Advertising vs Promotional

Part 1

How much effort and money do you invest (spend) to make yourself known and, more importantly, to generate business?

One of the largest areas of spending for a real estate broker is advertising. How much do you spend? How much does it bring you? Many brokers tell me, "It costs me xx amount of dollars, if I close two deals, it pays for itself." Nothing could be further from the truth!

People like to calculate ROAS: Return on Advertising Spend, meaning if I invest $10,000 and earn $15,000, I get a 1.5 return on my investment. This unfortunate formula serves to justify unprofitable expenses. On the one hand, the calculation must be made based on the net profits my business generates, not its gross income. If I generate $200,000 in commissions, and my agency fees, office fees, licensing, car expenses, etc., amount to $60,000, I’m left with $120,000. But that's not all—what is my personal income (equivalent to salary)? How much do I need? What is the minimum amount I need to live well? $5,000, $7,000, $9,000 per month? How much is left? That's my profit; my profitability. And from there, what should be my return on investment in real estate from my advertising budget?

Part 2

Should I invest in advertising? Yes, of course, but when and how much? Those are the questions. What do you have to sell and what is your target market? Let’s start by defining the difference between an advertising expense and a promotional one.

Advertising is a marketing tool used to encourage or persuade the public to buy their products. Promotion, on the other hand, is a marketing technique used to reach consumers and raise awareness of a new product or service—in short, to position oneself.

In short, advertising is for selling, while promotion aims to build awareness. Advertising seeks to achieve immediate or short-term results, whereas promotion aims to establish or maintain market share. Why are these distinctions important? Consider this: you need to make sales, not build awareness!

Most brokers spend significant amounts to make themselves known rather than targeting specifics: buyers or sellers who will make a decision in the next 15 days!

An ad that invites people to learn more or that mainly talks about your accomplishments is not really an ad.

To be continued next week.