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Posted by REW Marketing on Monday, January 28th, 2019 at 8:30am.

Cost of Real Estate PPC

This article is part of a series about real estate PPC. We highly encourage you to read the entire guide as it's released. Follow us on Facebook to stay up to date!

It's the first question we're always asked when an agent or brokerage is considering PPC:

"What's my expected cost per lead?"

To be honest, there's no simple answer. But, by answering the following questions, we can get a pretty close approximation and help you understand the mystery behind the cost of PPC:

  1. How does the Google Ads auction work?
  2. Cost Per Click: What is the expected CPC in real estate?
  3. Conversion rate: What is the expected real estate PPC conversion rate?
  4. Cost Per Lead: What is the expected PPC cost per lead in real estate?
  5. What should your monthly PPC budget be?
  6. How do PPC specialists keep costs down?

In this blog post, we also compare WordStream's real estate industry PPC benchmark data to the results achieved by Real Estate Webmasters PPC clients in 2018.

Spoiler: REW clients are killing it.

Let's get started.

How does the Google Ads auction work?

Every Google search triggers an ad auction. This auction will determine which ads show for that search. If the search keyword is one of your targeted terms, you enter the auction.

Two main factors go into the Google Ads auction:

  1. Cost Per Click (CPC) Bid: The maximum bid each advertiser has set for that keyword
  2. Quality Score: How relevant and useful each advertiser's ad is for that keyword

Quality Score is what gives Google Ads a special twist:

Ad space doesn't just go to the highest bidder. The more Google trusts you, the less you pay.

Why? Google wants its ads to be relevant and high quality.

Ultimately, Google calculates Ad Rank (which ads are displayed and in what order) based on a combination of the highest bid and quality score.

Cost Per Click: What is the expected CPC in real estate?

Cost per click (CPC) is the fee you pay per click. Across industries, the average CPC in Google Ads ranges from $1.00 to $7.00.

Real estate PPC cost per click typically ranges between $0.50 to $4.00.

Industry Average vs. Real Estate Webmasters

In 2018, REW PPC clients paid about half as much as the industry average for each ad click:

  • Industry average CPC (2018): $2.37 (Source: WordStream)
  • REW average CPC (2018): $1.25

This goes to show that advertisers can save big if they play their cards right.

Factors Affecting Cost Per Click

Why does CPC vary so much? Here's only a short list of what can affect a keyword's CPC:

Ad quality - Compelling ads improve the click-through rate, which improves Quality Score

Website quality - High-quality landing pages have higher Quality Scores

Ad position - Quality score being equal, you have to bid higher to show up higher

Campaign age - Quality Score takes time to improve, so longer-running campaigns tend to decrease in cost

Keyword competition - The more advertisers competing for your keyword, the higher you have to bid

Locating targeting - Costs will vary based on who you're advertising to

Seasonality - The supply and demand of advertisers vs. searchers fluctuates throughout the year

Conversion rate: What is the expected real estate PPC conversion rate?

In real estate, the PPC conversion rate is the percentage of visitors from ad clicks that take a registration action on your website.

This could mean creating an account, submitting a contact form, or inquiring about a listing.

Industry Average vs. Real Estate Webmasters

Once again, REW outperformed the competition by a long shot, with nearly 2.5 times the industry average conversion rate.

  • Industry average conversion rate (2018): 2.47% (Source: WordStream)
  • REW average conversion rate (2018): 5.94%

Remember: that's just an average. At REW, we see conversion rates on PPC campaigns range all the way from from 3-20%.

Factors Affecting Conversion Rate

Like CPC, the conversion rate can be affected by a variety of on-site and external factors. These factors include:

Registration settings - Do you ask users to register to see listings?

User experience - Does your website impress the visitor?

Number of listings available - Do you provide valuable information?

Market competition - Does the visitor have other options?

Real estate niche - Certain property types have higher conversion rates than others

Seasonal fluctuations - Conversion rates typically increase in peak selling season

Because of this long list of factors, even campaigns within the same market can experience wildly different lead counts.

Cost Per Lead: What is the expected PPC cost per lead in real estate?

Cost per lead is a function of your campaign's CPC and conversion rate.

Estimating cost per lead is a simple calculation:

Cost Per Lead = Cost Per Click / Conversion Rate

Industry Average vs. Real Estate Webmasters

Here's where it all comes together. On average, REW PPC clients pay 5 times less than the industry average.

  • Industry average cost per lead (2018): $116.61 (Source: WordStream)
  • REW average cost per lead (2018): $21.07

An important disclaimer about cost per lead...

These are impressive results, but here's something to keep in mind:

These are averages across all clients in all markets.

Just like home prices vary from market to market, cost per lead will vary too (that's not to say cost per lead directly correlates with housing prices).

Without first running your campaign, we truly won't know your campaign's cost per click, conversion rate, or cost per lead with any certainty.

If you're ever promised a specific cost per lead by a PPC specialist, run the other way.

Cost Per Lead in Competitive Markets

In highly saturated markets, or those in the luxury real estate space, you can expect a rough cost per lead of $20-50.

A few market examples include Arizona, California, Colorado, Florida, Michigan, Utah, and Washington.

Cost Per Lead in Less Competitive Markets

In small-to-mid-sized American markets and all Canadian markets, we typically see cost per lead range from $5-30.

A few examples include Alabama, British Columbia, Georgia, Hawaii, Minnesota, and Ontario.

What should your monthly PPC budget be?

Once you've estimated your average cost per lead, you can determine your monthly budget. Rest assured: Google will never exceed your monthly budget over a 30-day period.

As a general rule of thumb, we recommend generating 1-2 leads per day per agent, especially when you're just starting out.

Here's how to calculate your monthly advertising spend budget:

Number of agents x leads per agent per day x expected cost per lead x 30.4 days

Using our average client data, here's an example calculation for a single agent who wants to generate 2 leads per day:

1 agent x 2 leads per day x $21 per lead x 30.4 days = $1,276.80

Most agencies that run PPC will also charge a management or program fee, so take that into account when setting your budget. Of course, you should also factor in the cost of the website you're driving leads to.

How PPC specialists keep costs down

The role of a PPC specialist is to allocate your PPC budget where it will be spent most efficiently. Without proper management and expertise, click costs can quickly spiral out of control.

So how do we manage those costs? An experienced PPC manager will:

  • Create compelling ads
  • Create effective landing pages
  • Choose and monitor high-performing keywords
  • Maintain the strongest ad for the best price
  • Set device bid adjustments to favor mobile or desktop users
  • Adjust location targeting
  • Set an ad schedule
  • Set a bid strategy
  • Experiment with different ad formats and extensions
  • Monitor conversion tracking
  • Keep up with the latest Google Ads trends

Fewsh. I'm exhausted just reading that list.

The right PPC specialist can truly make or break your campaign.

Key Takeaways

As with all forms of marketing, PPC can be unpredictable. An individual PPC client's cost per lead is very tough to predict.

In general, you should expect a cost per lead between $20-30 unless you're in a very competitive market.

Thankfully, experienced PPC specialists play a huge role in keeping costs down. Even with a program or management fee, you'll typically see much lower costs than running the campaign yourself.

If you're interested in real estate PPC services, you're in the right place. We at Real Estate Webmasters are Google Certified Premier Partners, working exclusively for real estate professionals.

Check out our PPC services page to learn more.

Continue the Real Estate PPC Guide

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