We are in the business of providing motivated house seller leads to real estate investors – if you read our blog, you already know that. We enjoy using our expertise to manage ad campaigns – it’s what we love to do and we are good at it. On the other hand, investors have to make decisions about marketing budgets, to determine the goals of ad campaigns and to estimate whether the end result (or the ROI) is satisfactory.
Although it seems that real estate investors have an easy task in this lead generation process (as opposed to what we as marketers are tasked to do), it’s not always so, because if you don’t calculate ROI from online marketing correctly, you can miss the whole point of running PPC. The ROI is important in the decision-making process, and if you are an investor, you would benefit from the analysis that follows.
Join us as we examine the best ways to calculate return on investment in ad campaigns for real estate investors.
The expectations from an ad campaign begin to formulate way before you approach a high tech marketing agency, like AdWords Nerds, given that some real estate investors publicly share their experience with PPC.
Some investors participate in (or simply follow) discussions on REI forums, others are exposed to behind-the-scenes type of content by other investors on social media, and some hear both horror stories and success stories at networking events (in REI clubs). Regardless of the source, you are likely to hear what other real estate investors have to say about Google Ad campaigns for finding motivated sellers.
Suppose you don’t bother with anecdotes from other real estate investors. You come to us, and since we’ve helped hundreds of investors in the past decade, you want to hear what we have to say. Something along the lines of: What can a real estate investor expect from a PPC campaign for generating motivated house seller leads?
Dan addressed this issue in the 111th episode of the REI Marketing Nerds podcast:
One of the things that has constantly come up over and over and over, and this is something I really have to work on myself and recommending to myself, and is directly applicable to your marketing in your real estate investing business is the idea of comparing apples to apples.
This manifests in this really, really common question I get. I get this all the time from investors big and small, where they say, Hey, they want to talk about online marketing and we’re talking about SEO or we’re talking about PPC, or we’re talking about Facebook ads or whatever, and let’s say we’re talking about conversion rate. Okay, so they want to know, Hey, my page converts at 5 percent. Is that good? Is that bad? And the question is like, How do I compare to other investors? The problem is that’s really kind of a meaningless question.
And it’s true – you can really do yourself a disservice if you compare your ad campaign with the ad campaign of other investors. Let’s check out why that’s so.
It’s really hard to find two ad campaigns for targeting motivated seller leads that are the same. Not even when you compare two of your own campaigns.
In other industries, like retail or manufacturing, you can pump an X amount of money in marketing, to make an Y amount in sales and keep Z amount in profit. Real estate investing simply doesn’t work that way.
There are a lot of moving parts and you need to factor all of them in. Things like:
As you can imagine, it’s hard to align all of these variables for two different ad campaigns. If you ignore the complexity of the problem, you are bound to make a mistake. To illustrate this point:
you operate in California they operate in Iowa; you put $1500 per campaign, the other investor puts $5000; no one bids for your keywords (“sell my house fast in X”) while the other investor is up against many competitors; you get 30 leads and you close 5, but the other investor gets 20 leads and closes 5, etc.
You are free to contrast the performance of different PPC campaigns for motivated house sellers. But if you were to make a decision about your ad campaign based on data that’s relevant for other real estate investors, the mistake will cost you money. And it doesn’t matter whether you’ve found this data on a public forum or you asked someone like us to provide benchmarks to you.
What do we refer to when we talk about wrong decisions? Well, you can’t really affect factors like the competition in your real estate market, but you can arrive at a go/no go decision about an aspect that’s within your control. These are quite straightforward decisions, like:
Why are these types of decisions a mistake? Well, they can potentially botch your lead generation process. If you cut your ad campaign short prematurely, you are leaving money on the table and the leads (and deals) which are available in your market will go to some other investor.
Real estate investors are susceptible to making wrong decisions about online marketing. In the podcast we mentioned above (Apples To Apples In Real Estate Investing), Dan shared the history of a client who left us because they weren’t satisfied with the results they were getting.
These folks believed that the poor performance of their ad campaign had something to do with our work (and we were doing our absolute best). They switched over to another agency, and got better results. What’s the catch? Well, apparently these real estate investors doubled their ad budget, and this resulted in getting twice as many leads.
How come investors don’t notice obvious and objective indicators of success? Let us share an industry secret with you, and you will understand.
Most of what we do is based on metrics and numbers – that’s why we call ourselves nerds. So, Dan wanted to know what metric can serve as an indicator that a real estate investor will continue to invest in a PPC campaign? This is an in house discussion between Dan and Justin, our head account manager. Having handled a lot of clients, Justin surprised Dan by responding: none. Well if it’s not a metric, then what is it?
How they feel. It purely has to do with how they feel about the process.
Now, Dan was expecting to hear that real estate investors make data based decisions. But practice shows that this is not the case. It doesn’t mean that investors are irrational, but sometimes decisions are swayed because of human nature. You just need to take a look at the trading floor at Wall Street, and you can see that emotions can take hold of people who handle capital, too.
If you are a real estate investor, you are probably not surprised to discover that emotions play a critical role in decision-making. You witness this first hand when you close a deal to buy a house from a motivated seller. And you use emotions as leverage when you sell that same house to a buyer (if that’s your investing strategy). So, you get that whenever people are involved, emotions will affect the outcome.
But should you let emotions sway your decision-making as an investor? Absolutely not. And this is not an easy task, because whenever you put money into an equation, investor psychology kicks in, and can lead to poor choices.
Cheer up, we have a secret weapon against bad decisions and it’s, … you guessed it – numbers.
Digital marketing offers a wealth of metrics, on a level that simply isn’t available for other marketing channels. And if you, as a real estate investor who makes decisions about your PPC campaign, don’t utilize these metrics as a resource, you’re not doing digital marketing right.
It’s what Dan calls “objective measure of success” in the 144th episode of the REI Marketing Nerds podcast:
One of the reasons I love pay-per-click marketing and I love what I do is that there’s a number objective measure of success, right? At every step of that process, there are numbers that come at us and there are a variety of ways you can interpret those numbers, but there’s some kind of objective measure of success. We’re working with investors. We’re trying to generate deals. The more deals that we generate, the better that we’re doing, right? That’s how we think about it.
There are three data points we use to measure the success of a PPC campaign. We call them leading indicators and they are as follows:
So, next time when you measure the success of your PPC campaign for motivated house seller leads, look at these indicators. If the cost per click is going down, you are on the right track. If the volume of leads goes up, you are doing well (and if the close rate goes up as well, you are doing great – you provide high quality leads). If the conversion rate of your landing page goes up, then you are using a high converting website template, and this will increase lead volume.
Of course, it’s much more complex than the 1-2-3 description we provided above. However, if you note these indicators, and you correlate them with other data that’s relevant for your business goals, your decisions regarding ad campaigns will be much better than simply relying on your feelings about the process.
That being said, don’t forget to look at the hard numbers about returns either.
To calculate ROI from digital marketing, run the ROI numbers. Now, we are aware that this doesn’t sound like an original idea. But this is a part of the process that is often overlooked.
It’s where the expectations from the PPC campaign kick in, we discussed this above. Rationally you may comprehend that the results of your ad campaign can’t be compared with any other campaign, however, this doesn’t mean that you don’t have expectations about the process.
Remember, we’ve served hundreds of investors, and we are able to single out patterns. Real estate investors often fail to see the benefit from PPC campaigns because they aren’t running the ROI numbers. Investors make tens of thousands of dollars in profits by closing deals from the leads they got through PPC marketing.
Did they need an ad budget of a couple of thousands of dollars to acquire those leads? Yes, they did. Did that investment paid off? Yes, the return on investment in PPC marketing for getting seller leads is usually multiple (sometimes tenfold).
If your blueprint for success in real estate investing includes unrealistic expectations from digital marketing campaigns, no ROI analysis in the world can fix that.
Before we leave you to work on the ROI numbers for your PPC campaign, we ought to address another important point, and that’s the value of proper processing of leads which are already in your funnel. Close rates per real estate investor vary, and sometimes, the ROI doesn’t really depend on the quality of these leads. And if you don’t tackle this issue, you are practically leaving money on the table – these are leads that are already in your hands.
Work on streamlining your in house processes. Studies show that you need between 3 and 11 contacts to close a deal, so do your best to optimize your follow up process. Also, consider revising your closing strategies, and try to implement the multiple close model.
Both of these processes, the closing strategies and the follow up process, can significantly affect your close rate. This, in turn, increases profits, and the profit plays a role in calculating ROI from the leads you got through PPC.
There you have it – our tips for calculating ROI from real estate investor marketing. If you prefer to have these tips in a short list that’s easy to remember, it goes along the following lines:
If you review the items on this checklist step by step, your perspective on PPC marketing for getting motivated house seller leads is going to change. Have fun calculating ROI!
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