Google Real Estate Market Search Review - H2 2023

• Real Estate Lead Cost Report for Buyers on Google | Q3 2023 Update

• Real Estate Lead Cost Report for Sellers on Google | Q3 2023 Update

Transcript

Trenton Bodin: Welcome everybody to today's webinar. I'm Trenton Bodin, Director of Technology for Tristan and Associates, and I'm delighted here to host this session on the Evolving Trends in Real Estate Marketing on Google. We're fortunate to have Dan Lott, VP of Client Marketing at CINC who oversees 30 million in Google lead gen spend for real estate. And today Dan is here to share his expert insights on key aspects, such as the cost of buyer and seller leads, the dynamics of Google's real estate lead value index, and how today's technology and legal changes are influencing our industry. And as we go through this presentation, please feel free to drop any questions into the chat as Richard from CINC will be there to answer them as we go.

Before we get started why don't everybody who's joining us drop into the chat where you guys are from. We always love to see where you guys are joining us from across, the world. We usually get some [00:01:00] international clients in there. And as people are starting to drop those in Dan, if you want to introduce yourself a little bit and then we can get started. 

Dan Lott: Thank you very much, Trenton. Yes, I'm Dan Lott. I'm the VP of client marketing for CINC. And so I oversee the lead generation team at CINC. And CINC, if you don't know, it's a real estate platform for generating leads and converting them into sales. And we've been around for around 10 years and we generated over 30 million leads on behalf of our clients. So we are one of the biggest players in the real estate lead generation business. 

All right. So today. What I want to talk about is 2023 so far. How's it, going? What exactly does drive the cost per lead for real estate leads. And then a couple topics you may know about. The Google lawsuit, which is [00:02:00] ongoing and considering the gravity of this issue, it doesn't get a lot of publicity. Just want to talk a little bit about that and how that could affect you. Talk about AI. This is something that there's a lot of publicity about this. And then just talk about some of the resources that CINC has, that even if you're not a CINC client, you can avail yourself of. I assume all you who are listening have some experience with real estate leads, whether going through one of our competitors, through us, or just doing it on your own through Google or Facebook or whoever. So these could help you improve your performance. Just piggybacking on what we have done.

And so what we have done at CINC is, over the last 10 years, we've invested millions and millions of dollars in creating, these tools for real estate lead generation and some of this, the results of this can are very applicable to [00:03:00] any company we use it with us, but any client could benefit from it.

All right, how are we doing? This is just a slide. That's the team. I got to show off my team. Our lead generation focus is to deliver the most high quality leads in your preferred areas for the least amount of money. And then preferred areas is always very important because it's always very flexible. But that is, that's our crew. 

2023 so far has been pretty good. Last quarter especially, was better than I thought it was going to be. And the first half was okay. So what's important here is that. In Google Buyer real estate lead generation, the first quarter is by far the best quarter. And then the cost per lead goes up, up, up until the fourth quarter. And then it goes back down. It's a cycle. It's almost every year. It's been like that. What is interesting this year is we have reversed the trends for the first time in around five years. And I'm not sure why that is. Maybe it [00:04:00] pretends an improvement of the home buying market, but in the third quarter, the cost per lead was better than it was in the second quarter. So that's a really good trend for Google buyer. 

Trenton Bodin: And we've seen that as well. On our data is the nice trend of how that's been switching too. 

Dan Lott: Yeah, I like the sound of that. So yeah so it's not just us.

And then on the seller side, the cost of a seller leads is a lot more. It's twice, or at least at a CINC, it's around twice. But what was good is that last quarter was the best in two years, so that's a good trend also. Got a little stars there. 

And I know we're just talking about Google, but as I'm sure Trenton could also say that Facebook also has a lower cost per lead. All categories of Facebook: buyer, Facebook team listing ads, which is a different type of buyer at CINC, which is really good. That's $4.30. And then ListCast, which is our remarketing. It's all less than Google buyer, even though the Google buyer leads is a really good price for the Google buyer [00:05:00] leads. 

All right. This is something that Tristan has mentioned before, and this is one of the key metrics of what I look at when analyzing how we are doing, and what are some of the trends for the Google Buyer cost per lead. And it's, really pretty simple. 

All right. So this is home sales from the last 10 years. Over time, it went up, up, up, and then it went down in 2022. This is googling the phrase homes for sale. It went up up,up, And then it went down at the end. So there's a very strong correlation between the number of people who are googling the phrase homes for sale and the number of homes that are sold. When you think about it, it's obvious. 

How does that tie in with the cost per lead? 

Trenton Bodin: And it makes sense there, especially with how things are going too, with less people out there shopping for homes, and [00:06:00] they're not going to be searching for them because they can't, most people can't afford them at the moment right now.

Dan Lott: Yeah, exactly. They're not interested. They know their priced out of the markets or the rates are too high, so they're not actively searching. 

And so this slide, it's an inverse way of looking at the cost per lead. It's the amount of leads you can get for $20, but it mirrors exactly the other slides. And it's up, up, up, down. We had a couple outliers of years. In 2015 is when CINC started investing in automation, which caused the cost per lead to go down, the number of leads to go up. 2019 we did another, I don't know, insider company thing that was really successful.

And then 2020 was an outlier because of COVID, which caused the conversion rate in advertising to spike significantly and which caused the cost per lead to crater. So that's why this is so high. [00:07:00] If you take out this bar or lower it, this would mirror again, those two other charts. So all three are correlated very closely.

And so why does that matter? It matters because home sales are down this year. So that's why cost per lead is up this year. Although it's not up as high as I would have expected considering how far down the sales are and then what it means is. For you next year, probably the cost per lead is going to go up again. And that is just because home sales are expected to decrease again. Because there's no magical bullet to Oh even though the entire market is showing that the cost per lead should go up, it's really hard to make something magic happen and make the price go down, but so next year it probably will go up. The next year, if the other forecasts are pointing to it improving, then in two years, the [00:08:00] cost per lead is going to go down. But if you need more leads, you can go with search advertising or increase your budget. Those are the two. Increase your Google search budget. social advertising. We've had a lot of good luck with social advertising. I know there's a stigma attached to it. People say search is always better, but we found that the closing rate on social ads: Facebook Instagram is just as good. 

Social is not as correlated to home sales. 

Trenton Bodin: I think it's important to note as well as where that cost per lead should fluctuate and what you would think that it would be a lot higher. It's nice to see that it hasn't jumped in a large amount, so where maybe it might be $2, $3, $4, $5 more, or we might start to see like a $2, $3 $4 less. And we're noticing as well on from pay per click to Facebook, Instagram, the difference of where we would have a new listing ad coming at a certain price, [00:09:00] now it's maybe a dollar or two more for the buyer leads, maybe it's two or three dollars more. But then we're also starting to see that at times, depending on what the home is in the price range, that's starting to be where, if it's in that range where it's more of an entry level, It's starting to really pick up and actually like decrease for us. So I'm curious, is that something that you've noticed in 2023 with the different trends based on affordability and the home value, is that changing for you guys? 

Dan Lott: It's really hard to tell on that. It would stand to reason that it would, but I can't really tell on that. I should have an answer. You should have told me that beforehand. I would have thought about a clever answer.

But anyway, so the Google lawsuit, which like 20 years ago, there was a big Microsoft lawsuit and that was like the lead story on the news every day. It was like this big Microsoft lawsuit. And Google, it's impossible to find information about it.

There's starting to be more articles about it because [00:10:00] the CEO testified, a week ago and there's another trial that he's also testifying on. But this could be a huge deal, and it could fundamentally change online search and online advertising industries. And from Google, it could cause the breakup of Google, which is big deal for Google, to be broken up. And that could mean like selling off YouTube. You probably know YouTube is owned by Google, and then they could also sell off their display capabilities. 

So that's what could happen from Google standpoint, but from your standpoint as an advertiser, what does it mean? And I think this had some very interesting stuff. All right. As I said, it could break up Google, and in general, it's going to make ad buying more complicated. Whatever they decide to do. I assume they're going to do something. If they sell off YouTube, then it's going to require two different systems of two interfaces, things like that. 

But the most interesting thing from it is just [00:11:00] following the trial and reading the exhibits online and reading the testimony. It's really eye opening in terms of, the role of Google in the advertising industry and how much of an impact money is on Google, which is surprising for a company that's built. That's a worth a trillion or 2 trillion or whatever. They actually think money is important. But so it's a lot more focused on money than they would lead you to believe. It's not a perfect auction. They always say Oh, it's a. It's a perfect auction. It's it's all based on these level levers and there's nothing we can do. And they've released contradictory information where the head of advertising said the exact opposite of what he said at a symposium a year before or whatever. So they are able to just manipulate the results based on if they need revenue for a quarter. And just in general, Google advertising is complicated and they use that to increase their [00:12:00] profitability. 

And so my recommendation to you is to not just blindly trust what their ad experts say. If you are advertising with Google, you probably have a ad rep or somebody who reaches out to you. And often, they don't work for Google. If you look at the bottom of the emails that they send out. There's like a disclaimer. It's yeah, we don't work for Google. So they are trying to get you to spend more money with Google. Their suggestions are always either to raise your bids or to raise your budgets, depending on which makes sense. I'm not saying they're terrible people, but their goal is to make money, so just take it with a grain of salt. Some of their some of their suggestions are good. Some are bad, but don't necessarily do everything. There's that optimization score, which is part of the Google ad process where they try to get you to approve all these recommendations. So you get a higher optimization score. It's often not in your best interest as an [00:13:00] advertiser. And so we often just disregard that. 

Trenton Bodin: I think it could be because if you're trying to just do these marketing and as a real estate agent thinking that you could just like cross market across different channels. I'm curious what are your recommendations for real estate agents and marketers alike to stay agile in the face of these legal changes? 

Dan Lott: I would say just partner with people and companies who have aligned interests that they know, like with CINC, I don't want to make it a promo about CINC. It's like we win while you win, we're a fiduciary. We invest your money where we think you will get the most leads, the best leads. So just find a company or do it yourself. You have to read up on it. And it's just the fact that Google has done a really good job of making themselves seem like their hands off. It's the market is deciding, but it's not really. So just, make sure that whoever you hire has your same your interest in mind. [00:14:00] And if not, just read up on it. And Yeah it's a lot of work, and that's why Google knows it's complex, and so that's why they're able to guide you to something that's more expensive.

Trenton Bodin: That's why it's so important, why you should partner up with something like CINC to where they can figure out what these issues are, and then have solutions around these for the agents to rely on. 

Dan Lott: Exactly, because we've had all these suggestions over the years over many years of experience like kind of seeing when a situation happens and how to avoid it. 

All right, and then AI early stages. AI not yet. It will have a huge impact on real estate advertising and it's gonna have a huge impact on every aspect of business, but it really just hasn't yet. I don't know what you're seeing, Trenton, but because well, real estate has a lot of safeguards like the MLS is going to block [00:15:00] pages from getting fed up by the chat GPT or whatever that is. 

And the first place where we were expecting to see some disruption was early this year, Bing was the first to launch with a chat GPT. And I was expecting Bing to get a whole bunch of new market share and that didn't happen at all. And I think that it's either flat or they actually lost market share from that. And Google also launched their option too. They've incorporated AI into it. So nothing has really happened yet. Nothing in the real estate search advertising. But in the future, change will come, but not yet. Google and Meta both have the interest in keeping it the way they are or adding different ad types to monetize it. Because they're trying to make money, and by feeding advertising, they're not going to, they're not going to opt out of showing ads. [00:16:00] They're going to just put additional ads on the, whatever it was they generate through, through AI. So there'll always be a place to do advertising, but eventually there will be a big change.

I don't know when that's going to be. It's going to be huge. The real estate industry will just be a very small part of everything that is changed by AI, but we'll see. 

Trenton Bodin: I like that you did mention the Bing and Chat GPT. They can definitely help you as far as simplifying different tasks that you might have for real estate focused things. If you have a new listing and you weren't sure how to build it out, as far as the body tags, you could always just put in some bullet points and it'll make it super clean for you Once you generate some of these leads through CINC, you can then use some automated responses for smart plans to follow up with. So there's definitely some opportunity out there. But yes, it's in the very early stages. And I've [00:17:00] noticed week on week things are changing. Things are improving. So I think definitely in the next three to six months, we'll want to really focus on what those changes look like and how we can help implement it into our business.

Dan Lott: That's right. And yeah, exactly what you're saying with the ability to write... the automated content is being built like that and put onto a real estate websites and used for SEO purposes, things like that. Probably could have mentioned that in there. That's an important one because that does have to do with the real estate lead generation. It's really powerful. Just the ability to create a custom content very easily. 

And then, just wanted to point out some of the resources that are available at cincpro.com. You don't have to be a client. So you can just take a look. And we have developed something called the lead value index, which indicates what are the best markets for real estate lead generation. And we put into consideration, what are the costs per lead in that [00:18:00] market for Google buyer cost per lead, as well as the median home price in those markets. We also factor in commission rates, things like that. What percent of leads close, and then what percent of commission do you expect to get? And then we come up with an index. And not very exciting, but the number one is Honolulu, which is a good place to be if you want to be in real estate. Every quarter we have done it, Honolulu has been the most and it has the highest. And it's something like for $1 of advertising generates $50 worth of real estate commissions. And that is because Honolulu has a very low cost per lead and it has very high home prices. 

Trenton Bodin: For those that aren't familiar what Google real estate lead value index is, can you elaborate on that and how it's calculated? 

Dan Lott: It takes in consideration the home price, if you go [00:19:00] to cincpro.Com, you'll find the actual formula. But it incorporates home price. And the cost per lead for Google buyer leads. Those are the two variable factors. That's where you determine what are the best markets for real estate. And then you incorporate the fact that approximately 1 percent of real estate leads closed. We've done. All the research showing that around 1 percent of the Google Buyer leads will close. And then what are the average commission rates on that? And then you can figure out using those four data points, you can figure out how much commission you can expect to get with $1 in advertising for Google Buyer leads. So that is what the lead value index is. So generally it is the higher price home markets have a higher lead value index, which kind of makes sense. Those areas generally do also have a higher Google buyer cost per lead, but the home price overwhelms that. And that would make [00:20:00] sense. 

Cause like with, CINC, we have a lot of clients. We have 3000 or so clients, but they're more in the higher end areas than the lower end areas. Would make sense just because you get the better commission rates, and it's almost a 10 time return on investment for each dollar invested in the advertising. That takes out of consideration the platform costs, but the each dollar invested will return around 10 times return. Not 10%, 10 times.

Trenton Bodin: What you're saying is we should all move to Hawaii if we want to 10 times our business.

Dan Lott: No, Hawaii is 50 times, so Honolulu. I think it's a safe safe bet all the way around. I think pretty much being a realtor in Hawaii or pretty much any other job in Hawaii would be pretty good. 

But yeah, anyway, so go to cincpro.com and you can just look it up and download the [00:21:00] the report and you can see all the different cities. I do a lot of reports and this is one of the more interesting ones just because it factors in a bunch of different data points and it changes, except for the fact that Honolulu is always number one.

And then the other thing that I wanted to mention is we have something called the super secret submarket finder. And that shows what are the submarkets in your area that perform well for real estate lead generation. This is one of the strengths of CINC. We dig down into very small submarkets. As I said, we've spent millions of dollars with creating technology that allows us to expand on an ad, like an ad campaign.

Like our typical ad campaign, instead of having two ad groups, which is what our competitors would do, we'll have 200 in there. That is a mixture of drilling down into specific sub markets, specific towns, and specific neighborhoods, specific school districts, and then niching them out with adding different product types. So [00:22:00] a, a campaign that would normally have five ad groups will have 100. And so as through that, and it's just because we've been around for so long, and we've generated more leads than anybody, so we know what are the best submarkets for advertising. 

And there are ones that are, they're usually not towns. They're usually like neighborhoods and they're planned cities that aren't technically cities, but they're like large neighborhoods. Those you can get for a lot cheaper cost per lead because a lot of our competitors who only go by city or zip code, maybe, they aren't targeting them. So we're targeting areas which are in your backyard, but you don't realize it. 

All right, so if you're doing your own lead generation on your own, just go to cincpro.Com and you'll see a little pop up that says super secret submarket finder tool or whatever. And just request access to it. And then just put in, if you're in Scottsdale, it will show what are the areas within Scottsdale and like [00:23:00] directly around Scottsdale, which will have a better cost per lead than Scottsdale itself. And so if you just, if you're doing it on your, own, you can add it to your account, and then you will get more leads. It's that simple. If you're able to do it; if the site you have Currently going is allowed to use those areas. You'll get more leads. So I recommend you do that. 

And if you are using one of our competitors, call us up, get the top areas and then just ask your current provider to add them to your account. And if they can or if they say yes, check back in a couple of weeks to see if they actually did it. Or if they say no, ask them why not. And a lot of times it's just that unless you have built this technology, it's extremely, it's really hard to build out an account that has 150 ad groups. It takes days, like literally days to do it. But if you have technology, we can do it in half an [00:24:00] hour or something like that. So that's why a lot of the our competitors don't do it. And you get these dumbed down versions of an ad campaign that don't deliver as many leads as they could if they wanted to spend extra time.

But anyway that's just my suggestion. And it's also interesting because you will find that Oh, wow. I didn't know that. Cause like you'll find some school districts do really well. Some don't provide any leads. In Marietta where our office is, there are two school districts that are like the best performing school districts in the country in terms of cost per lead and lead generation. So it's weird that would be the case. It's an interesting thing. It's the super secret submarket finder tool and just check it out. It's interesting stuff. 

Trenton Bodin: That actually sounds really awesome, and pretty underrated if you ask me. I just signed up for a call as well because I'm curious just in my own market what that looks like. what areas are we missing? Should we expand to this city or this market like you [00:25:00] mentioned? This school district is doing really well. And if you're not familiar with that, then it's a lot of resale homes and really high high quality school districts. Those are the ones you want to get into. If you're ever worried about where you should buy in this city, look for those specific markets that are going to be able to grow, or people are going to want to move there because they want to be close to those things. So I think that's a great tool to help a lot of agents be able to grow there.

Dan Lott: That's right. And yeah, you'd mentioned you're in Denver and that's an area that has a lot of those planned communities that are not specifically cities so they're not tagged by the MLS as a city. So you have to do keyword searches to get the traffic there. And Denver generally has a pretty high cost per lead, but some of these smaller submarkets are a lot better. So it's a good example. And then we also, if you're looking at a neighborhood, you're probably further along in the home buying [00:26:00] process. Somebody just typing in Denver might be just like a lookie Lou, but somebody who's going to Cherry Creek or whatever, is further down the road. So that's a good, better quality lead that way too. 

Trenton Bodin: Yeah, I think of areas like big metro areas that have all those sub cities all around it. With all the master plan communities in there, a lot of them you're seeing has their own school district with inside the community. And if you want to have like a STEM school or you have the little private schools, that's where this tool is going to help you allocate your resources to find those.

Dan Lott: That's right. And it's all based on data. It's 10 years of data, 35 million leads we've generated. And that's how we've got it. 

Trenton Bodin: Excellent. As we're coming here towards the end, does anybody have any additional questions they would like to ask Dan here? And the team with CINC. We can definitely get those [00:27:00] answered.

I have a question for you, Dan. With your guys's platform and the lead gen that you guys offer, what is your suggestion as a new agent that's coming to join that wants to start lead generation. Where should they start with CINC? 

Dan Lott: We always suggest to diversify your ad spend going in. Just because the Google accounts when you start out, like first couple of weeks are very rough. After around a month you're cooking with gas, but first couple of weeks are pretty rough. So it's important to have Facebook. Facebook starts out of the gate at full strength. So when you start with your platform, you want to have diversification and because you don't want to... you're excited, you've launched... oh, I haven't gotten any leads. What's happening? So you have both Facebook and Google. We'll have, [00:28:00] maybe 60 percent on Google versus Facebook. And then, just diversification is the key. Eventually, search leads are said to close sooner than social leads. But in the long run, they close at a similar pace. So it's good to get a diversified portfolio with these lower cost social leads as well as the slightly higher cost search leads. And then in two, years, they both close at the same rate. So that's our suggestion. It just diversification. Cause you don't know what's going to work. Going back to... Colorado Springs is a pretty rough market for Google buyer leads. And I don't know why it just is. It has one of the highest cost per leads, but the social is really good. It has a really strong cost per lead. You never know what's going to work in your market. So it's important to diversify. 

Trenton Bodin: [00:29:00] Excellent. We did have a question about Canada. Do you guys service there? Actually, I guess Richard just did answer that. But maybe you can expand on that. Is it just the United States or do you guys cross continental? 

Dan Lott: We do Canada. We have a lot, like some of our biggest clients are in Canada. We don't do Quebec, but other than that, we do. Some of our best markets are... Halifax, I think, has the cheapest cost per lead of any Metro in North America or just about. And yeah we have a lot of great clients in Canada. 

Trenton Bodin: Excellent. If we don't have any other questions, I want to thank you, Dan and the CINC team. Thank you Richard as well for watching out on the chat there. Appreciate all the content you guys served up here. And if they want to get any information, Richard just dropped in the chat the link and the promo to get a demo [00:30:00] from CINC. I definitely would take advantage of a few different options that Dan has mentioned here. 

Appreciate it and thank you, and have a great rest of the week, Dan. 

Dan Lott: All right. Thanks. You too. It's been fun.