Episode #183 – Improving Your Google Ads Lead Quality

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 AdWords 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 .

(00:41): Hello everyone. And welcome to this week's episode of the REI marketing nerds podcast as always. This is Daniel Barrett here from AdWordsnerds.com. And look, you need more leads in deals online for your real estate investing business. You know where to go. It's AdWords nerds.com. That name again is AdWords nerds.com. What's up. It's nice to, uh, it's nice to chat with you this week, this week. It's just me. And I want to talk about something that I've seen crop up a couple different times in conversations, either with clients over at AdWords nerds. Um, I've been doing some consulting for variety of different folks, uh, both in real estate investing and out and have been talking about this issue. So I wanted to share this with you. You get it for free. They had to pay for it, right? So don't tell 'em about the podcast, I guess.

(01:36): All right, what we're gonna talk about this week is a relatively simple way to improve your lead quality from Google ads. And I'm gonna preface this by saying this methodology that we're going to be talking about assumes that you are U using an algorithmic bid strategy. So what, let's take a step back and let's talk about what that means. All right. Five years ago, six years ago, 10 years ago, however far back you want to go. The way that Google ads worked was you had all your keywords in your campaign. And each of those keywords had a bid. What we would call a maximum cost per click. It's a number that you would set, right? I am willing to pay at maximum $5, $20, you know, $2, whatever it was. You had set that number. Now that bid that you set would sort of determine where you ended up ranking in the sort of list of ads that show up on a Google search results page generally.

(02:45): And I'm simplifying here, right? But generally the person that bid the most for that particular click would show up in spot number one, and the second highest person would show up in spot number two, cetera, et cetera. Okay. Now that type of structure bid strategy is called manual costs per click, because you are in this case manually setting the amount you are willing to pay per click, right? Totally makes sense. And this is how basically all of Google ads worked. Um, this is, you know, even at AdWords nerds, this was 90% of everything we did for clients up till about 2020 or so now what ended up happening is that over that time, that same time period where we, and I think most real estate investors were using this same bid strategy. Google rolled out a variety of algorithmic bid strategies in which you, as the advertiser, don't set your bids, you do not determine the maximum cost per click.

(03:54): Instead, what you do is give Google a goal and let Google set those bids for you. Okay? All algorithmic bidding strategies basically work like that. You tell Google what the goal is. Perhaps you set some constraints on how you want it to pursue that goal. And then the computer goes out, crunches a bunch of numbers and tries to find the optimal bids and strategy for you right now. There's a couple different ones of these. For example, you could tell your Google ads account to maximize clicks. In which case, essentially what it's doing is it's trying to drive the absolute highest number of clicks. It can be within the constraint of your budget and keywords and market size, right? Uh, similarly, you could tell that, uh, account to maximize conversions saying, okay, uh, conversion in this case for most investors, what a conversion is gonna be is either a phone call or someone emailing you, you know, contacting you from a form, something like that.

(05:02): So it's gonna go out and say, okay, I want to maximize the number of conversions or leads I can generate within the constraints of the keywords. You're targeting your budget and your market size, right? Similarly, you know, there's a couple different variations on this. We don't have to go down the rabbit hole, but basically you can think of this as saying, okay, you know, old time way. And by the way, manual cost per click still works great. We're actually using it a lot. Now we're sort of going back to it in many cases. So I'm not saying that it's actually, old time. Like no one uses it anymore. You know, we're not talking about horse and buggies, right? The manual cost per click still totally viable, really, really useful in many situations. But that's the sort of the classical way of managing a Google ads account is you are managing your bids.

(05:50): You're setting those manually. And then the new way is you're giving Google a goal and it's optimizing around that goal and setting your bids for you. Okay. Now let's talk about improving lead quality. And by the way, the way I define lead quality is the ratio of leads generated to deals generated the fewer leads. You need to generate a deal, the higher your lead quality. All right. So, you know, lead quality varies from channel to channel. What is a really good lead quality in direct mail will won't necessarily line up with, what's a really good lead quality in online ads or SEO or whatever. Facebook, Google bang, anything you could name, right? And actually acceptable lead quality will vary quite a bit between markets and over time, of course you understand this, right? But that's how I'm defining lead quality, the lower the number of leads we need to generate in order to get a deal.

(06:56): That's how we're defining it. So let's say we are not happy with the number of leads we need to get a deal. We think that ratio should be better for us. How do we go about making that happen in the context of Google ads? Well, the way it used to work with manual cost per click bidding is there was a couple things you could do. You could add negative keywords, which basically filter out some of the noise, searches the stuff that's off topic for us. Stop those searches from triggering your ads. That should do it. You could pause keywords all together to say, you know, this keyword is generating stuff. That's off topic for me. If I pause that keyword, I won't show up for that stuff. Similar in effect to adding negative keywords, right? That should do it. Or, or, or, or what you would do is adjust your bids. The keywords that were generating the best leads for you. You would drive those bids up in order to get more traffic from those keywords and similarly keywords that generated leads, but perhaps lower quality leads. You would drive those bids down in order to decrease the amount of money you spent on them. And this process of adding negative keywords, pausing, keywords out, and then adjusting your bids manually up or down. That was how you impacted lead quality. There's some other stuff of course, that you can do. I'm simplifying, but you get the picture.

(08:39): Now I just talked about how right now, if you look at the sort of the Google ads, marketing landscape, what is happening is you are seeing a transition over to algorithmic bidding strategies. People are using maximize clicks or maximize conversions, or there's some other ones, but in those situations, the algorithm Google is setting your bids for you. So how do you improve lead quality in that case? Well, you can still add negative keywords and you can still pause keywords, but you can't adjust your bids. So what do you do? So that's the problem let's talk about right now. What I think is a potential solution, Want to find motivated seller leads online, but don't know where to start download our free and motivated seller keyword report today. AdWords nerds have spent over $5 million this year researching the most profitable keywords for finding motivated seller leads. And you can grab these exact keywords when you download our report at www.AdWordsnerds.com/keywords.

(10:07): Now this is gonna get a little technical. I'm gonna keep it high level. I promise I'm gonna explain all my terms. So don't zone out because this is something you can actually go and do on your website today. And I think it's gonna be really impactful for you, especially long term. All right. So stick with me the way that Google knows that you have generated a lead is by looking at your conversion tracking. Okay? When you go into your Google, uh, ads account, you can create a conversion tracking event. And really all that is, is a little piece of code that you put on your website in a particular place. Let's say you've got a sort of traditional real estate investor website, where you've got a, a short form upfront. Maybe it ask for their name and in their address, their phone number, their email, whatever, whatever you ask for.

(11:00): And then you've got a second step form where you ask for significantly more information, how many bathrooms, how many square footage, right? Whatever you ask for. All right. It's fair to say that most investors are tracking when people fill out that first form and the way you would do this is in the Google ads account. You'd create that conversion tracking event. Again, just a little piece of code. You're gonna put it on your website. So, that piece of code loads, when someone fills out that first form, so Google knows any time this code is loaded and they get that information sent to them. They know that someone filled out that first step form. And if that person has clicked on a Google ad before doing that, Google will see that information, connect the two and say, aha, I have produced a conversion. Okay. So that's how that works. And most investors are doing this. Most investors have that first step form tracked. It's all well and good. Now of course, we also said that most investors have a second step of some kind. In fact, many investors now will have multiple steps, right? So they might have step one and step two, but then step three, step four, step five. Other investors are just gonna have step one and step two anyway is fine.

(12:31): But what's interesting is I think most investors would agree with me as well, that if a lead fills out just the first step form, they just give their name, their phone number or their address and their email or whatever, and not the second step form on average. And of course I'm saying on average, of course, there's, you know, exceptions, but on average, that lead will be lower quality than a lead that fills out both the first and second step form. This is because there is significantly more effort involved in filling out both forms, right? I'm going deeper down the funnel. I'm jumping through more of the hoops you have in front of me. What I'm doing by exerting that effort is demonstrating my level of motivation. So I think it's fair to say on average, yes, we wanna get leads that fill out that first step, but also we want to get leads that fill out both steps.

(13:44): Now let's take a step back and think about this. If leads that fill out both forms are higher quality. That means we will need less of them to produce a deal. Remember we defined lead quality as the ratio to leads gen between leads generated and deals generated. So if a lead is higher quality, that means we need less of them to close a deal. Okay. Makes sense. Right now, would you be willing to pay more for that lead that filled out both steps than the lead that just filled out the first step? Your answer should be yes. Why? Because if you need fewer of them to generate a deal, that means you can afford to pay for more of them. They are more valuable. Okay. If you are in a, like a lottery or something, and you've got one kind of ticket where one in a million is gonna win the lottery, and you've another kind of ticket where one out of 10 is gonna win the lottery that one out of 10 ticket is worth more.

(14:58): You should be willing to pay more for it makes sense, right? We all understand this sort of at a gut level. If I need fewer of them to close a deal, they're more valuable to me. They are gonna generate more revenue for my business. Okay. Now, how do we tell Google that? Because remember Google is setting our bids. And if Google could predict that a certain type of searcher or a certain type of clicker is more likely to fill out both of those forms, either based on their demographics or their past behavior. Well, then we should tell Google, Hey, if you're setting the bids to try to get that person in the door, you should set those bids higher. I need fewer of those people to close a deal. I'm willing to pay more for those people that should affect our bidding and effect. If you are manually doing this, you would be doing that.

(16:00): It's fair to say that Google the algorithm and all their data and stuff, they should be better at that than you. So how do we tell Google that we want them to do that? We do it via a conversion truck. Just like we set up a conversion event for that first form. We need to set up a conversion event for that second form. I wanna know if a lead fills out the first form. And I want Google to know if the lead fills out the second form. So let's say they fill out the first form. Cool. I've got that code, that fires. When they fill out the second form, I should have a different code. That fires that says, Hey, Google, this person just filled out that second step form. Now here is the fun part. You not only want to set up two conversion events.

(16:48): I think many investors have done this. What you want to do is set them to different values. When you set up a conversion event in Google, there is an option to set a conversion value. Now, my suggestion is that you set these as fairly far apart, a common one that we will use at AdWords nerds is we will set the first form conversion event. So they just fill out that first form. We tell Google that conversion is worth. It has a value of 10. It doesn't really matter what the value is. If you could figure this out with actual revenue numbers, by all means, do this, but we just use 10. All right. Doesn't really mean I'm only willing to pay 10 bucks. You know, if you feel more comfortable saying it's a hundred bucks, then fuck, but set it to what if 10? All right now, second form conversion event.

(17:52): The one that only fires when they fill out the full process, we set that one. We set the value of that conversion to a hundred. Or if you set a hundred for the first one, we'd set a thousand, basically 10 exit. Why? Because it's more valuable to us. We know we need fewer of those leads to close a deal. I need to make sure that Google knows that. So now Google sees when those conversion events fire, if it fires on the first one, it sees a value of 10. If it fires on the second one, it see a value of a hundred. Now this is really important because, because, think back to how these strategies work. Okay? Think back to how these work, let's say you're using a maximized conversions bid strategy. All right, now Google's just an, it's just an algorithm. It's just a mathematical formula. All it is trying to do is get the maximum number of conversions within your daily budget. Let's say your daily budget is a hundred bucks. Okay. Google's got a hundred dollars. It's gonna try to generate as many conversions as possible.

(19:11): Now it's got two that it can work from, right? It's got that first step. And it's got that second step. Let's just assume for hypotheticals that these are different groups of people. There's some group of people, the short formers they're in rush. They're not super motivated. They're really only gonna fill out the first form. And we've got some other group of leads. Let's say the long formers, they're really motivated. They're, they're willing to put in the effort they need to go right now. They're more likely to fill out the second form. So we've got these two different groups. Let me ask you if your goal, your computer, you're an algorithm. Your goal is to generate as many leads, can many conversions as possible within the budget. Which group of leads are you going to target the short formers or the long formers? Well, by default, you are going to target the short formers.

(20:09): Why there's more of them, way more of them, just like there are more sellers in any market that motivated sellers. There are more short formers in any market than there are long formers. And what's more, those leads are likely to be cheaper because they're lower quality and likely to have lower amounts of competition for them. So if you are an algorithm and your goal is to get as many conversions as possible within the budget, guess what? It's gonna be a lot easier to do that with short, former than long formers. This is one of the problems with algorithmic bidding for motivated sellers. It is not set up by default to generate higher the highest quality of leads, or even to generate the highest amount of revenue for your real estate investing business. Look at what it says on the 10 it's there to generate the maximum number of conversions.

(21:10): And it doesn't matter what kind of conversions those are when you set the conversion values. Remember we set the short form at 10, we set the long form at a hundred. We are telling Google that these conversions have different effects on our underlying business. They generate different amounts of revenue on average, over time. And once Google understands that you can change your bidding strategy to one that takes that into account and use Google's data and algorithmic smarts or brains or whatever you want to call it to generate higher quality leads. I know that was high level, but I hope it made sense. If you have any questions at all, let us know. Edward z.com is the website. Go hit us up there. And look, I would love if you could leave us a review on this podcast, it really helps us out anywhere you listen to it, leave us a review. I check every single one and I really do appreciate it as always this Daniel bear from Atworth ear.com signing off. I will talk to you next week.

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