This article is part two of a real estate PPC series. In part one, we talked about what PPC is and how Google Ads work.
Too often, real estate agents run PPC ads poorly, end up shelling out way more money than they’ve allotted in their budgets and ultimately decide to ditch the program before they waste any more. It’s all too common to find agents who’ve had a negative experience and don’t want to continue with PPC.
However, PPC campaigns can drive motivated traffic to your website, generate more leads, and ultimately close more homes. When done right, costs can be controlled and wasted advertising dollars can be avoided leaving you with a prime position in the market. Read on to learn about why PPC is one of the industry’s worst kept secrets.
How is cost per click (CPC) determined?
Cost Per Click, or CPC, is the amount you pay each time a buyer or seller clicks one of your ads. This metric is important because it helps you gauge the performance of your ads. Before you can work on improving your average CPC, it helps to understand the key factors that go into it:
– Quality score: Google rates the quality and relevance of your keywords and ads. The higher your quality score, the less Google will charge to rank high.
– Ad rank: If two ads have the same quality score, you have to pay a higher CPC for the benefit of ranking higher.
– Campaign age: It takes time for your campaign to optimize and to improve your quality score, so costs decrease with longer-running campaigns.
– Website quality: High quality landing pages that are relevant to your keywords have higher quality scores.
– Keyword competition: Google Ads runs similarly to an auction. The more people that are bidding on a keyword, the more expensive it will be.
– Location: Costs will vary depending on your target location and if you’re targeting buyers or sellers.
How is the conversion rate determined?
For real estate agents, your conversion rate is the percentage of web traffic who turn into leads, either by leaving their contact information or inquiring about a listing. Similar to CPC, there are a couple of key factors that can influence it:
– Lead capture: Do you have a way for potential leads to submit their contact information before they can continue browsing your listing?
– User experience: Metrics like time on site, bounce rate and loading time can affect your quality score because they speak to your landing page quality.
– Target audience: Similar to CPC, costs will vary based on location, property types you specialize in, and if you’re targeting buyers or sellers.
What’s a good conversion rate?
One of the biggest misconceptions is that there is a “normal” conversion rate agents should strive for. There are also so many website-specific and external factors that can affect how many people leave their contact information that real estate agents within the same market can generate wildly different lead counts.
Higher conversion rates, on their face, seem awesome –you want a high conversion rate because that would mean you’re getting more leads. However, if you're converting less qualified leads who aren’t interested in your services yet, a high conversion rate won’t actually help you grow your business.
How is cost per lead (CPL) determined?
Cost Per Lead is another marketing metric that helps gauge the effectiveness of your PPC campaigns. Calculating CPL is relatively straightforward: divide the amount of money you spent on a campaign during a set period by the number of leads acquired through that campaign in the same period.
(ad spend over a month) / (leads generated during that month) = Cost Per Lead
($1000 ad spend) / (50 leads generated) = $20 CPL
According to WordStream, the real estate industry’s average CPL is $116. On average, Avenue clients pay 10 times less with a CPL of $12. It’s important to remember that these are averages across all clients, in all markets. Certain markets see a higher cost per lead because they’re much more saturated. Example markets include California, New York, and Texas. For a mid-sized market you can expect to pay around $10 with Avenue.
What should my ad budget be?
Once you know your Cost Per Lead, you can calculate how much to set aside for your ad spend. We recommend generating 1-2 leads per day, per agent on your team. This allows for enough lead volume to see a decent ROI on your campaigns. Remember: online leads convert into home sales at a rate of 1-3%. If you’re only generating a handful of leads a month, it’s going to take a long time to turn one into a close!
Number of agents * leads per agent, per day * expected cost per lead * 30.4 days
Here’s an example for a single agent who wants to work 2 new leads per day:
1 agent * 2 leads per day * $12 cost per lead * 30.4 days = $729.60 per month.
Psst...We go into more detail into the ROI of advertising in Part 3 of this guide.
How does Avenue save you money?
Whether you have a lot to spend or are on a limited budget, you won’t want to waste a penny of it. Our marketing make sure that your budget is spent efficiently by:
– Consistently adding negative keywords
– Adjusting audience targeting
– Creating compelling ad copy that drives people to CLICK
– Improving your quality score
– Managing bid adjustments
– Monitoring search terms
– Optimizing keywords
– Constantly testing ad formats and extensions
In one sentence, you get a pro marketing team handling your advertising, and you get to skip the agency price point.
In general, there’s no one-size fits all type of approach for determining your PPC budget. You can’t truly know your cost per click, conversion rate, or cost per lead until you’ve started running a campaign. Your cost per lead will vary depending on how competitive your market is, but you can expect to pay between $7-18 per lead with a properly run campaign.
If you don’t have any paid search experience, you can save yourself a great deal of time and money by working with a PPC specialist. If you’re interested in seeing how PPC can help your real estate business grow, you’ve come to the right spot! Even with program or management fees, you can expect to pay far less than going it alone. At Avenue, we’re on a mission to make sure your PPC campaigns give back more than it takes.
Book a free 1:1 consultation here to learn about our PPC services.
Missed the other blogs in this PPC series?
Part 1: The Value of PPC
Part 2: The Cost of PPC For Real Estate
Part 3: The ROI of Real Estate PPC