Case Study: Home Builder Billboard Part 1

Schumacher Homes BillboardAs I was driving yesterday I had an opportunity to safely take this photo of a home builder’s billboard that caught my attention. It originally caught my attention because of how simple the ad was (a good thing!) and how prominent the website was. However what really surprised me was that it was done by Schumacher Homes.

I grew up in Ohio and worked for a home builder there for several years, and so I’ve been very aware of Schumacher Homes and their brand. They build a good home at a fair price on your own home site. Their advertising was always well executed and thoughtful. I even had a moment to meet Paul Schumacher and one or two of his executives at this year’s International Builders Show and they all were really sharp and engaging people. So before I begin my analysis let me say that the actual builder here is coincidental – and I wish Schumacher continued success!

I have actually seen similar billboards for Schumacher in several states recently (Pennsylvania, Ohio, and West Virginia). I have a hunch they they may have partnered with either a national billboard company (a Lamar board is pictured here) or several regional ones to place one large buy of inventory at a greatly reduced price. I have purchased billboards at up to 90% off of their retail price using similar tactics. To be clear I’m not anti-billboard at all if they are purchased smartly. I think in the right locations for the right price they can be very effective. As a medium though, they can suck cash out of your budget quickly if done improperly – so be careful.

Let’s continue on to the creative design of the board. It is very clear and straightforward in its main message (best price per square foot) and its call to action (the website). The “on your lot” banner and energy star logo are nearly lost completely and probably should have been dropped or repositioned. The image I’m also hoping they have changed per market to appeal to those who are most likely to pass by, but I can’t confirm that is the case.

Lets talk for a moment about the large and clear website on the bottom. I’m becoming convinced that website names in certain forms of advertising are become less important every day based upon how people interact with the web. IF you have an SEO strategy and execute it properly then you don’t have to try and brand the website as much as your company. When the prospect sits down at the computer they will type your name into Google and find you quickly and easily. I tried typing in Schumacher Homes with about 15 different spellings and each one brought me right where I was trying to get to. Perhaps they were concerned that their traditional logo would be unreadable at higher speeds, I’m not sure. In any case how likely is it for a prospect to go to that website the moment they see it while driving 70 MPH down the freeway?  Or will they wait until a later moment in time and attempt to recall what they saw – most likely by typing it into a search engine. Something to think about – especially if you’re not confident in your SEO strategy.

The last item I want to discuss on the creative design is the selection of color. While it is true that black and white are a high contrast combination, they also tend to feel a bit lifeless and bland. If you’ve seen ads of theirs in other mediums, or you’ve visited their website then you know what a great job they generally do with color. In this case though, it subconsciously tells consumers that the way they achieve the best price is by potentially cutting quality. Which is a shame because using color would not have cost any more – however that is still what is inferred.

We’ve covered the medium and creative design, but there is much so more to discuss. Come back and we’ll look deeply at the message and the psychology behind it in part two.

What do YOU think about billboards as an advertising medium? What about their design for this one?

A Builder Ad Budget: Overview

The word budget isn’t one that gets most people excited.  It is usually seen as something that “the man” above dictates, and it never seems like it is quite the right amount. Over the next few posts I’m going to try and change your view of budgets ever so slightly – as a planning tool that you can use to help you make necessary changes in your organization.

1% of your company’s gross revenue is the right number for most organizations to start with for an advertising budget (note – if you are the price leader you may need a bit less, and if you are typically the most expensive you may need a bit more). For today’s purposes let’s say your total advertising budget for the year is $500,000. That would mean your company’s gross revenue is $50,000,000. How should that money be allocated? There are a lot of factors that can change things, but the budget below is a great starting place.

Sample Budget from BrandPossible

Notice that I am not including model homes, salaries, etc. into this budget. Those numbers I would include in the cost of sales or other categories, but not advertising. If you have questions about that just let me know – I’d be happy to respond in future posts.

Next we’ll begin breaking down each chunk of the sample budget and see what is involved and some specific strategies. First up is the online development & advertising budget.

A Builder’s Online Strategy: Entice People to Visit Your Site

Quick review – the 7 E’s are:

1. EARN Google’s trust
2. ENTICE people to visit your site
3. ENGAGE those “just browsing”
4. EMPHASIZE your differences
5. ENSURE you’re part of the short list
6. ELICIT a response – generate a lead and convert it
7. EMPLOY your happy home owners to earn more trust

Entice People To Visit Your SiteThe first two (EARN & ENTICE) are both working to drive traffic to your website, but by using very different tactics.

EARN is working hard to make sure you show up when people are deliberately searching for you or your category when trying to solve their problem. It’s pretty direct – open and honest.

ENTICING people to visit your site is a bit more like going to the “dark side”, but it should still be a part of your strategy.

No, I’m not recommending you run a banner campaign that says “Obama wants to give you free mortgages!” with barnyard animals partying in an infinite loop. THAT is just ridiculous. No, what I’m talking about is much more subtle – yet still effective. There are two ground rules you need to keep in mind:

1. Don’t lie – at least not if you ever want them to trust you again
2. Give value – make the landing page full of useful and relevant information

There are plenty of mediums for enticing people to visit your site – AdWords, Facebook, YouTube, Twitter, banner ads, blogs, Trulia.com, Zillow.com, Realtor.com, and too many others to name here.

All of these work to capture those who are on the fringes of becoming qualified leads. Perhaps they are only looking at used homes right now, or they are searching for interior design tips because they are thinking about remodeling – the point is they may miss your SEO work altogether. However, being a home builder you probably have content they would find interesting (I haven’t met a woman yet who doesn’t like to look at pictures or videos of beautiful homes) and you just need to entice them to take a look.

Yes, even syndicating your community, house, and inventory information through a tool like NewHomeFeed or the BDX also counts as enticing because they syndicate that content to many sites that primarily cater to those searching for a used home.

This should NOT be more than 15% of your online budget, and you shouldn’t even go beyond Adwords without having a good tracking mechanism so you can see what works and adjust over time.

Everyone knows how important Adwords are, so I thought I’d give you an example from a recent Facebook campaign I ran over the course of only one week. I created a targeted ad to run and used an ENTICING message – subtle but relative to those who may soon be thinking of moving. The result? 899,956 impressions (those were free) and 453 clicks (those cost me $259.90).

Example Facebook Campaign - Builder Online Strategy

I can hear the hecklers – “so what – it was probably all worthless traffic.” Nope. The average visitor stayed on the site for over 5 minutes, viewed 8 pages - they ended up having a significant interaction with our brand. Best of all, 5 people went on to request additional information bringing my cost per lead for the campaign to $51.98.

Print Advertising is Like Crack Cocaine

Newspaper ads are like crack cocaine? Yep.Last week I was part of a panel at the International Builders show with Myers Barnes, Mike Lyon, and Steve Shoemaker entitled “More Leads. More Sales. No Excuses.” It went great, and I hope we helped a lot of people begin to think differently about how they integrate the web into how they market and sell new homes. There was one point though, were I think I caught people completely off guard – when I compared newspaper advertising to crack cocaine. At that point Steve, my fellow panelist, quickly pointed out that he had no personal experience with the stuff (thanks for the backup buddy!).*

 

Cocaine use is an expensive and addictive habit that has a law of diminishing returns (you need more to get the same high).

Newspaper advertising is an expensive and addictive habit that has a law of diminishing returns.

 

Why is it so expensive?
Paper, ink, distribution, unions, large office buildings, large staffs of reporters, salespeople, and management – oh my! Newspapers in today’s economy are simply bloated and inefficient. Compounding the problem is that companies are spending less so prices for the advertisers left are actually still rising! Delivering thousands of copies creates some nice economies of scale, but the problem is that you are paying to deliver to thousands of people who are likely ignoring your interruption message.

Why is it so addictive?
It’s addictive because it’s so easy to re-run the same ad again and again. If you get a really big promotion, then you… just add a starburst or new headline to the same old ad. Right? In today’s fast paced world it’s all too tempting to call up your sales rep and say “pick up last week’s ad and run it again this Sunday.” You or your builder gets to open the paper and say “WOW – look at that gorgeous ad… I did it again!” Finally because print advertising is difficult to track (yes, you can use call tracking or personalized URLs – but those aren’t necessarily easy to do correctly) you are always wondering how effective the ad really was. When the pressure is on for more traffic to the model, that lack of data makes it easy to lie to yourself and tell your sales rep to “run it again.”

Trust me, it’s going to take a lot of guts and withdrawal symptoms to cut back severely… or go cold turkey.

Why are there diminishing returns?
The simple answer is that fewer people are reading traditional newspapers every day, so your reach continues to shrink. You also run the risk of losing touch with the influencers in today’s society or gaining mindshare with the next generation of consumers. You also aren’t investing in anything for the long term. Your ad will be delivered on Sunday morning, and be in the trash by Sunday evening – your website will still be there next year for the next prospective buyer to use.

Remember, newspaper advertising is like:
Can’t be easily tracked or finely segmented
Really expensive ROI
Always losing effectiveness
Customers can’t interact with it directly
Keeps you stuck in the past

*For the record, I’ve never been involved in any drug use. Heck, the university I went to didn’t even allow dancing! (but I loved it!)

New Home Marketing Metrics: Go CSI On ‘Em

Are you a CSI style marketer? You should beAs a marketer operating in the world of real estate – especially new homes – you have to be part scientist. Not the drab lab coat kind of scientist, but the hip CSI kind of scientist. Able to get dirty in the field, observe details that others miss, and review data sets and diagrams in a semi-dark room with a haunting melody filling the air (I can see Kevin Mack doing this…), and yet be full of creativity – it takes a special individual.

Maybe a little dramatic – but the point is that being a “nerd” in the marketing world today is a prerequisite. In new home marketing there are two metrics that you need to know and track on a consistent basis:
Cost Per Lead (CPL)
Cost Per Sale (CPS)

These interact intimately with the following three new home sales metrics:
Traffic to Appointment Ratio – What percentage of traffic units convert to an appointment?
Appointment to Sale Ratio – What percentage of appointments convert to a sale?
Traffic to Sale Ratio – What percentage of traffic units convert to a sale?

I’ll review the sales metrics in more detail at a later date. Today I want to focus on the marketing ones and why they are so important.

Cost Per Lead

This one is under your full control as a marketer. How much does it cost, on average, for you to get someone to visit a model home? Request information online? Make a phone call? Just do the simple calculation of (total spent)/(leads achieved) = CPL.

Once you establish what your averages are it gives you a benchmark to measure from. Considering a new advertising method? Test it for a reasonable period of time and see what your CPL is. If it is at or below your average CPL, then you’ve got a winner!

An average CPL for a medium to large sized regional production builder is $300 – $450 dollars. It may not apply to you, but it at least gives you something to compare with (My current CPL for traffic to a model is $238)

Cost Per Sale

This one is a measure of how well your sales and marketing teams are working together. To calculate your CPS do the following calculation (total spent)/(total sales). You can use this information to develop new sales programs, incentives, and change up your Realtor programs. For example, if your CPS is $5,200 and an average Realtor sale only costs you $3,500 – what do you need to get more of? Or, perhaps an online service is offering to charge you $2,000 whenever they send you someone that purchases a home, is that a good deal for you? If you don’t know what your CPS is, you wouldn’t know.

Ultimately though this also tells you where you need to “attack” to meet the budget you want to spend. If your CPS is too high to meet your budget, and your CPL is already low – then that means conversion and sales training is probably where to start.

The assignment for this week is to plan for 2011. What does your boss want you to spend next year? What is your current CPS and CPL? Does the math work? If not, where do you need to push or pull to make it fall in line? Chances are there are some tough choices to be made – but you need to make them. Now at least you have some data to help you solve this crime scene.

Note: Yes – these calculations require traffic data. Yes – many builders allow their sales reps to self report this data. First, it’s going to be inconsistent. Over time though it will be consistently inconsistent. Don’t make it an excuse not to measure traffic at all – do it. Second, you don’t have to accept self reporting. You can track emails, phone calls, and even traffic through the model. No more excuses.