What Should My Real Estate Marketing Budget Be?

If you ask ten different agents, "How much do real estate agents spend on marketing?" you will likely get ten different answers -- but the method to calculate that sought-after number might be the same. That's because the general rule of thumb across industries is to base your marketing budget on your total revenue.

The U.S. Small Business Administration recommends allocating 7-8% of your revenue to marketing if you do less than $5 million in sales for the year. Although this is a general recommendation that isn't specific to the real estate industry, it's consistent with the way many agents determine their marketing budget.

It's common for real estate agents to allocate approximately 10% of their gross commission income to marketing activities.

How much real estate agents spend on marketing will differ by each individual or team and must also take their goals into account and how their current transaction activity aligns with those goals. For instance, an agent might decide to pivot their 2021 strategy and double-down on "Just Sold" and "Coming Soon" digital ads to reach more seller leads if listings are flying off the shelves in their market without any digital advertising.

The calculation is the easy part: The more difficult part is deciding where to invest each dollar for maximum return.

What marketing activities should my budget cover?

You could spend all day, every day, carrying out marketing activities. There's always another email to write, lead to follow up on, digital ad to publish, focus group to talk to, and newspaper reporter to pitch. Real estate agents don't have time for every promotional activity under the sun.

There are a handful of tried-and-true tactics that should be on every agent's list, however, whether you're a seasoned vet or just starting to dabble in marketing your business.

Email Marketing

Emails aren't optional, and Gmail isn't an option (or AOL, Yahoo, etc.). Real estate agents are running a business, and that business needs the ability to set up automated workflows that nurture leads and send market updates, e-newsletters, open house schedules, and other valuable, local market content to their sphere.

Cloud-based email marketing software isn't very expensive (unless you're managing many thousands of contacts). Likely, you will pay less than $1,000/year for your email service. Before you sign up, compare competitors and their plans. Many offer a free base level that could sustain you for several months as you build a rich email program. Then you may consider upgrading to access additional tools or add more contacts that exceed your current limits.

Here are a few established brands to give you a sense of service costs (rates are valid as of April 2021):

• MailChimp is a go-to option for small businesses across industries. Its pricing plans range from free for a basic plan to $299 per month for a premium subscription (with up to 500 contacts). More than likely, you'll start at the free plan and upgrade to the mid-range $9.99/month or $14.99/month plan when you need to activate more features.
• ConvertKit is another popular option with monthly pricing, as well as yearly rates that will give you a two-month-free discount. The baseline plans allow for up to 1,000 contacts and include a free tier and two paid tiers ($29/month and $59/month).

And though it isn't a full automation system, agents should know that contacts they invite to Homesnap will be automatically signed up to receive a branded newsletter — all free to Homesnap Pro agents, so you don't have to work this extra into your budget.

Plan to spend up to 15% of your real estate marketing budget on email marketing activities.

Online Presence

If leads and prospects can't find you online, do you really exist? To most digital-savvy buyers and sellers, who rely heavily on the Internet, the answer is a resounding "no."

Think about it: If you looked up the local Italian restaurant to see its menu and it didn't show up in search results, wouldn't you wonder if it had closed? The same is true for your real estate business. You need a robust online presence to prove that you're an active, successful agent and to build trust with those who are considering working with you.

With so many agents in the industry, you don't want to be unfindable online.

The two best marketing activities to build your online presence are website maintenance and Google Business Profile management. 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 results when someone Googles your name.

Another top tool to improve your online presence is the Google Business Profile. This profile takes up the right column on the Google search results page. It contains your business contact information (including a link to your website), your business's bio, photos, content posts, and, arguably most important, your star rating and online reviews.

However, you cannot just set up your profile and leave it be. It's imperative that you keep it updated and active on a weekly basis. This helps improve SEO and the odds that your profile will appear in search results for a wider range of search terms, such as "real estate agents near me."

Compare these popular options that will help you boost your online presence (rates are valid as of April 2021):

• Homesnap Pro+ is a bundle of upgraded benefits designed just for real estate agents, for just $99 for the first year (regular price is $599). A premium version of the free Homesnap Pro account, this membership includes additional features like a Google Business Profile (verification, assembly, and management), a custom responsive real estate website with a unique domain, advanced MLS search capabilities and custom lead pages for every one of your listings.
• Placester is only a website creation and hosting platform, and therefore doesn't offer Google Business Profile services (we aren't aware of any other marketing platforms that combine the two). There are three plans—$100/month, $190/month or $200/month—that include a responsive website, unlimited pages and posts, lead capture, and IDX listing display tools that may incur an additional fee.

Plan to spend up to 15% of your real estate marketing budget on building a robust online presence.

Digital Ads

There are many benefits to running digital ads on platforms like Google, Facebook, Instagram and Waze. These include: expanding your reach, building brand awareness, generating leads and promoting your listings (active and coming soon), open houses, price cuts and closed sales.

Digital ads should be a core part of how much real estate agents spend on marketing. As such, your all-in costs could be as much as 50% of your available budget. This will include actual advertising fees, as well as costs from designers and lead qualification services, if you plan to outsource those functions.

Advertising fees can fluctuate month to month, making the cost of this marketing activity a bit less predictable than the other tactics we covered. One way to keep costs flat and consistent is to work with a trusted marketing partner, like Homesnap Pro Ads or Concierge. These ads services will manage everything from design and copy to optimizing the settings and spend throughout each ad's run. Concierge goes a step further and also includes live, direct phone call leads from high-intent leads via Google's Local Services Ads.

Plan to spend up to 50% of your real estate marketing budget on digital ads.

Final Thoughts

You'll notice that our calculations leave 20% of your budget remaining for other activities. This could be spent on things like branded freebies, postcard prospecting, newspaper ads, etc. It can also be reallocated to the tactics we already mentioned if you need a boost in one of those areas in a given month or year.

Keep in mind that there is no silver bullet that will generate overnight success, and the same is true for your marketing. The return on investment will be high when you're able to maintain the activities over months and years. Choose your tactics, budget, and third-party partners carefully, and then stick with your plan to see results.

To view the original article, visit the Homesnap blog.