Does your advertising work?
Some basic principles can help you get
more from your ad budget.

by Melissa Woolard   Most real estate agents think advertising is expensive and complicated. While it can live up to both expectations, don’t lose sight of one other undeniable fact: advertising works. If it didn’t, the Coca-Cola Co. probably wouldn’t have sunk $569 million into ads in 2002. (And if you think that’s a lot of money, there were 57 bigger spenders on the Ad Age list of largest advertisers.)

A well-thought-out advertising plan can yield results greater than any other form of prospecting. Greg Herder, CEO of Hobbs/Herder Advertising in Newport Beach, California, a company that specializes in real estate marketing, has witnessed many such successes. He cites one client who made $80,000 his first year in the business and spent $55,000 of it on advertising. However, the second year he made $350,000, and in his third year he topped $600,000.

Herder acknowledges that one of the hurdles for agents is overcoming the philosophy that door knocking is the only way to get business. Nobody will deny that personal contact is necessary to succeed in real estate. Shaking hands and handing out business cards builds and reinforces customer trust. However, complement that face-to-face interaction with a targeted advertising plan and you can achieve fantastic results.

Just ask Ronnie Matthews of Ronnie & Cathy Matthews, RE/MAX Advantage Associates in Houston. “I’ve never knocked on a door,” says Ronnie. “I’ve never made a cold call, and I’ve never called on a FSBO.” In 2003, they spent $150,000 on advertising that helped them achieve gross sales of $110 million, placing the 20-person team among the top 10 teams internationally for RE/MAX for the fifth year in a row.

It’s OK to start small
It wasn’t always that way. When Ronnie and Cathy started, they had very little money for advertising. “We made black-and-white copies and we did what we had to in order to get our name out there,” Matthews says. His secret involves what most consider the golden rule of advertising: Do it constantly and consistently.

Matthews recommends agents just starting out with smaller budgets “concentrate on an area or a group and get your name out there continually.” Expand your advertising as your success allows. These days, the Matthews marketing mix includes two PT Cruisers complete with Ronnie’s and Cathy’s name, picture, and number on the side. Ronnie maintains that you should stay true to your message. “We’ve always been Ronnie & Cathy Matthews and we always will be. Our pictures have changed a little … but our number and address haven’t changed in over 10 years.”

Again and again and again
To stay top-of-mind with prospects, experts agree that you must get in front of them often. In the ad business, this is called frequency. A much-cited suggestion is to aim for a frequency of three times a month.

You must also determine and define your market. For agents, this usually consists of past clients and a geographical farming area or another type of niche.

One effective method to get your name in front of that target market three times a month is to create a plan that mixes different forms of advertising. Here’s an example: You see a prospective client at a function, shake his hand, make small talk, and give him a business card. A few days later, that same prospect gets your mailer. The next week, he sees your picture and number on a billboard. The same thing happens the following month and the month after that and so on.

Why do you need that kind of frequency? To ensure that the client will not only call when he decides to buy or sell but will also think to refer a friend who mentions that she is in the market for a home. It seems like a lot of work and money for one client, but what if every person you talked to at the function experienced the same frequency, or everyone in the neighborhood, or everyone who drives by the billboard? When you look at the overall results, you can see how the effort and expense pays off.

Postcards, radio spots, and other options
You have many choices of advertising vehicles. Direct mail (postcards, newsletters, and other mailed items) is the most common form of advertising agents use. Other options include print ads, billboards, television, and Internet. Radio is probably the least used, because it’s not a visual medium, but it is an extremely effective form of advertising and gives you a great bang for your buck. Done well, it can be very effective.

You may be tempted to handle your own advertising from start to finish. However, you likely will benefit from relying on a professional to get the most from your marketing dollars. “Many times I see agents purchase advertising or marketing tools on impulse rather than considering all the factors like distribution and demographics,” says Cyndi Cook, director of marketing and promotions for RE/MAX DFW Associates, who also has 10 years of experience in marketing communications. “Placing the marketing and advertising needs into the hands of a knowledgeable professional allows the agent to focus on their clients. They now have someone to do all the research, negotiate the advertising costs, compile the materials, and manage their ad budget.” Cook adds that, in her experience, the agents who use marketing professionals see excellent results and a great return on their investment.

You have several choices for vendors; you will want to find the perfect fit for your budget and goals. General advertising agencies are probably not the best option for an individual agent or sales team. Instead look for an agency that specializes in real estate marketing. Contractors, freelancers, and consultants with a strong background in marketing are another excellent solution for agents. They are usually small enough to want to work with smaller budgets and can provide personalized attention. Print shops, publications, and radio and TV stations will offer to produce your ad for an extra fee or even include it when you make a large media purchase. Remember that their designers work for them and they make their money by selling space. You may get better results elsewhere.

How much should I spend?
Two things are true about advertising dollars: You get what you pay for, and a little (used effectively) can go a long way. How much you spend depends on a number of factors, including where you are in your career.

According to Herder, “Anywhere from 10%-30% of your gross commissions should be spent on marketing. If you are just starting out, you will need to be closer to 30%. If you are a seasoned veteran, you will be closer to 10%.”

Your advertising expenditures will vary based on how active your other prospecting activities are and other factors.

“An agent’s advertising budget can range from 25%-30% of their total commissions earned depending on their media selection,” says Cook. “Agents who frequently do blanket direct mailings, billboards, or radio/TV ads will need to adjust their budgets to accommodate the cost of this type of advertising.”

When it’s your hard-earned money, even 10% seems like a big hit, but the returns can be phenomenal.

How long should I stick with a campaign?
One of the biggest mistakes REALTORS® make is to give up on a campaign before it has reached its full potential. Remember the three-times-a-month rule and stay patient. Don’t give up because the phone isn’t ringing … yet.

“I tell my clients that they need to give their campaigns a full year to see results,” says Herder. “You have to commit to something for at least a year to give it a chance to work for you. Be patient and remember that you are building a business. That is something that can only be accomplished successfully over time.”

If you have done your homework and put the appropriate resources behind your campaign, it should start to work within six to eight months. If you cannot commit to that amount of time and money, do something less expensive. The results might not be as big, but smaller returns are better than dumping an expensive campaign and getting no results at all.

How do I know it’s working?
If you don’t track your advertising, you are throwing darts in the dark. Tracking is the process of measuring the amount of business an ad or campaign produces. “I always advise my clients to use as many tracking systems as they can,” says Herder. “It’s the best way to know what is working and what is not. The trick is to analyze the data to make decisions.”

Here are two of the easiest and least expensive ways to track your ads:

• Just ask. Keep a tracking pad next to your phone and write down the caller’s name, phone number, the reason for the call, and where the caller got your name and number from. You can make it easier by using a checklist that includes: sign call, referral, agent referral, and then your advertising media—direct mailer, radio, outdoor, TV, etc.

• Dedicate a certain phone line or extension to ad calls. You can either use one extension for all your advertising to get a general sense that your ads are working, or you can assign separate extensions to each medium, campaign, or individual ad to more closely examine responses. The latter option requires more time and effort, but can give you a clear picture of what’s working.

The basic principles of advertising don’t change, but you have to apply them with your goals in mind to develop a custom plan that works for you. Do that—constantly and consistently—and you’re sure to see results.

Melissa Woolard is a freelance writer in San Antonio with 10 years of experience in the marketing communications field.

Photo © PictureQuest.

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