Budget Solutions Spend Marketing Dollars Wisely Our expert gives this broker tips on what to keep, what to cut and what to add to her marketing plan.
LuAnne Wilson is having doubts about the marketing choices she’s been making. “I’ve owned a small residential realty company for 16 years, which has generally enjoyed a modicum of success, but this ongoing down market is leaving me confused about where, when and how much to spend on marketing,” says the president of Evergreen Realty Corp. in Sarasota, who specializes in resort and second-home properties. “Lately, my marketing includes scaled-down newspaper classified ads, a neighborhood newsletter, direct-mail postcards, Craigslist (craigslist.com), yard signs, e-mails [to my] growing e-address book and a new local MLS Web site.”
Wilson is also a little disheartened about all the negative coverage that the housing market is getting in the press. “Color me frustrated. These are different times. I do a huge market with people from out of state and out of the country. I had two clients out of the Washington, D.C., area send me a piece by a couple of economists saying that Southwest Florida was the epicenter of the U.S. housing bust.” Bring in the Expert
For advice on how to overcome her misgivings and stretch her marketing dollars, Wilson spoke with real estate marketing specialist Greg Herder. Here’s what he had to say: 1. Take It Up a Notch
Most real estate professionals assume they should curb their marketing spending when business is slow. Not true, says Herder. “You actually need to spend more. Agents think, ‘My advertising isn’t as effective as usual, so I’m going to pull back,’ but the cost per lead goes up in a down cycle. Marketing costs more when the market declines. Take Procter & Gamble; they always increase their budget as the market goes down and pull it back on the upswing because their return on investment isn’t as good. Visibility gives consumers confidence in you. The more they see you, the more likely they are to call you.” 2. Do the Math
“In a good marketplace, you should typically spend about 15 percent of your gross income,” Herder says. “When things are slow, you should invest 20 to 25 percent.” The rule of thumb, he explains, is that the first $30,000 that a licensee makes should go to marketing. “If you spend $30,000 or more you’ll never make less than $100,000 per year. If you’re a natural people person, you can spend less. If not, you’ll end up spending more.” 3. Time Equals Money
The irony in all this, Herder points out, is that a housing market that calls for an even bigger commitment to marketing is what’s making it difficult for real estate professionals to afford to market themselves in the first place.
That’s where sweat equity comes in, he says.
“If you’re broke or you have a small budget, focus on cold-calling, door-knocking and FSBO [for-sale-by-owner] prospecting. You’ll get the biggest return from those activities. Think of it this way: The less time you have, the more money you spend. The more time you have, the less money you spend.”
In addition, he says, consider moving money out of high-cost marketing and into lower-cost online marketing, such as blogs, search engine optimization and e-mail. 4. Beef Up Your Brand
Herder suggests that Wilson start a brand identity campaign. “It’s all about frequency of exposure,” he says. “Getting your name in front of people once a week for eight weeks builds identity. After that, if you taper off to two times a month, people will think they’ve been seeing you for years.”
He also recommends that Wilson send out what he calls an “expert opinion e-mail” at least once a quarter. “You don’t necessarily have to use that terminology, but what you can do is give your opinion about what’s going to happen in the next three months of real estate.”
Wilson should strive for a combination of her brand message with a direct-response appeal, Herder says, such as “Call for LuAnne’s Special Report on How to Buy a Home in a Down Marketplace” or “How to Sell Your Home for a Great Price in a Down Market.” “Combine it with your name and some of your personality,” he adds. “People pick up on whether something is genuine or if it’s just a line. Authenticity creates a stronger pull than a clever headline.” 5. Narrow Your Farm
“It’s easy to lose focus if the phone’s not ringing, but focus is perhaps the most important thing in a down market,” Herder says.
He cautions Wilson against mailing to homes on the periphery of her farm. “If you’re a little fish in a giant pond, LuAnne, it’s a lot harder for anybody to see you. When you’re focused and consistent on one niche or farm, you’re going to do well in either a good market or a down market.” 6. Cut Out One-Time Promotions
Next, Herder recommends that Wilson cease doing any promotions in which she rarely participates. “Never spend money on one-time shots,” he says. Those could include mailing to prospects once, annual sponsorships of local events such as a Little League baseball game, etc. “Promotions that don’t get your name out consistently will never be good marketing.” 7. Neutralize Bad Press
Finally, Herder encourages Wilson to rise above any bad press about the real estate market. “The only way to counteract it, LuAnne, is to create good press about the ways you’re helping your clients deal with this market. Offer solutions such as ‘If you have to sell, here’s how to get it done,’ and provide tips that will make a difference. And be truthful. If someone asks if the market has hit bottom, respond with something like ‘If I could answer that with total conviction, I’d be rich. Here’s what I can tell you: If you buy anything today, five years from now you will say, ‘That’s the best deal I ever made in real estate.’”
“There are some good things about the marketplace,” Herder concludes. “We all need to focus on those. Once consumer confidence comes back strong, I feel sure the market will pick up.” This column provides advice from industry experts concerning marketing, technology and business issues. It won the Silver Award in the 2008 Best Column category from the Florida Magazine Association.