Episode #22 – Preparing For The Worst: How To Improve Your Marketing (Even In an Economic Downturn)

You're listening to the REI Marketing Nerds podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of Ad Words Nerds, a high tech digital agency focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition and live a freer, more awesome life. And now, your host, Dan Barrett.

Dan: Hello everybody and welcome to this week's REI Marketing Nerds podcast. As always this is Daniel Barrett here from AdwordsNerds.com. How are you, people? I hope you are doing awesome. As I am recording this, we are heading into the holiday season. It is freezing out in Connecticut. [0:01:01.8] I got to be honest; I'm sort of like my head is all topsy-turvy. I barely know what's up, what's down and it's been a wild couple of weeks. I was actually out in San Diego recently for a really high-level real estate investing mastermind. I got to meet a lot of awesome people, some current clients, some past clients, really, really intense kind of extremely high-level, high-performing real estate investors. It was a really interesting crowd. If you have ever been around a hundred of those people all at once, it's pretty cool how they all kind of figure each other out and get along. I had a blast. I learned a ton. I came back and I was thinking about how I could distill down what I picked up at that mastermind for the podcast. Most of you guys know I'm a marketing person. I' m not a real estate person. I came to the real estate market kind of in a roundabout way. [0:02:00.0] I always say, "I let my clients do the deals. I'm the ads guy. I'm the marketing guy."

To be honest, a lot of this stuff that people are discussing there, it's kind of above my pay grade. It's deep real estate stuff. There is a ton of other awesome real estate investing podcasts you can go out and find for that stuff. I really wanted to find the angle that I could do that's going to be unique to me and that's going to be the kind of thing that my listeners are going to be interested in. One of the big overriding themes of this event was the feeling that the market is starting to slow down. The investing market has been getting tighter, it's been getting harder to find deals, sellers are less motivated, you know what's happening with the economy – just a lot of uncertainty, a little bit of anxiety, a little bit of a sense of how do I adapt to whatever is next. [0:03:05.0] For me, I came home thinking, alright, what is our plan at Adwords Nerds, what's our plan for our clients? How are we going to adapt for our clients? It really made me sit down and write out a list of ways that we can save money if things get tight, how do we lower cost per lead, how do I get more for my dollar. I'm going to share some of the major ones with you. I'm going to try to do this in way that's going to be relatively channel agnostic meaning you can use it for any of your online marketing channels not just for Adwords but as I often do I will probably reference Adwords or Facebook a fair amount of time because that's what I most familiar with but these are things you can use really in any marketing channel. If you can apply even just one of these processes to your marketing you're going to save a ton of money over time. [0:04:01.1] I mean this is one of those things where lots of people talk about it, very few people actually do it, and even fewer people than that actually do it systematically and regularly and that is where all the money is. You have heard me talk about this over and over and over again so I won't belabor the point but doing a little bit every single day is a lot better than most people are ever going to do. So don't make it too hard, just get out, take some action.

Let's start with money saving process number one; that is the 80/20 Analysis. We've talked about 80/20 Analysis before, this idea that 20% of inputs are going to be 80% of the outputs so like 20% of my ads produce 80% of my leads, 20% of my keywords produce 80% of my clicks, 20% of my marketing produces 80% of my deals, right? [0:05:00.1] This has become popularized over time. Tim Ferriss talked about this a lot, kind of blew it up. There is a really great book that's called "The 80/20 Principle" that was kind of the first book on this to really make this concept a mainstream thing. I highly recommend that if you want to look into it more. But a lot of people get hung up on the actual numbers, 80/20, and I'm going to be honest. In most of the marketing that we do in the most motivated sellers' space, it doesn't really work out that way. It's not like 80/20 exactly. Instead I want you to think of this as a mental model where you say what tiny number of inputs produces a large chunk of my outputs. You're looking for leverage. You're looking for areas where things are in balance and that is going to save you a ton of money. Why is that? I will give you an example. We were running ads for an investor here in Connecticut and he spent something like $5000 over five months, he was basically spending about $1000 a month, not nothing but no where near what we would call big budget for motivated sellers. [0:06:15.7] He was crushing it in the beginning, did a ton of transactions, he was really happy. Lead quality dropped off for whatever reason in the fourth and fifth month so we kind of paused it, we did some Facebook. We didn't really like the way Facebook was looking, we came back to Adwords. So the question was how do we get the lead quality up in Adwords? How do we get lead volume up without spending as much money as we were spending before? I went through, and I'm going to start with the 80/20 Analysis. I looked at all the historical data from the account and said what 20% of the things that I did in this account but again not really 20% but what small number of things that I did inside this account produced the vast majority of my results. [0:07:00.5] Now let's say I was targeting about 100 keywords. I just filtered those keywords in Adwords and I said which of these have actually produced a lead and which of these have produced a conversion? It turns out that out of a hundred, it's really about 30 that had produced conversions. Everything else in that account had not produced a conversion yet. This was over a course of five months. So I was like look five months is a pretty good chunk of time, it's very likely that some of these were going to convert later in the course of the year but these guys that have converted within five months those are my A team. I just paused everything else. I paused 70% of the keywords that we were targeting. Now let's say that I wanted to take that even further; when I just look at those 30 keywords that are converting out of those a significant chunk of those had only ever produced one lead so most of these are producing one lead a piece over the course of that five months. [0:08:02.9] They are good keywords, they produced a lead, that's awesome but the likelihood that they are going to produce another lead in the next six months is maybe low. If you look at those remaining keywords, the ones that have produces more than two or three conversions, it's really only a tiny number. I think it was like six had produced two or more conversions. So if I wanted to be really, really price conscience, I want to be really conservative with what I spend, I could just run the keywords that have produced two or three or more conversions a piece that's going to leave me six keywords out of my initial hundred. This is going to cut my spend by an absolute ton. We didn't end up doing that, what we ended up doing was just running the stuff that had converted including the stuff that had converted at least one time. So we were from about 100 keywords to about 30 because I didn't want to throttle it all the way to the ground there. [0:09:00.9] Now when you look at the amount that those other 70 keywords had spent, the ones that had never converted, it was about $2000. So remember that's about two fifths almost one half of his entire spend is being spent on these keywords that never produced a lead. By cutting those, I essentially cut his spend in half while keeping his lead flow the same. I'm not saying you always want to do that. That's a strategy that is prioritizing savings, money over generating the highest possible volume because he was very profitable but something you want to be aware of. Again this 80/20 Analysis, this idea of how can I cut or how can I focus on the small percentage of things that are producing the biggest percentage of my outcomes. Really, really powerful. Really strong strategy if things are tightening up and you feel like money is tight. This is kind of an aside but when the market gets tight or things get tough or business is slower than you want; people tend to cut at that point. [0:10:09.7] You got to cut your expenses and so what do people cut? A lot of times they cut marketing and this is not a smart move, this is not a smart move. Cutting marketing because your business is slow is essentially like saying, "I'm drowning so I'm going to hold my breath." It does not actually help you survive. It is maybe going to keep you alive a tiny bit longer but you are not spending your time getting to the surface where you can actually breathe again, doesn't matter. So when things are tough, the question is not how do I cut my marketing out, the question is how do I make my marketing better. Money saving tip number one, 80/20 Analysis.

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Money saving tip number two for your marketing is segmentation. Segmentation is basically about dividing your marketing audiences up into segments and saying, "Where is the money actually coming from?" The way that we typically do this online is by things like demographics so you might look at your audience by age. It might be that all your deals actually come from people that are 40 to 50 years old. I don't know if that is true but that might be true. So if that's the case, cut everybody else out. It might be that all of your deals come from women, interesting to know. [0:12:03.0] It might be that almost all your deals come from a certain zip code. Now online, you can get this even more specific and you can start to get into the device they use so are they using a mobile device, are they on a desktop computer, or are they on a tablet? On channels like Facebook you can look at placement so are your leads coming from the Facebook timeline or are they coming from Facebook Messenger or are they coming from Instagram or are those other placements just wasting your money as is often the case. Knowing this allows you to say, "All of these may be doing okay but my biggest demographic segment is women and my biggest device segment is mobile." So if you really want to cut but keep a lot of that effectiveness you target women and you target mobile and then bam you got your two highest performing audiences and you cut everything else out. It's kind of like a Venn diagram. [0:13:00.3] You picture a Venn diagram, there's like those circles that overlap, and it's the area where the overlap is that's really, really powerful. Same thing with segmentation, you think about how many ways can I slice and dice the leads that I'm generating; time of day, day of the week, all of these things. The deeper you segment and the more you overlap those segments over each other, the more finely grained you get. Like anything else, we have to be careful because all of these things are going to save us money, you can always save money by cutting down your marketing, but the problem is when you cut down your marketing you sacrifice volume. If you're trying to do four or five deals a month, you really can't cut too deeply and expect there to be a ton of deals there, right? At some point you're going to need to generate volume and a lot of times volume and price effectiveness or price efficiency or cost efficiency, they are kind of on opposite ends of the spectrum, not always but often. [0:14:03.6] You kind of have to choose one or the other. So you want to make sure that all this works with your goals but doing a 80/20 Analysis like talked about in tip number one and then really segmenting your audience down like we talked about in tip number two are two major ways to cut your costs.

Tip number three, look into other channels. So there is a general marketing principle that I think about all of the time which is the Blue Ocean Strategy. These are not the people who came up with this but there is a really good book called "Blue Ocean Strategy" that you can go out and pick up, it's one of those New York Times bestselling business books so you may have heard of it. But it's a pretty simple idea. The Blue Ocean Strategy Idea is like in the ocean, you have a blue ocean which like there is not a lot of fish around and everything is nice and blue, clear and cool and it's pretty chill, right? [0:15:00.9] Now a red ocean is where there is a lot of fish and a lot of activity and all that fish and activity draws sharks and sharks tend to fight to get those fish and they compete to eat and the blood and guts fills up the water and makes it a red ocean. So this idea is like would you rather be in the red ocean where you're fighting with a whole bunch of sharks or would you rather be in the blue ocean where it's pretty chill. Most of us would prefer to be in the blue ocean provided we can find enough to eat. Well applying this to business, the idea is like you should really spend your time going where your competitors aren't going, it's a lot easier to be the only person in a given channel or one of the few people in a given channel than it is to be someone in a channel where there is intense levels of competition. Right now, in most online advertising platforms, there's an intense level of competition. Adwords, a lot of competition, Facebook competition is has been rising very steadily and has been increasing the rate of increase pretty much day over day, week over week. [0:16:08.1] So we have these two channels where most investors are and most investors are spending most their money and they are having trouble because it's a red ocean. It's highly competitive; a lot of other investors so prices are high, motivated sellers see a lot of ads from investors etc. Now you can interpret the Blue Ocean Strategy in a couple of different ways. One might be I'm going to do a type of ad or an approach that no one else is doing. So you could do that within those channels, just take a totally different approach. But I sort of think it's easier to just find a different channel and make it your own. There are a lot of advertising channels that almost nobody is using right now. I almost don't want to talk about it because I'm always like – to be honest like behind the scenes we are working very hard to make these channels work and crack them because I'm like whoever does this is going to make a ton of money and I want it to be us. [0:17:00.7] But I will tell you because you're cool, you'll keep it between us. It's not a secret. Google Display Network, clicks on Google Display Network are less than a dollar right now. Google Adwords are about $10 national average, $7-12 or something like that. So pennies, pennies for the same amount of traffic on Google Display Network; same thing on YouTube, YouTube traffic is ridiculously cheap. YouTube has basically so much inventory for ads they cannot sell it fast enough and so prices on YouTube haven't gone up in like five years. There is no market anywhere right now where prices have not gone up in five years. It's really, I mean really out of the ordinary. Not that's not even to get into the some of the weirder ad channels like Taboola and Outbrain and all the stuff we haven't talked about, Yahoo Gemini just recently launched. [0:18:00.0] Bing, certainly there are investors in Bing but a lot fewer than there are in Adwords or Facebook. So these are very high potential channels and even if you just dedicate a little bit of money to it and you kind of put some time into trying to figure it out, a lot of potential to really disrupt your market. Thing is it's like if everybody else is struggling to make do but you're paying one tenth to get your leads of everyone else, guess what you're going to kick everybody's butt and you're going to be way more capable of withstanding market disruptions; the housing market collapse or whatever. You're business model is going to be way more stable because you're spending way less money and effort to get those leads. Look I got to say it's not the easiest thing in the world to make those channels work then obviously the more we learn about it, the more I will share with you but I think that there is a huge amount of potential there and certainly worth the investment of your time and money to make it happen. [0:19:00.3]

So those are three major tips you can use for right now to sort of protect your business against a possible economic downturn, make your marketing more efficient, lower your cost per lead, generally lower your anxiety level and I think that it's something we're thinking about – we're thinking about a lot for our clients; we use these same mental models all of the time. So if you get some use out of it that will make me really happy. Let me know. Leave me a comment, shoot me a message. Look if you're not in our Facebook group, first of all you should absolutely be in our Facebook group, it's free. I post in there multiple times a week. We do trainings. We do lives. We do all sort of awesome stuff. It's a lot of fun. Tons of investors sharing tips and tricks on online marketing; it's the REI Marketing Nerds Facebook group. You can get there by going to AdwordsNerds.com/group and as always you can find show notes and links and all the other episodes for this podcast at AdwordsNerds.com/podcast. I would love you'd get some value out of the show and you enjoy it, please head over wherever you find your podcasts, just give us a like, give us a review, subscribe to this show, it helps other people find it and I really appreciate it. Let me know. Find me on Facebook; drop me a line, I'd be happy to talk to you. I hope you have an awesome, awesome rest of your week. If don't talk to you before the holidays, have an awesome holiday. I will be talking to you very soon. Cheers everybody, bye.