Beautiful, fast, real estate websites
Taking a hard look at real estate PPC data this past weekend as one of our accounts (and a really good friend of mine) has had a spike in cost per lead lately (a big one that is not tenable) it’s definitely an oddity and needs to be sorted out (we will) but as I’ve been exploring I’ve also been looking at trends.
What I can say for sure is this season cost per lead seems to be on the rise. Not sure if this is indicative of the spring market and positive sentiment coming back or if it’s just the nature of the game.
What I did was looked at the top 100 markets in terms of CPL: (screenshot for sorted example)
Now of course everyone wants 10+% conversion rates (and as you can see, they ARE possible)… << and all of the PPC companies out there will always use their rare 10+% conversion sub $10 CPL accounts as case studies (don’t blame them, we do to).
But this is real talk on CPL’s (top 100 markets, not just grabbing a few unicorns to make the data look good).
Here are some quick stats to share.
The “average” CPL is $13.73 USD - (note it is slightly lower than that since there are CAD accounts in the data, which should be normalized by $1.32) so it’s likely more around $12 USD CPL.
The “average” conversion rate: 7.1%
Average CTR (Click through rate) 9%
The average cost for a click: $.93
The top 10 markets (CPL) $4.91 USD
The bottom 10 markets (CPL) $21.50 USD
Given the market conditions, we are currently recommending a 1% to 1.5% (down from 2%) raw lead to a closed deal.
This means you need 66-100 leads to close a deal in today’s marketplace.
Average CPL: $13.73 means cost per “closed deal” is $906-$1,373
Still has great ROI if you’re making $5-10k+ per transaction but it’s definitely up from years past.
On a positive note: We’re seeing a LOT more activity from our own personal PPC account at carlycarey.com. We have 4 deals confirmed from PPC this year and a bunch more folks we’re working with, so it definitely seems like buyer sentiment is back and there is at least a “bit” of inventory to choose from.
Not all accounts at REW are “forced right away” - we recommend that, but some clients have alternative registration such as after x amount of views (or no registration) which does affect the average CPL and conversion rates.
CPL is not normalized to currency (it’s a mix of CAD and USD) as such CPL numbers (which should be normalized into USD) will be higher than they actually are (CAD accounts should be reduced to 1/1.36)
Anyways, that’s some real talk on PPC (top 100 markets).
Would love to hear your thoughts - comment below (no PPC company promotion please :))
And for those that are curious - the top ranked (lowest CPL) was the Bahamas.
The most expensive in the top 100 was luxury markets in Washington DC (sorry @andreREW)
Great intel Morgan. Thanks for keeping an eye on our PPC performance. Is there anything I can do to help you investigate what triggered the spike? I noticed a good number of NEW players bidding in my market. Perhaps we should refine the keywords?
Hey Andre, I wasn’t actually talking about your account as the spike (your market is just naturally more expensive due to price point was the point I was trying to make < obviously poorly)
The client in question, I actually think I solved - my guess is there was a conflict in the registration form triggering because of the implementation of a third-party chat (Ready Chat) but still testing.
Your market “this week” was high (already has gone down, example campaign shown)
but month to date it’s actually not that bad
Keeping in mind, the markets we’re targeting are ridiculously expensive (compared to the national average)
1% conversion on month-to-date would be a cost of $1,652 per acquired deal in this case.
Considering GCI is likely $16k+ I would estimate a 10-1 ROI on it.
Does that math line up? What is the current average price point for you over there? (I’m going off the interwebs for my numbers
You did bring up a good point though Andre - about costs going up when competitors enter the market.
A few competitors (REW or otherwise) won’t make a dent, however it is my observation overall, that there is a LOT more competition in the market (hundreds if not thousands more people) bidding on adwords.
What this does is drives up the “cost per click” (what people are willing to pay) and keeping in mind adwords is an auction system) so the more competition in the market, the higher the cost per click goes (it’s the one thing REW has little to no control over)
Here is some market insights from the past year (using your market as an example)
Feb 2022, your clicks were $.66 and your conversion rate was 6.75%
Today - your clicks are $1.08 (that’s a 64% increase in the base cost of clicks)
So even though your conversion rate has stayed quite stable (last 30 days is 6.5%) the cost per lead will have gone up dramatically due to increased competition in the market (an increase in cost per click)
Think about it this way: (The formula)
(All great things REW can do to help) x cost per click = cost per lead.
So we can control one side of the equation (improving conversion rates, keywords, bidding strategies timing, geolocation all the things) but it still gets multiplied by the CPC to give you the end result.
And it makes sense right? The 2021, 2022 market was HOTTTTTTT (So many more Realtors®, so much increase in price etc) so people are driving up the bids.
It will take a while, but this new market is going to flush folks out and that will mean competition will go back down which should see CPC’s going in the other direction.
In the meantime - (as long as there is a positive ROI) Coach AJ Hazzi has some great advice: Those who are willing to outspend the completion are in the best position to grab market share.
Again - there HAS to be a positive ROI to it though.
Great, now I’m in a rabbit hole! lol
Looking at my own market (luxury on Vancouver Island) check out how fast CPC’s are going up.
30 days ago? $.69
Today? $1.21 (almost double in one month!)
Is it annoying (and does it kind of suck) yes.
But! We have 2 subject removals (closed deals) 1 accepted offer (closed) and 1 listing (just hit the market) from PPC so far this year. (And hundreds of other prospects in our CRM coming in each month)
So… while I still want my team doing everything they can on the PPC side to get many as many leads as possible in my budget.
When I take a step back and look at the ROI - “So far” we’ve made over $40k in commissions on $3k of spend.
Hey Morgan, thanks for explaining, my friend! I’m glad to hear that the CPL has gone down this week. My CPL was in the $12.60 range last month, coming from the $11 range last year. So the current $16.52 CPL is quite an increase. Hopefully, it will adjust in the upcoming months, but I can see a lot of new players out there competing for the same.
Yes, I’m focusing on expensive markets. Perhaps I should consider adding other cities that are not as expensive in the future.
Your math is correct, Morgan. My team’s average for 2022 is $796,720 and my average is in the $1.5M range. Therefore, the GCI is in the $20k range.
Yes, I can complain about the cost per lead, but in reality, even with the increasing cost of digital marketing, the 10-1 ROI+ is not a bad deal. To overcome the increase, we must focus our energy on optimizing our team’s follow-up and conversation skills in addition to having more niche websites that incentivize visitors to share their info in exchange for access to your websites.
There is a Positive ROI Morgan! And while there is a positive ROI, the opportunities for success in the online lead gen are limitless as long as we do an excellent job at growing the teams and optimizing our follow-up and sales skills.
I’m glad the G PPC team at REW handles my PPC efforts successfully. As an agent, I want to put my energy into growing and improving my agent’s ability to convert.
I always listen to Coach AJ Hazzi and his assessment of how to invest with confidence as long as the ROI is present.
Based on the lead information costs you related to us. That means if it cost $1,373 dollars to generate one transaction then a spend of $500.00 per month would net around 4.4 transactions in a year. Am I figuring that correctly. I am in the North Dallas, Texas.
The answer to that question is far more nuanced than yes / no because there are so many factors involved:
Here are some of them:
Platform: You should be on the latest platform (Renaissance) if you’re on an older platform that can have an impact in performance. (You can also get a free upgrade on renewal from your AM BTW)
Market: while we speak in averages, every market is unique and has its own price points, inventory levels, turn over rates etc. Dallas is very transactional for instance so 1-3% conversion rate with great follow up is totally possible, whereas Hawaii has far more “house porn” (people dreaming about moving to Hawaii but not really serious, or even if they are serious it is so much harder to get out there, view homes etc, so much longer sales cycles and it’s more like a .5-1% conversion at best. There is also nuance inside the market, Dallas has really expensive neighborhood and less expensive - lead costs will certainly vary based on this.
Follow up: This part’s on you. How good is your follow-up (and we need to be honest with ourselves). The best metrics come from measurement (we always say if you did not write it down you can’t measure it, and if you can’t measure it, you can’t improve it) and also “If you didn’t write it down, it didn’t happen” - so if you’re not multiple calls, texts emails inside of a week for a lead, you’re not keeping up.
There are lots of other things but these are some of the big ones.
In general - if you’re not “only” focused on expensive neighborhoods, $10-$20 CPL is a very reasonable lead target, as is 1% conversion rate (2% if you’re really awesome, but aim low and then get better) so 1-2% is $750-$1500 per deal.
Now as for your budget comment - $500 is a little light (for any market). Here’s my thoughts on that.
REW charges 25% management fee (we get paid $125 to manage that budget) so $375 goes to Google. So really that means $500 is less than a lead a day.
At that lead volume, it’s harder to stay engaged and build a rhythm and good habits with lead follow-up. So your conversion is likely not as good.
Also with a limited budget means limited data for Google, and so the learning process (they assist us using AI / Machine learning etc) is slower and less robust (more data is always better).
So what I counsel people to do in this case is double the budget and halve the timeframe.
What I mean by this is: If you are committed to 12 months at $500 in PPC (and if it’s in your means) commit to 6 months at $1,000 instead. It’s the same $6,000 spent, but this way you condense the experience, get to optimization (and results quicker) and overall it’s a better play.
Does that make sense? Also, I don’t see your account in adwords (under your name) is it under someone else’s?
Thank you for adding a little more clarity to the discussion. I am getting ready to upgrade to the new platform but at this point we are in the middle of adding or trying to add another Buyers Agent to our team to help with lead follow up. Our REW site is www.roxannedeberry.com and it is the older platform. I am speaking with Shannon about the upgrade and she has been answering all of my questions. You hit right on the things I have been talking to our team about and since we don’t have an ISA we need all hands on deck when it comes to our lead follow-up. Our business is about 70% past clients and past client referrals at this point. We get many referrals from other agents around the country and due to my wife, who is the Team Leader, (like your wife I would assume) is part of the Mike Ferry Training program and has been for many years brings in referrals from agents. We have not, as far as I am concerned, been able to make a big impact on getting many more transactions from google or google ppc. Although, we may have but were not able to track that as effective as other criteria. We have a lot of work to do to make this part of our business more significant. I really appreciate your feedback.
This is the case with many folks (you’re not alone) - so I think you’re going to LOVE the new CRM / platfrom. Specifically the agent accountability module which allows a no excuses (no bullshit) approach to conversions with your agents.
You either did, or you didn’t do it
There are a lot more automations available too which will help the agents do the things they don’t want to do. Excited to hear about your upgrade. Shannon’s rad, I’m sure she’ll take great care of you, but if you have specific “how do I” questions, bring them here. We’re always happy to share (and it is a benefit if others can get involved and learn too)
If a person has a limited budget would it make more sense to go hyper local in terms of one specific community or one specific property type ie infill homes or those with side entrances?
All comments welcome…