How does the local agent cover the cost of their marketing?

I had an interesting conversation with a colleague the other day regarding the calculation of their return on investment for their marketing activities. The conversation started because of the observation that one of the most media present agents in the area has ads appearing on every sign post, bus stop and street corner. Both my friend and I are doubtful that the agent is making a decent return on investment, but it was worth some time to do a few rough calculations.

This may or may not apply to you own investment in marketing, but here is my rough assumptions and calculation.

Assumptions:
- Average take home per sale $10,000 (hey, it’s San Diego County)
- Monthly rent for space on a bus stop: $700
- Monthly mailing of postcards or letters: $2000
- Monthly cost of local media advertising: $1200
- Monthly online marketing: $200
- Area farming: $600
- Miscellaneous marketing activities: $2500
Total monthly marketing costs $7200

Now in general your marketing cost should be between 10% and 20% of your revenue; with some businesses investing as much as 50% of their income in marketing their real estate businesses. If we assume that due to the new shift in the market the agent has more listings than sales and is pushing around 40% of his revenue into attracting new clients; the agent should be collecting about $18,000 per month. Given the average commission of around $10,000, it should just take the sale of two homes to cover that agent’s investment in marketing. The agent has a lot of listings in the area so I have no doubt that they are at least selling two homes per month.

My math is most likely wrong, but it was an interesting conversation and analysis.

Repetition & Marketing Metrics, Are You Measuring Up?

What is known by all marketers, but not realized by many small business owners is repetition and measurement are the keys to running a successful marketing campaign. The primary focus of any marketing program is to get your target customer to purchase your product. However, many small business owners do not effectively utilize repetition to brand their product, and very rarely do they utilize any form of metric to measure the success rate of a program.

Statistics vary, but it takes the average person at least five exposures to a brand name or product before he or she will make the commitment to purchase it. In addition, it usually takes more than thirty exposures to a marketing piece before the customer can remember it at will. The simple lesson from these facts are that you must run advertisements multiple times, and consistently use the same or similar images to market your product. Run the same advertisement in multiple mediums, with the same logos, images, and themes as it has been proven to be the best mass media approach to marketing your product.

Repetition is the key to creating a successful marketing program, but how exactly do you measure the success? A successful marketing campaign develops awareness of your product which translate into larger sales volumes, but what part of the campaign has had the greatest effect on awareness and increased sales? To answer these questions, you must approach your marketing program with some pre-defined ideas on how you are going to measure results, and how you are going to differentiate the results of one marketing medium from another.

To define exactly how you are going to measure the results of a specific marketing program, you must evaluate the message of your campaign. You must determine exactly what is going to close your customer, and if anything in the message can be echoed back to you in a quantifiable form. Many times, you can include an offer, coupon, or discount in the advertisement which can be documented at the time of sale. This provides an easy metric for tracing the effectiveness of an advertisement. If a traceable coupon or discount is not available, you may need to rely on measurements of increased sales and statistical analysis to quantify the results of your program.
The two fundamental themes in marketing are repetition and measurement. A marketing program will be ineffective if it does not provide sufficient repetition and exposure. In addition, the program will be useless unless it can provide a quantifiable response. Both provide the foundation with which to build an effective marketing campaign.