That’s a common question I get, and it’s not an easy one to answer.
It’s not that I don’t know the answer. I do. (At least I think I do…) The hard part is that it’s tough to believe the marketer when they’re telling you how much to spend on marketing. : )
So rather than answer that question with my opinion, I’m going to show you what a successful retailer spends on marketing, and the results they get. I’m not going to say who this retailer is, or where they’re located, as I don’t want to give away confidential information.
I can say, however, that our example retailer is located in a mid-size metro area with about 300k people. They are surrounded by several other retailers (independent and corporate stores), and they are on a major thoroughfare in the area.
This retailer is also new. They opened about a year and a half ago, and they are doing quite well. They are currently averaging about 10 home sales per month, and growing. They have healthy margins, and do not bill themselves as the cheap option in the area.
Below, I’ve got the different marketing channels (Meta, CTV, Google, etc) this retailer is in, along with results from the campaigns in those channels. Keep in mind these are not the only places in which this retailer advertises; these are the ones that we (Bild Media) manage, so we can see the results.
Meta
Total Monthly Budget on Meta: $5,000
This particular client runs several different campaign types on Meta. I have some of those listed below, along with results directly from their ad accounts. These are all 30 days’ worth of results.
If you’re wondering why we run different campaign types, it’s because different people behave differently on Meta. You may have an ideal buyer whp wants to submit a lead form, and you may have another buyer who wants to visit the website, then submit a lead form. If you only run one type of campaign (lead gen, for example), your ads will only be served to users likely submit a lead form, which limits your reach.
*Note – These are not all the campaigns running, just a few examples of the active ones.
- Messenger Campaign
- Traffic Campaign
- Leads Campaign
- Post Engagement Campaign (Boost)
- Brand Awareness Campaign
Total Monthly Budget on Google: $3,000
This client has a $2,500 per month budget on their Google Ads, and they spread that across search, YouTube, display, and various other placements.
Here are the results from one of their campaigns. Keep in mind that your cost per conversion (lead) will almost always be higher on a Google campaign than on a social campaign. This is because there is more friction, and the user has to invest more time to submit the lead form.
Here’s a chart of this retailer’s lead form submissions. This is not exactly Google, but their Google Ads point to their site, and these are lead forms from their site.
CTV (Streaming TV)
Total Monthly Budget on CTV: $1,500
CTV (Streaming TV) is a relatively untouched platform in our industry. In the past, advertisers had to spend so much money to be on streaming networks that it only made sense for national brands to do it. Now, local businesses can target extremely accurately in their local markets and get great results from streaming TV ads. And from a home buyer’s perspective, there’s a certain amount of authority that a business gets when they show up on TV, as opposed to just social media.
Billboards
Total Monthly Budget on Billboards: $2,500
Billboards, like CTV, are another advertising platform that most retailers and communities are sleeping on. Digital advertising became so prevalent that many businesses forgot that their customers actually live in the real world. Billboards reach them there.
I won’t show an our example client’s billboard, but I will show you this fun idea I just came up with. Feel free to use it if you want. It works because it’s humorous, true for most couples, and memorable. A good billboard won’t sell a home for you, but it will make buyers think of your brand first when they’re ready to buy.
Advertising.
If you’re looking at this and thinking, “That’s too much…I sell that many homes for a fraction of that ad budget”, make sure you’re looking at the rate of growth, not just the number of homes sold. Two years ago, this retailer didn’t exist. If you’re not selling 10 MORE homes per month than you were two years ago, it’s not an accurate comparison.
There is a baseline of business that all businesses will do with minimal advertising. If that baseline is where you’re comfortable, and you’re not super interested in growth, then no, you do not need a large advertising budget. You need just enough to maintain your current volume, which will be much less than the budget required for meaningful growth.
If growth is the goal, however, you need to be prepared to pay for it. There is no free route to business growth. You pay for it in time, energy, or money, and usually a healthy combination of the three.