Author: Sales Boomerang
The cost of acquiring borrowers through digital channels is rising through Q4 of 2020. Advertisers are spending more to achieve end-of-quarter goals, industries impacted by COVID-19 are starting to return, and the recent influx of political ads is driving advertising costs up.
The cost to acquire a borrower can be as high as $3,000! Now, more than ever, lenders must have a borrower intelligence system that guarantees they are capturing the 20% of the volume that comes from their database every month. Those loans cost only $240 on average and have a much higher chance of a conversion. You already have a relationship with these borrowers—you just need to know the moment they need a loan from you.
Cost of Marketing in the Real Estate Industry
Despite the current pandemic, successful professionals know that marketing can make or break a business (in more ways than one). Ads and other online marketing channels can bring in clients, but they can also drain your budget. According to a 2017 Real Estate Webmasters study, one in eight real estate agents invested over $20,000 into marketing in just one year—and the top three percent spent more than $80,000!
Various Marketing Channels
Loan agents and other real estate pros have started to realize just how much goes into modern marketing. The 2017 study discovered that websites and digital marketing were the highest-ranked marketing tools for the real estate business. Of the 300 real estate brokers, agents, and team leaders surveyed:
- 70% had a website
- 38% used social media marketing
- 23% took advantage of search engine marketing (a rising industry, also known as SEO marketing)
Offline, some 26% of real estate pros used newspaper advertising to lure in potential business. Besides the marketing channels just mentioned, 10% of organizations used:
- Online Ads
- Door-to-door flyers
- Local sponsorships
In just a decade or two, real estate businesses—which had, in large, an offline presence—have had to pivot towards the world of digital marketing. For some, this new marketing channel was just what they needed. For others, it costs too much for what seemed like too little.
Other Hidden Costs for Online Marketing
Many of those surveyed in the study said they would be investing more money into their web platform spending. The web platform would include:
- The company’s website: Your website is your first impression. Consumers are having less patience for businesses that can’t keep up with the times.
- Web hosting: A poor web host can significantly impact customer experience. From slow loading times to security issues, low-performing web hosts can drive clients away.
- Customer relationship management system: Maintaining good relationships with existing customers is critical to any business’ success. More organizations are opting to use online platforms to manage their customer relationships. For lenders, intelligence systems like Sales Boomerang can help retain borrowers no matter what stage in the lender-borrower relationship.
These investments are essential for businesses in the 21st century to thrive—but they add up.
How Do 2020 Numbers Compare to Past Years?
A recent study by Evocalize evaluated the 2020 advertising trends for professionals in the real estate industry. With the impact of COVID-19 and the upcoming national election, we also wanted to review the most current advertising figures in the real estate industry.
Lead Conversion Rates (CVR) Are Up, While Click-Through Rates (CTR) Are Down
Real estate pros have seen a seven percent increase in CVR in a year-over-year comparison to 2019. Data has shown that CVR is climbing compared to the drop in late 2019. Brokers can expect buyers and sellers to stay active well into the autumn months.
However, the 2020 CTR has stayed well below 2019’s rate, though it fluctuates much less. These statistics indicate that while buyer and seller intent is high, advertisements may not be as effective as they were just a year ago. Therefore, real estate companies should take note that the rising costs of ads may not be worth the investment—at least not right now.
Acquiring a Borrower - Where Should You Invest?
As indicated above, online advertising might not be the best place for lenders to invest. Instead, focusing on existing leads and developing customer relationships could be a cost-effective way to find borrowers.