Betting on Advertising Insurance

The decision to spend money in order to make money has always been a treacherous one to formulate. To make things more difficult, if you ask experts or colleagues for guidance you will end up with more questions than answers.

 

My many years of marketing experience may help you to make an individual educated assessment. Allow me to start by giving you my personal views and how they may be biased. As a publisher of four print magazines, you may assume I am going to pitch you an ad. Falling short of sounding like an infomercial, I am not here to sell anything. I am here to give some facts, a little opinion and a lot to make sense of how you should view advertising. Since this is a Real Estate magazine, I will focus on two groups; Realtors and home sellers.

 

First analogy, advertising can be viewed as buying health insurance. Usually insurance will barely pay for its self on the day to day medical expenses. Advertising is similar in that when you advertise there are long periods of small rewards such as picking up a listing contract, name recognition and new “potential” customers. The rewards from these examples yield little profit and may discourage your need to advertise. Using insurance as an example once again, we all have that day when we end up in a hospital. ¹ The average total patient charges for South Florida hospitals is $27,871 per case. It is at this point most of us utter those famous words “Thank goodness I have insurance”. In comparison, consistent advertising will yield you that sale that pays for many years worth of advertising and at that point you will swear by that advertising media. Studies show that consistent advertising promotes earnings as low 7% and as high as 30% per year. Keep in mind that different advertising outlets perform better on the day to day, while others out perform the return of investment ration in time.

Now that we have an illustration of the advertising dynamics, let’s talk about different advertising outlets. Bear in mind we are focusing on local Real Estate.

 

Let’s start with Realtors. Your options are many and range vastly in cost. The first thing you should do is forecast your earnings. Just like a large corporation, forecasting helps you set goals and allocate for expenses. Remember to consider market conditions and growth. Think about forecasting in manageable periods, like yearly quarters or market seasons. This will allow you to adjust if unforeseen circumstances occur.

 

Once you have forecasted your earnings, allocate and commit moneys to advertising. Small or large work this budget to the best of your abilities. I recommend developing a short mantra which describes you and how you differ from other realtors. Strive for multidimensional marketing campaigns that relay your mantra. In other words, don’t just list properties online and neglect your image and services. Develop a campaign that achieves three things:

Exposes your listings

Brands your image

Depicts your specialties (Farming Areas)

Do this by using multiple formats of advertising. Focus on saturation and not so much on quantity. As a result, I would recommend using three advertising formats for every $10,000 spent yearly (e. g. $4000 on print media, $4000 on internet and $2000 on networking). Stay away from blowing your budget on one media, such as television. Select advertising formats that focus on your farming area and target your clientele. You are throwing your money in the air if you choose advertising outlets that flood large geographical areas which will yield low quality calls from neighborhoods you rather not work.

Find balance between exposure, image and cost. For the most part you will achieve two if the three. For example, you may advertise on a “life-style” magazine that has phenomenal image and a great distribution, but uses up your budget. Another example, you may choose to do a radio show on satellite radio which is cost effective and brands you as an expert in your field, but it airs at 6:00 am when your core market is sleeping. Lastly, posting your listings on as many free web sites as you can will generate several emails and leads, but these don’t portray who you are and all the services your offer. Be careful to not spend countless hours on the computer which carries several hidden costs. Before you know it, you hired an assistant, you are outsourcing web services and you are developing a site that never seems to be complete. Focus on being a realtor not a webmaster.

 

Sellers, lets start by stating the market is not favorable right now. Remember I started by questioning the decision to spend money in order to make money. DEMAND that your realtor advertises your property. If you have a high ticket property for sale, your realtor may ask for an advance to market your property. This is a common request which, for the most part, it is a good practice to engage into. Large ticket properties take much longer to sell; therefore your realtor may need your help to keep your property exposed. This in the long run could save you loads of money. In that order, selecting a realtor who has a marketing plan is imperative. It helps that the realtor focuses on similar properties to your own. This will ensure he or she is targeting the sort of buyer that is looking for your type of property. This is one of those times when competition helps. Make sure their marketing plan has several advertising medians. In fact, look for traits that are similar to the ones cited on the previous paragraph.

 

Don’t let realtors convince you that any particular advertising format “is dead”. Yes there are outlets that work better than others, but all advertising Medias have a niche and serve a purpose. Today there is a large push to sell properties on the internet, and for the most part I would agree. The problem occurs when an agent is trying to evade the expense to advertise. Don’t allow this type of agent to convince you that properties are only selling via the internet. The World Wide Web works, but the internet limits the selling abilities of your agent to get you the best deal possible. The net is a great way to generate leads, but without the proper substance to back it up it is just another email inquiring about your property. To qualify a realtor as a strong internet driven marketer, ask them what they are doing for SEO (Search Engine Optimization), visit their site and see how it ranks using the Google ranking tool, and ask how they are advertising that web site locally. Moreover, how are area visitors or area residents locating their web site amongst the estimated 340,000 real estate web sites? Finally, ask what other web sites or online services he or she is affiliated with to generate leads. This goes back to focusing on saturation and farming within your target demographic.

 

Second analogy, advertising could be a little like gambling. Most of you have at some point visited a casino. I’m not talking about a slot machine arcade, but rather a full blown slots, tables, booking, and money making machine. In advertising you are the casino. Choose your theme, mantra in your case. Arrange several options in which your patrons can gamble, advertise in multiple medians in your case. Be ready to loose a little, but keep them playing and you will bring loads of profit. As a result, advertising should never be purchased in single units. For example, do not run just one ad, do not send out one mail out, and do not just do one open house. If you are going to carry out this practice all you will do is squander your money. Going back to the gambling analogy, you chance to loose much more if you put down a single chip on one number, the odds are far too great. If you commit to craps, you increase your chances to win by playing at least for a complete shooter’s session. This way you have multiple opportunities to adjust your bets and spread the risk.

 

Your odds greatly improve when you have knowledge of the game. One method you earn that knowledge is by playing the game. Advertising is the same way. Do your homework on each advertising resource, but use your budget to implement a campaign. On print media do not run less than two issues and do not commit to a longer contract than six issues for your first attempt. Newspapers still work well when you run single line ads for multiple days. Radio and television is a great resource that could be extended by joining forces with other agents or choosing programs that run multiple short slots. Use your budget to negotiate volume discounts. For those Medias you are confident with, work out prepaid discounts.

 

Internet advertising is a little more complicated. While many will argue, I feel it is still in its infancy. Changes to search engine algorithms occur often and every web site has a better way to do the same thing. Many web sites offer “free” services that attract sellers and realtors, but be careful. Today many people are scrambling to help their Search Engine ranking by linking to directories that do not bring any value to the seller or agent. In fact, the majority are promising more than what they can deliver.

 

As per NAR, the internet contributes 24% of the leads that sell homes. I recommend you focus on web resources that have valid credentials such as being ranked by Google. Don’t be fooled by web sites that look pretty or have multiple gadgets. The ones that work have content, are affiliated to another advertising media and have good search engine ranking. Try to use web resources that use multiple input methods to fulfill its database. For example, choose sites that have IDX capabilities and a private database. This way the content is fresh and several formats are contributing to its content. Content equals more search engine exposure.

 

To conclude, advertising should be an educated venture that insures your growth. Develop a budget, diversify your Medias, commit to campaigns, try new technologies and favor what works. Accept that everything has a cycle and what works today may not work tomorrow, so educate yourself and try new vendors and/or formats. Furthermore, try to use advertising providers that combine Medias. To give you and idea, some home magazines offer good internet exposure and services for little or no additional expense. Remember to do your homework and ask what the web sites monthly visit and hit counts are. Verify ranking by using search engine tools. Remember that saturation of your farming area and clientele is key; therefore choose sites that cater to your needs. If you are trying to grow your web site’s exposure offer to exchange links with advertising vendors. Link exchange grows your link popularity which in turn helps your placement in Google and other search engines. Choose providers which are focused on helping you grow your business, not selling you ad space or ad time.