An Industry Expert Shares the Perfect Marketing Budget

Creating a marketing budget is frequently a challenge: Half the time, no real budget exists. The other half, the budget hasn’t been updated since it was created. Yet having and monitoring your budget is the only way to know the ROI from your marketing initiatives, and if that ROI is improving each year.

To help, we’ve connected with key industry partners to get their top tips for how builders can most efficiently market their new construction homes and grow their business.

Here’s Kevin Oakley of DoYouConvert, author and experienced new construction marketer, with advice on structuring an effective marketing budget.

Here are his three keys to creating the perfect marketing budget — including a breakdown of where to focus your funds.

1. Don’t overlook the power of online

Few would argue with Oakley’s belief that 100 percent of today’s consumers are heavily influenced by the internet. Yet an informal poll he conducted revealed that the average builder dedicates only 30 percent of marketing budgets to online. In other words, the single largest factor to impact your online traffic only gets a small financial investment.

A world-class online marketing program can’t be overestimated. While working at Heartland Homes in Pittsburgh, PA, Oakley’s sales grew by more than 100 units in a single year because he moved more than 50 percent of his budget online, giving his team the resources to move faster and execute an online sales and marketing program. In less than four years — from 2008 to 2012, during the great recession — more than 70 percent of Heartland Homes’ sales came from online contacts, something Oakley says wouldn’t have happened without the switch to online.

2. Think like an investor

Investors look for both short-term and long-term returns — and you get that when you invest in content, process improvement and people. For example, quality photographs and videos will provide value on your website and improve the impact of your ads. Find the right content, processes and people, and you’ll build positive momentum that pays off today and tomorrow.

3. Lock down the numbers

The following breakdown is a good starting point for your annual marketing plan. Remember, you can always adjust your budget.

1 percent of projected revenue becomes your total marketing spend

If you dedicate anything less than 0.07 percent of your projected revenue, you’re underinvesting in your own company, and you might suffer for it during the next downturn. On the flip side, allocating more than 1.5 percent will likely be overkill. This number includes all advertising expenses and sales offices in model homes, but not model home expenses or salaries.

50 percent or more goes online

The lion’s share of your investment should belong to digital. This includes online ads — Google pay-per-click (PPC), Facebook, syndication sites, display, etc. — and any development costs related to your website and online sales program (including, servers, maintenance, upgrades and CRM). This also includes your website content such as photos, videos, renderings, site maps and written descriptions.

Since online is the largest area of the budget, be sure to spend time figuring out where to allocate it. For example, if 50 percent of your marketing budget is $100,000, break it out like this:

• Advertising: 50 percent ($50,000)
• Website development, tools and CRM: 25 percent ($25,000)
• Content: 25 percent ($25,000)

When there are times when you don’t need to invest as much in your website structure, you can reduce your development budget and dedicate more of it for producing even better content. Move your funds between these three categories, but keep the total at or above 50 percent.

20 percent goes to signage

Signs reflect your brand, so make sure yours look good all the time. You don’t want a home shopper to see your faded signs as an indication that your community’s heyday has come and gone.

8 percent goes to events

Model homes are the ultimate marketing tool: They immerse prospective buyers into the experience of living in your home. Encourage people to visit your model and fall in love with it. Your event allocation includes real estate agent events, grand openings, customer appreciation events, and any other happenings to get buyers on site.

6 percent goes to collateral

Real estate agents and sales staff are the primary audiences for your printed materials. Today’s consumer might glance at your collateral, but they prefer the instant accessibility of your website’s offerings.

15 percent funds everything else

Use your remaining budget on gifts for buyers and realtors, market research, direct mail, agency support and anything else not covered above.

Once you create a marketing budget that strategically and proactively funds the most effective initiatives, executing those tasks and tracking your ROI can become significantly easier.

Looking for more ways to make your marketing budget work smarter? Check out Promoted Communities and other Zillow Group solutions for builders.