If you are anything like most real estate agents, you didn’t even both to put a proper business plan in place before you started your real estate business. Odds are that means that you also don’t have an official marketing budget.
How do I know that?
Well, I have spent the last 4 ½ + years having the same conversation with tens of thousands of real estate agents when they call me to help fix their marketing and branding problems. In fact, I would estimate that about 10% of the agents that come to me for help have an official marketing budget.
So if all these other people are running their business without a proper marketing budget, why should you? I’ll dive into the shockingly MAJOR reasons you must have one if you want people to take you seriously and I will show you what yours should be.
But first, let’s get on the same page here. When I say “marketing budget” I don’t mean the maximum amount you should spend on marketing. Instead, a marketing budget should outline what percentage of your overall spending will be allocated to marketing, as well as, break down how much you will spend on various strategies.
If you have ever been pitched by someone for marketing or branding services and wondered whether or not it was the right move for your business, this post is for you. It’s time to finally get serious about your business finances my friend.
Why Do You Need A Real Estate Marketing Budget?
Honestly, there are more reasons than I could probably name. However, the first one I want to point out is the one that has been most relevant lately: you need to be ready to strike when the iron is hot.
As Covid-19 ravaged the world, real estate agents responded in one of two ways:
They panicked, put their head in the sand, stopped or eliminated most of their spending, and hoped for the best.
Or they recognized that the cost for obtaining market share would plummet and they upped their marketing to capture all of the buyers and sellers eager to make a move immediately.
Those that chose option one lost BIG time. Those that chose option two, became overnight rockstars with more clients than they can handle.
You see, every time crazy things happen in the economy like a stock market crash, a recession, or even a pandemic, new opportunities are created. Do you know how some people became mega-millionaires off the real estate market during the recession? That isn’t because they pulled back! It is because they double, tripled, or 10X their marketing budget to capture the majority of the market share at the cheapest price.
Over the last couple of months I have been inundated with calls from many types of real estate companies that recognized that now is the time to go all-in on marketing but had little to no money to use for their marketing. Why? They had no marketing budget or business plan in place to act as a safety net and they missed the opportunity.
However, having the ability to strike when the time is right is not the only reason you need a marketing budget in place. Here are some of the other key benefits of setting your marketing budget:
Measure Your ROI
If you have a proper marketing budget in place, it will be easier for you to track what portions of your marketing plan are outperforming the rest and make adjustments accordingly.
Ugly Surprises
Without a marketing plan and corresponding budget, it is hard to know how much you should expect to spend on various products and services you will need for each campaign. For example, if you include getting a website set up you need to plan to pay for the domain and hosting, website design, original content creation, etc.. Detailing every single expense that goes into each campaign prevents sticker shock when those bills start coming in.
Eliminate Waste & Overspending
My guess is that unless you have an amazing accountant you have no idea how much money you are spending on what every year. That means you have no way to know how much of that money spent is wasted. When you have a marketing budget in place, it is easier to track every penny spent and cut out the waste.
Negotiating Power
When you have a hard budget in place that outlines what you plan to spend on each aspect of a project it gives you more power to negotiate with real estate marketing service providers. For example, I recently had a real estate broker approach me to write the 40 post-licensing course curriculum for their brokerage franchise. In our consultation, I quoted him a price based on the outline of the work to be done. That quote was $3,000 than what had been previously allocated for the project in his marketing budget. As a result, I was able to counter offer some adjustments to the project that would allow him to stay in budget and get the course completed as soon as possible. This NEVER, NEVER, NEVER would have happened if he hadn’t had that marketing budget in place to use as leverage in negotiations.
Understanding the 25% Rule Of Real Estate Marketing
Your real estate marketing budget should act as a roadmap for all of your marketing efforts. However, if you are like most of my clients, you’re probably wondering what your marketing budget should even be. That is where the 25% rule comes in.
The 25% rule states that you should allocate a minimum of 25% of the revenue you want to make towards your marketing efforts. For example, if you want to generate $100K per year in revenue, you should be allocating at least $25,000 per year to your marketing budget.
Now, I know a ton of you just read that and said “Sarah, how the hell do you expect me to spend $25,000 on marketing when I only make $35K per year (average national salary of agents)?!?!?!?!
My response to you is, you are only generating that dismal income because you don’t have a budget in place to help you do more and do it more efficiently. That whole mentality of investing in your business whenever you think you might be able to afford it is playing not to lose. Setting a production goal for your business with a detailed and budgeted plan for executing those goals is playing to win.
Keep in mind, I’m not telling you to spend for the sake of it. Not all marketing is effective and most of it won’t give you the results you want. Everything should come from a point of strategy and if you need help establishing that strategy then you need to schedule a call with me.
How To Allocate Your Real Estate Marketing Budget
Now that we know what a marketing budget is, how it benefits you, and how much it should be, let’s talk more about how you should allocate that marketing budget. The more detailed and deliberate you can be in writing out your budget, the harder it will work for you. As you look at all of the strategic campaigns and funnels you have to take the following categories of marketing spend in mind.
Tools
Software, computers and tech equipment, social media scheduling tools, email marketing software, CRM, marketing analytics software, etc.
Services
Content writing, graphic design, SEO, advertising agencies, real estate photographers, videographers, website syndication, etc.
Staff Hours
Whether you have in-house staff handling your marketing, or hire someone like me to handle it all for you, you need to consider how much of the marketing team’s time will be needed for each project. The amount you spend on labor for each project needs to be factored into the ROI to measure performance and make strategy adjustments.
Advertising Fees
If you place ads in newspapers, classifieds, social media, or search engines you need to plan for those costs. Although some of these methods have the worst marketing ROI performance in the biz, you still need to plan for them if you insist on using them.
Ready To Start Running Your Real Estate Business Like A Real Business?
Just because you have failed to prepare yourself up to this point does not mean you can’t get on the right track now! In fact, pat yourself on the back for taking the step to read this post and having the desire to do the right thing moving forward!
I know the idea of putting a business plan and marketing budget and strategies and systems and all that big picture stuff sounds overwhelming at first. However, it really doesn’t have to be that way. I wrote The Intention Real Estate Agent’s Guided Journal to not only teach agents how all of this works but actually walk them through each process as quickly as possible with prompts. I know not every agent can afford a coach or professional like me to help them with all of this so I wrote The Intentional Real Estate Agent to make the answers you’re craving accessible at a low price less than going to the movies.
However, if you would like more personalized guidance on your marketing, branding, and content strategy schedule a call with me.
