what everyone else seems to be doing. (After all, it has to be working, doesn't it?)
It’s possible that because of this, you are spreading your advertising too thin, hoping not to miss out on potential buyers. Or perhaps because you’re so busy, you simply place the same ad over and over again without a really clear strategy or tracking in place.
We understand it’s not easy, which is why we’ve written this article to help you better plan for and calculate an effective real estate marketing budget that will put you in the best position moving forward.
Tip 1: Plan Ahead!
As the saying goes: Not making a plan is planning to fail. Having a plan, that is, a formally laid out marketing plan, is extremely important, and we can't emphasize this enough. You shouldn't be rushing through the marketing process every time you get a new listing. So, whether you're confident enough to plan annually or want to plan quarterly for higher flexibility, some type of plan can help you lay out your marketing dollars like a template that can be applied as you move forward--with plenty of wiggle room.
Remember what strategy actually means: "It's fundamentally the movement of an organization from its present position to a desirable but inherently uncertain future position" (per Harvard Business Review). Research shows that it's the marketers with a plan that end up qualifying as being the best-in-class.
The more prepared you are with reference to the market, the seasons, and the needs of your business, the wiser you’ll end up spending your precious advertising dollars. Consider the way you prepare to take buyers to different properties. You need certain data in a certain order that ensures you take them to the right properties, possibly in the right order to be persuasive, and have the right information to provide so they can make an informed decision about the best fit for them. Your marketing is the first part of the way you'll reach buyers and start the sales process, so why should it be treated differently?
No two properties are the same, so the buyers looking at those properties aren't likely to be exactly the same either. The people looking for a first home are going to be looking for different things than when you're marketing to second home buyers, and a $500,000 condo is going to provide a completely different living experience than a $2 million house. This should absolutely be reflected in your marketing.
Having a plan means having the tools you need to react to each listing and each buyer differently. When you build your real estate marketing plan be sure to identify the most common types of listings you will have and build out a strategic and calculated marketing plan around that--so that when you are ready, the template is already in place, you know how much you need to spend, and you can much more effectively place a well thought-out campaign.
Tip 2: Do the Math
Math should certainly pay a part in planning out your different marketing campaigns. It’s key that you look at real numbers. A sure way to waste dollars is to use a one-size-fits-all approach when you clearly don’t have the opportunity to make the same amount of money off every property.
In general, planning to spend about 10% of your commission income on marketing for that listing is a good rule of thumb. Remember, you have to spend money to make money, and your marketing is going to cost you a little more early on to build your brand, as well as to maintain it and stay top of mind.
As we said, not every listing requires the same amount of marketing or even the same kind of marketing, all of which effects how much marketing dollars you need to spend on it. There are a number of variables you should use to ensure that you don't spend too much on a property that won't return much, and don't spend too little on a property that ought to be earning you quite a lot. Here's just a few things to keep in mind:
- Your commission
- Your recent sales history
- Value of the property
- Local and regional market conditions
- Market forecasts
- What your competition is spending
- Typical advertising costs for various formats
Tip 3: Don't Buy Ads Just to Please Sellers
If the seller is local or coming into town, there can be pressure to prove to them that you're doing your job. The temptation may be to buy a classifieds ad, because that's "what's expected." We can only say this: DON'T.
That's not to say an ad in the classifieds section is a bad marketing tactic — it might be a good idea, depending on the listing and the buyers you're trying to reach. But don't buy one just to make an impression on the seller. If it's not improving the bottom line, then it's a waste of your money. By planning ahead and being more strategic with your marketing, you can not only please the sellers but also make a true impact.
When you have a documented plan in place, you'll have other ways to prove you're working hard for their money. You can put together a presentation based on your plan, and you can build reports based on your goals and the metrics used to measure whether your efforts are effective. You're the expert, and you're the one they hired to get the job done, and a plan will give you the confidence to prove your work in a meaningful way.
Tip 4: Don't Fall Victim to Common Myths!
In marketing there are all kinds of myths that get in the way of marketers making educated decisions. Here are a few we see pretty often in the real estate industry:
Myth: You should only run your ads in the classifieds.
- Truth: There's no evidence to remotely support this. In fact, we've already provided information that lets you know content sections online are more effective, and that's even more true in print. That's because it's not about the page the buyer is looking at; it's about the content on the page, what the customer is there for, and the positive associations you can use to differentiate your brand from the competition.
Myth: Only ads on the top right of the first five pages will work.
- Truth: Again, there's no evidence to support this. Content pages are read throughout the publication, making them equally effective.
Myth: Print can't be tracked.
- Truth: Gone are the days this might ever have been true. There's a number of methods you can use to track whether or not a quality customer is converting because of your ad, not least of which are promotion codes and phone numbers. What's more, even Google Analytics can track the impact of your print ads.
Myth: If my competitors are doing it, I should be too.
- Truth: If that's what's right for your listing, it should certainly be an option, but the real name of the game is brand differentiation. How can you stand apart from your competition if you seem just like them? Blow the "standard" out of the water by being open to new options.
Tip 5: Spend the Money to Be Where Your Customers Are
As we said, every listing is different, and you'll be looking for different buyers for each one. We really can't understate the value of a plan, and a plan gives you yet another benefit — targeting. Believe it or not, targeted real estate marketing doesn't need to cost more, and it may even end up costing less in the end. It simply requires you to understand who the potential buyers are for each individual listing so you can put advertising where they're going to see it based on what you know.
Consider the fact that 90% of home buyers will use the web during their property hunt, and 70% of consumers prefer to get to know a brand (that's you!) through their online content. Yet that doesn't mean all your effort and advertising should be digital — it may be far more effective to reach out through direct mail and by neighborhood involvement that will generate referrals.
Remember, your real estate marketing needs to start with a plan. From there, you can do the math and ensure that yearly real estate marketing budgets are reasonable, avoiding the risk of wasting your money by haphazardly spending on what you think you might need. If you still have doubts, don't be afraid to contact your marketing partners; we can help you draft an effect plan and budget and keep you on the track to success.