Many real estate agents wonder how much the average agent spends on marketing, or what is normal to budget. In short, it depends on the individual agents.
Some recommend 10% of your gross commission income or gross revenue, or just 7% – 8% for very small businesses. This includes marketing and lead generation activities. However, this is only a general rule which may not be right for everyone, especially new real estate agents who don’t have the income yet to spend money but especially need to generate awareness and attract clients.
Regardless of your exact budget amount, a more critical component is determining which real estate marketing activities you should be spending money on, and what percentage for each activity.
Creating a Real Estate Marketing Budget
An important first step is to establish a marketing plan. Assess your goals before deciding on what to spend on marketing. Some common goals for many agents are building awareness of your real estate brand, especially important for new agents, and increasing your online presence. You may want to initiate and maintain relationships with local homeowners, or even establish a strong reputation as a local real estate expert. Many new agents are interested in tools to generate effective leads that can convert more reliably into sales.
Marketing Budget Ranges
If you are a new real estate agent, and don’t have a large real estate marketing budget, you may wish to do as much of your own marketing as possible to cut costs; you’ll have to rely more on free activities like contacting potential clients personally. Even on a low budget, you can – and should – still get professional copywriters and photographers for your bio and profile shot, which are critical for website creation. You can use a free website builder, but be prepared to put in hours of extra effort. You can also join sites like RateMyAgent or Zillow, which connects potential clients to subscribed real estate agents, for commissions on successful connections.
If you can budget at least $10,000, you can hire a professional to create a more impactful and enticing website that’s optimized for web searches. You can also set up Google Search or Display campaigns, but will still need to dedicate time to be hands on. You can also spend a portion for magazine ads, which generally cost about $250-$1000/month.
With larger budgets of $20,000 and up, you can have your marketing professionally managed to free up your time. You can spend some of your budget to develop a content marketing strategy including publishing online written or video content, which you can also forward to your email contacts database. Professional writers and videographers are recommended to produce high-quality, SEO-optimized content. You can start to sponsor social media content, as well to increase brand awareness.
A Real Estate Webmasters study showed that, while 53% of agents spend less than $5,000 on marketing, top real estate agents spend much more. In fact, 52% of agents with real estate commissions higher than $300,000 have budgets of $20,000/year; 20% of these top performers budget over $80,000/year. Also, Deloitte reports that small businesses that actively market online see an increase of $350,000 or 20% increase in annual revenue.
While investing in marketing is important, it is more crucial to monitor and assess that your efforts are effective, tweaking your strategy to gain the biggest return on what you spend.
Types of Marketing Costs
Allow for one-time, set-up activities, such as creating profile bios, pictures and videos, websites, and email systems.
You should also budget for ongoing expenditures, including content production costs for blogs, vlogs, and guides, as well as other online advertising.
Traditional marketing, such as flyers, and magazine and newspaper ads, as well as public relations efforts like radio promotions or partnerships with local businesses will also be ongoing.
Splitting Budget Costs Effectively
Email and Direct Contacts
Your real estate business will need to set up automated workflows to encourage leads and update clients.
Email marketing solutions can be inexpensive. Many systems like MailChimp offer a free base level that is usually sufficient until your new business has grown; levels can be upgraded as necessary, starting from about $10/month up to $300/month.
Generally, it’s recommended that real estate agents spend 15% of their budget on these activities.
Online and Digital Advertising
COVID-19 changed the real estate industry and how the average real estate agent did business. Virtual tours and live streams to sell homes replaced open houses. The rising trend for buyers searching online ramped up, rapidly increasing reliance on online marketing. Professional websites and effective digital ad campaigns became more important than ever. Some recommend spending about 50% of budget money on online campaigns, and another 15% on setting up or maintaining a website and online presence with tools like Google Business Profile.
Website Creation and Online Presence
All real estate agents should have a website that is modern and responsive across devices, has engaging and valuable content for buyers and sellers, and hosts lead capture pages for all your active listings. Make sure your website is optimized for search engines so that it shows up near the top of search results.
You need to keep your Google Business Profile and other such pages updated and active to improve SEO and increase the chances of it showing in search results.
Online and Digital Advertising
Social Media Marketing
Facebook, Instagram, and others are good for expanding reach, building brand awareness, generating new leads, promoting listings and open houses, and updating potential clients.
Google has 5 billion search queries daily. Google Search and Display ads help you tap into this wide-reaching network. The average cost-per-click for Search ads is $1-$2, or $1 for Display ads.
Other Marketing Budget
It’s recommended that the remainder of your budget is put aside for any other initiatives, like paying for promotional gifts or paper ads. It can also be kept as a flexible marketing fund to use as needed.
Are You a Real Estate Agent Looking to Advertise?
A real estate agent relies heavily on commission for income. According to WOWA, most real estate agents make one or zero sales per year; only the top 10% make more than 10 sales per year. In an area with a hot real estate market, competition is fierce. In Canada, the top reported real estate agent earnings is $134,783, but the average real estate agent makes far less, with a median income of $46,212.
To break into this top group of real estate agents, effective marketing is critical, so be proactive, before running low on leads.
For creative real estate marketing solutions to make you stand out from every other real estate broker, contact Merged Media today. We offer complete services and solutions to help you gain the best return on your investment.