Let’s face it: The largest single expense we have as real estate agents is advertising. How large? Many of the experts tell us we need to invest as much as twenty percent of our gross commission income into our marketing. Twenty percent!
While it is my contention that the experts have it way wrong as to their twenty percent budget, and I believe that you should be able to run your practice on less than half that amount, the fact remains that whether you spend ten or twenty percent, we are still talking about a lot of money. For an agent grossing $100,000 per year, that’s ten to twenty thousand dollars!
The problem that most agents encounter, and frankly, why most experts recommend spending so much money on advertising to begin with, is that nearly all agents have an advertising strategy that amounts to throwing lots of money at lots of things and hoping some business comes in. In other words, “Ready – Fire – Aim” as opposed to “Ready – Aim – Fire”.
What if I told you that you could design an advertising campaign that worked, and worked well. Not only would it produce results, but it would be predictable, duplicatable, scalable, and affordable. Sounds too good to be true, doesn’t it? It’s not. You’ll see.
In the following four articles, I am going to share with you four simple steps to designing the perfect advertisement. Four steps that you can apply to any advertising campaign, for any product or service. Four steps that will bring your advertising costs to a minimum and bring your results to an all-time high.
And I’ll make you a promise. If you will apply these four steps to your advertising, you’ll never again have to wonder where your next transaction is coming from. And you’ll be able to generate as much business as you want, when you want it, in a totally predictable manner. So stick with me through all four steps, and let’s revolutionize the way you look at your advertising.
Step One: Determine the Purpose
When we think about the purpose of advertising, it really comes down to only two things: Do you want to focus your efforts on brand awareness or on lead generation? Why? Because they are totally different directions and your approach would be different depending on the direction you choose. But let me help you with your decision.
Brand Awareness Advertising. When it comes to brand awareness advertising, nobody has more expertise than Jack Trout and Al Ries, co-authors of many books on the topic of advertising. Jack and Al are the gurus when it comes to this sort of advertising.
In their national bestseller, Positioning: The Battle for Your Mind, they describe the way the mind of the consumer works (in terms of brand awareness) as being akin to rungs on a ladder. Each ladder is a product or service category, and the top rung is the brand that has the highest “mind-share” for that particular category.
The number of rungs for the ladder depends on the relative interest level of the category. Think cars or sports teams as high-interest categories and laundry soap or toothpaste as low-interest categories. High-interest categories have approximately seven rungs and low interest categories as few as three.
In other words, the consumer can typically recall their top seven or so choices in a category that is interesting to them, but otherwise, only two or three. Here is where it gets interesting. The top rung in any category is typically occupied by the brand that was first into the space and subsequent entries compete for the lower rungs.
Surveys show that each rung has typically twice the mind-share of the rung below it, and this two-to-one ratio seems to remain consistent across all product and service categories. In other words, the first brand into the space, at least in a major way, has a huge advantage in terms of maintaining mindshare.
They give an example of the Budweiser beer brand. Because the Budweiser brand had become the first big name in the space, they were easily able to fend off the attacks of Miller who spent millions of dollars in advertising trying to overtake them. For many years Miller outspent Budweiser many times over and yet were unable to capture that top spot.
One day, out of frustration, they decided to erect another ladder — their own ladder. They introduced Miller Lite, the first light beer. Since that time they have remained on top in the light beer space, although many others have outspent them in their quests for king of the light beer realm.
So what is the take-away from this principle? Be first, or prepare to spend tons of money in what may ultimately be a futile attempt to gain your position on the top rung of your real estate ladder. Another takeaway is that this principle underscores the importance of having a unique selling proposition (USP). Your USP is effectively your new ladder and by getting it up first, you make it difficult for your fellow agents to compete in that same space.
Lead Generation Advertising. The alternative to using a market saturation strategy to build your brand is to simply focus on generating new business — in other words, a lead generation strategy. If your focus is on generating business you can have the best of both worlds. You will spend far less money and do far more business, and your personal production volume will build your brand over time and you won’t ever have to spend a dime on brand-building advertising.
So how do you do effective lead generation advertising? It’s easier than you might think. You’ll need only two things: direct response advertising and effective lead capture. Both are easy to implement and relatively inexpensive when compared with brand awareness advertising.
Let’s look at direct response advertising first. It is called direct response because unlike brand advertising, it offers something specific that the customer wants and then it requires the customer to respond to get it. Direct. Response. For example, unlike brand advertising that talks in a general way about how great an agent you are, a direct response advertisement might offer use of an MLS home search and require a registration to access it.
In over ten years of direct response real estate advertising, we’ve learned a few things about maximizing the responses. The most important thing is to remember that direct response advertising is all about the customer. If you recall, branding is all about you. Many agents fail at direct response advertising because they are in “branding mode” and forget to make the ad about the customer.
You should know your customer (more on that in the next step) and use that information to make the ad about him. Your offering should align itself with his wants and/or needs. You should also make your value proposition very straightforward and easy to understand. Here is an example of an offering that has tested well (more on testing in the fourth step): “Use the most powerful online home search in the greater Fayetteville area…”
You should notice that the appeal is straightforward and unambiguous. It is exactly what 91% of all homebuyers are looking for in a website, and it is market specific. It even makes you want to use it, doesn’t it? That is the appeal, but remember, it’s only the first part of direct response advertising.
Next is the exchange of value. I offer the homebuyer something of value (the most powerful online home search in the greater Fayetteville area) and then I require them to provide me with their contact information to use it. Exchange of value. If your offering is good, most people will be willing to pay you the small price of admission — their registration.
There is one more important thing that will nearly double your response rate: Give them a choice of two yeses. Typical direct response advertising gives the customer the choice between a yes and a no. Click to respond or don’t click. (A choice between a yes and no.) If you offer a choice between two yeses you’ll see a huge increase in responses.
Here is an example of a choice between two yeses: Click to search homes with an agent or click to search homes by yourself. Giving the customer the option of two yeses makes him feel in control. This simple technique lowers the buyer’s sales resistance and results in many more responses for the same traffic.
That brings me to effective lead capture. Many agents attempt to do direct response advertising only to send that traffic to an ineffective website and hope for the best. The result? None or very little business. Direct response advertising is only effective when the responses are effectively captured.
The typical real estate website captures about 1% of its unique visitors. Even the very best, and most expensive websites only capture 6-8%. Certainly, 6% is better than 1% — it’s six times better — but for very little money (less than most websites today) you can capture 25-30% of your direct responses. By using an LCM gateway, either with a website or instead of a website, you should capture between one-fourth and one-third of all your responses.
The reason efficiency of your lead capture is important is that website traffic costs money. The more efficient the capture, the lower the cost per lead. Using a traditional real estate website, the cost per lead will likely be over $100, simply because the capture efficiency is so low.
On the other hand, by using an LCM gateway, the cost per lead will be a fraction of that — often lower than $3 per lead — simply because the capture efficiency is so much greater. And when you can afford to generate new customers for under $5 each, needless to say, that is a game-changer.
Summary. So your first step is determining the purpose of your advertising. Do you want to build your brand by market saturation advertising? If so, I hope you have some really deep pockets. I also hope you are first in your space. If you are like most of today’s mega-producing agents, you will instead choose direct response advertising. And by choosing direct response advertising and generating lots of low cost business, you will still ultimately build your brand simply by your production volume.
In the next step we will discuss knowing your customer and why that is a critical part of developing the perfect ad. In the meantime, if you haven’t had a chance to check out LCM gateway technology, I invite you to check out ours. Here is a link.
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Matt Jones is the founder and CEO of FavoriteAgent.com, nationally syndicated columnist, broker, and best selling author of LCM: The Secret to Success in the New Age of Real Estate, The Ultimate Listing Presentation, Traffic: How to Sell Fast and Net More, Becoming a Mega-Producer, The Science of Online Marketing, 10 Steps to Real Estate Success, 20 Questions: Everything You Always Wanted to Know about Real Estate but Were Afraid to Ask, The Virtual Office Model, Max-Bang!, and The NEW Ultimate Listing Presentation. Jones' North Carolina-based company has been profiled by major media outlets as an innovator and a pioneer in the industry, and CNN's Pulse on America claimed FavoriteAgent.com is "changing the way real estate is being done in America." This article is syndicated in the following locations: iTunes, YouTube, Stitcher Radio, BlogMattBlog.com, RealBlogging.com, NewsGeni.us, TheCommissionCheck.com, RevampedAgent.com, and now Amazon Kindle.