Real Estate SEO

Posts Tagged ‘Real Estate SEM’

How the big guys plan to exploit the little guys and how Real Estate SEO and Real Estate SEM level the playing field.

It’s no secret that the National Association of Realtors is on the side of the big guys. I’m talking about the ERAs, C21s, Prudentials, and Exits of the real estate world. From one point of view, that’s OK. These big firms employ hundreds of thousands of Realtors.  That’s a lot of jobs. I’m sure that a lot of our readers work for some of these larger companies and that’s all well and good.

Now, I’m going to draw out exactly how the system that the big guys, supported by the NAR, have put in place, can actually work to the little guy’s advantage, through the use of the internet, SEM, and SEO. It goes like this…

The revenue model at the heart of most the big residential real estate companies is pretty simple.

1. They want as many real estate transactions as possible to happen under their brand
2. They want to keep as much of the transaction’s value as they possibly can.

Seems pretty obvious. If a trillion dollars in real estate transactions happen in the US in a year, then Coldwell, for example, wants as much market share of that trillion to be under their name. AND they want to keep, that is the corporation wants to keep, as much of that as they can.

Most of the big guys are on a traditional split. The agent negotiates a commission with the seller and the company keeps a percentage of the commission. There are 2 ways for the company to make more money:

1. The agent negotiates a bigger commission from the seller. This is all well and good, but most markets are seeing consistent commissions paid by sellers. It’s likely 5 or 6 percent in your market and just about everyone is working for the same percentage - regardless of how long they’ve been a Realtor. So, the corporation has little control over this.
2. The corporation takes a bigger percentage of the agent’s commission.

Now, most of these companies start you at a low split. If you’re new to the industry, they may take 60% of your commissions for the house. If you’re doing a lot of sales, that will graduate to 50/50 and on down until you’re keeping 80% or more of your commissions.

Of course, the big companies want to keep as much of the commission as possible, they don’t like 80/20 splits or event 60/40 splits. Their goal is to have as many entry level agents doing deals as possible. The result is that they’ll keep 50 or 60 percent of the commission. In order to make this possible, they need lots of new realtors in the market pretty much all the time.

So, the big companies, in cooperation with the NAR and local real estate boards around the country have kept the barrier to entry into the real estate profession exceptionally low. Lower than almost any profession where someone has as much earning potential as they do in real estate.

This means that just about anyone can come into the industry whenever they want. So long as this is true, there will always be too many real estate agents for very many of them to make a great living. Sure, some of them will make lots of money, but most will not. Most will take on a second job or do real estate on the side or even average less than 1 deal per year. Just take a look at NRT’s stats for deals/agent and you’ll be shocked. (they’re the largest residential brokerage in the country)

Now, here’s how this all plays into the hands of the average realtor. The internet is one giant level playing field. The big guys can try to buy a million clicks or SEO around every term on the planet, but it’s untenable. They’re years behind the local guys and longevity matters in the SEM game.

You can start a real estate website today and so long as it’s built on a good platform and you hire a good SEM/SEO team, you can achieve ranking in just a few months. In some ways, this means that the internet is in the little guy’s favor. The independent real estate company can be ranked right next to the big guys. In lots of markets, the big companies aren’t ranking at all.

As real estate marketing and client acquisition continually goes more online, the big guys will be more and more left out of the picture. With time, it’ll be easier and easier for the independents to challenge the big guys and take market share. We’re already seeing this in lots of markets. Do a Google search with your town or city’s name followed by the words real estate. This will give you some insight into who’s already investing into real estate SEM and real estate SEO.

Agree? Disagree? Thoughts? We’d love to hear from you. Thanks!

Image source: www.nuwireinvestor.com

A client of ours decided to invest in a tile ad on boston.com. For those of you who don’t know, Boston.com is the website of the Boston Globe, which is, in my opinion, the best newspaper in Boston. Every once in a while, a member of the sales team at boston.com or nytimes.com or some local newspaper calls one of our clients directly and convinces them to commit to a banner, tower, or tile ad on their website. Usually, it’s in the real estate section, which, of course, sounds like a good idea.  It’s an easy expenditure to explain and to get your boss to approve. If you’re the boss and you’re reading this post, DON’T APPROVE THIS EXPENDITURE.

Now, if you haven’t heard, the Boston Globe is under the threat of being shut down. The paper is owned by the NY Times company and they’re loosing money. So, the management over at the NY Times is threatening to only offer the online version of the paper if the Globe can’t cut expenses. The unions are fighting back and it’s getting ugly. If you read the globe, it’s a page 1 story just about every day.

Now, our clients get called by folks selling ad space on their sites all the time. We’re used to this happening and we often advise our clients against buying banner and tower ads alltogether. Every once in a while, they do it anyway and we have new evidence to show folks why it’s a bad idea.

Here’s an image of the page. On the right, you’ll see, outlined in red the placement of the ad that our clients decided to pay for. How much? They paid $1200/month to be on this page. Now this is the main real estate page on the site boston.com/realestate. It would stand to reason that this is the best page to be on for our clients.

The results
This ad brought a little less than 100 visitors to our client’s website during the month of April.  You only need a middle school education to know that they’re paying about $12 per click. If you’re familiar with CPC prices, you know this is extremely high.

For those of you who are not PPC or SEM experts. Here’s some more information. We are managing an SEM campaign for this client. We’re using Google AdWords and the client is paying for Google search traffic at $0.75 per click. That’s the average CPC (Cost per click) of the PPC campaign for the month of April. So, this means that our client is paying 16 times more for each visitor they get from boston.com than they are for visitors from Google who clicked on their paid placement.

SEM is by far more cost efficient than tile placement. This is pretty much always true. We’ve been preaching this for years. SEO can make your campaign even more cost effective, but the numbers, when you’re dealing with SEO, aren’t quite as concrete and quantifiable. Besides, this is the most recent direct comparable data that we have to show you. We literally pulled it down today.

In case you’re wondering, we used good ole Google Analytics to gather this data. It’s pretty clear that paying for advertising space in the real estate section of a newspaper’s website, unless it’s PPC, is a bad marketing investment. We see it time and again.

If anyone at the Globe wants to rebut these facts, I’m happy to talk.

At Boston Logic, we’ve always had a philosophy and it goes something like this:

“You’re in the real estate business, we’re in the marketing and technology business. You shouldn’t be expected to run your online marketing campaing. That’s our job.”

Our clients take comfort in the fact that we know what we’re doing and they see the results, so they are happy and loyal. I bring this up because it illustrates an important reality about buying premium services. It’s unrealistic to become an expert before making every single purchasing decision. What you need to know is just enough to make an infomred decision. Then, you can go back to doing what you do best, Real Estate.

The other day, I spoke on the phone with a real estate broker who had, unfortunatley, missed the important first step. He hadn’t informed himself enough and therefore had made a poor decision. When I asked him how his PPC campaign was going, he told me that he was encouraged by the number of impressions that his SEM manager had generated for him. So, I asked how many visitors this had brought him, what his click through rate was on the campaign, and what his cost per lead was. He had no answers.

When we’re managing a campaign, impressions aren’t a bellweather. Sure, they’re a part of the equation, but they are certainly no measure of success. This broker wanted to bring more visitors to his real estate website and sell more homes. He is spending money on a PPC camaign and he’s got no idea how it’s performing. All he knows is how often his ad is coming up.

If you’re looking for an SEM or SEO vendor, make sure that they are willing to educate you on the basics of how they’ll be doing their work. If they can’t explain it to you, then you should assume they’re hiding something from you because they probably are.

You need to be an educated buyer. Here’s a useful page about SEO vs PPC. Also, if you read this blog regularly, we touch on many of these topics and we’ll continue to educate you on real estate seo and ppc. If you want us to explain the basics to you, we’ll do so free of charge. Just drop us a line on the contact us page.

If I can leave you with one parting word today: Be an educated buyer. It will make you far more successful.

Have a good weekend and good luck with your SEO.