Clicks or Leads? Navigating PPC vs. PPL

"Hello and welcome back to another episode of the Collective Clicks podcast. This is your host Brandon Bateman, and today I'm going to be talking with Noah Parks from my team all about the advantages of pay-per-lead versus PPC. How are you doing today, Noah?"

"Good, how are you Brandon?"

"Hey, good, cannot complain. Excited to do another podcast with you. It has been six months, probably a little bit - a little while."

"Yeah, yeah. For anybody that wants some context, right now as we speak, I am looking out my window at Noah's house. Yet despite that, he has made one appearance in the office in the past six months. Is that it, just one?"

"Maybe two. You come for our quarterly planning for sure, leadership stuff."

"So anyways, great to talk with you. You're the guy that every time you come into the office, people say, 'Whoa, does he still work here?' Which is kind of funny because to many of the people listening, they all probably know you fairly well because you're such a big piece of our outward-facing presence. So anyways, I'm super grateful to be here with you, and I'm excited for a cool topic today, which is pay-per-lead versus PPC."

"Yeah, so this is an exciting topic for me because I feel like there's a lot of misinformation going around about this. Now obviously, before we get too far into this, right, we are a company that does PPC as a service for Real Estate Investors. Noah works for that company as well, right? We're a little bit biased, so take it with a grain of salt. However, I think we're pretty level-headed, objective people, right? So I want to talk through some of the different stuff we're seeing, and spoiler: we're not going to say that one is better than the other. It really comes down to what your goals are."

"And I had sales, so I may say one's better than the other."

"All right, then I'll have to take the position of arguing for pay-per-lead. You know, I'll take a well-rounded approach."

"Fair enough."

"So obviously this has been a big topic of discussion. I think what prompted the creation of this podcast is that a mutual friend and client of ours named Victor posted on Facebook, 'Pay-per-lead is a scam,' or something like that. I can't remember exactly what the last few words were, and it started this conversation."

"Yes, a very lively conversation."

"And I noticed that a lot of the strong opinions against pay-per-lead were, in my opinion, a little bit unfounded or maybe from lack of understanding of those companies and how they work. But there's also a lot of truth to what was being said in that debate, and I think it's worth kind of visiting all those things."

"So a good place to start would be, in your opinion, based on what you're hearing - because I know you're talking to probably like seven or eight investors every single day, which really adds up a lot over the course of a year and a half - a lot of context of what's going on."

"I feel like it gives me a pretty good pulse, thumb on the pulse of the investor industry here."

"Yeah, I mean, you hear the good, the bad, the ugly of all the marketing, and you're also really good at digging into why people feel that way about their marketing and what could be causing the result to be what it is and things like that, so you can better understand. So I think I honestly think you're one of the most qualified people in the world to speak on this subject just based on your exposure."

"In your opinion, what are some of the advantages and disadvantages of doing your own PPC as compared to buying leads from a pay-per-lead provider?"

"Okay, um, yeah, I mean, honestly, I see advantages to both. One of the approaches that I pride myself on taking and having any kind of discovery conversation or just understanding where an investor is at in their marketing cycle, if you will, it tends to follow a pretty common thread. And that is new investors tend to take the route of marketing that provides the lowest barrier to entry, which is oftentimes outbound, right?"

"But they hear all the upsides and all the good about inbound, and at some point they need to scale and they need to be able to do so more efficiently than trying to scale their outbound operation. So then they inherently will look at paid, and when you look at the paid world, we've got the two options: we've got owning your own PPC campaign, running ads in Facebook, Instagram, Google, Bing, whatever it may be, and then we've got the pay-per-lead side of it."

"One of the things that I see quite often is that younger investors who are newer into their marketing life cycle, they may not have the full budget to own their own PPC campaigns and have that fully managed for them. So they turn toward the PPL side of things, and so there is an advantage there in that you can start getting your toe in the water without having management fees and a full-blown ad spend. You know, where they've got a seven to ten K budget per month, something like that, they can buy the leads onesie-twosie and get into it."

"So that's definitely one side of it that I see. Other people use it as a supplementary channel. They have their own PPC, but they buy a few leads here and there just to get a couple extra coming in. So that's generally the situation that I see, and then as it runs its course, we start to get strong opinions on one side or the other of one channel versus the other."

"Winning truth, I mean, they're very complimentary."

"Yeah, when I think of different ways to go about this, I think one good scale to compare these things on is what time frame is the result that you're looking for supposed to come in. As it relates to long-term strategies, that's going to be like SEO very much, right? As we move to more of a midterm strategy, I think your own PPC fits really well there because it does produce a more immediate result than SEO does, but at the same time you have some level of ramp up. You have to gather data, figure out what's working, etc., and it's a little bit inflexible in the sense that you don't want to be like turning it on one day, off the next day, etc., right? So you have to have some level of consistency."

"And then on like the far short-term side, we have pay-per-lead. To give an example of where I recommended this to someone the other day: this was somebody who said, 'I don't want to do a six-month agreement.' So I had a conversation with them to see, you know, what's motivating you. Turns out, when we get to the bottom of it - of course, this is not any of the stuff that he said, this is all the stuff that was like underneath what he said, right? The real reason underneath everything was, 'I have an office lease that's going to get more expensive in three months, and I need this to turn around before then so I'm able to afford that office lease in three months.'"

"And I told him, 'Forget your own PPC. You're going to do PPL.' Especially because he said his cash conversion cycle was 90 days. I'm like, there's no situation where spending any money on marketing right now is going to get you more money in 90 days because he was flipping properties. That just doesn't happen. But if it did happen, it would happen with PPL, and you might have to wholesale."

"It's not like it couldn't happen with PPC, but we were talking about just like jumping in the game and immediately being wherever you're going to end up. PPL is awesome, right? It's a fantastic short-term strategy. Turn it on today, turn it off tomorrow. And the reason is those companies that are generating the leads, they are consistent with their marketing, right? Because marketing as a whole has to be consistent, right? You're just inconsistent in when you're buying things from them, but if they're not selling it to you, they're selling it to somebody else. So the underlying campaign has consistency, which makes it so that they kind of absorb that burden of consistency and you don't have to."

"Yeah, exactly, exactly. I've seen - I mean, I get into conversations and based on their situation, you know, I've made recommendations to a couple of the PPL companies that I'm close with and trust. And you know, no matter what, you hear both sides, and so you just do your best by the client in their situation."

"And yeah, anything else that you notice in terms of pros and cons?"

"Yeah, I mean, the most common things that I hear - you hit very well on the pros. You can get into it quickly, you can get into it less expensively if you will, and with less of a commitment to the process. The downside is you're not building your brand, and again, in the life cycle of an investor, that's going to become more important as they start to become more established. So establishing your brand, having a branded campaign so you're showing up on anything close to your own name, all of those types of things are really important."

"The other thing - you know, one of the things that's perceived as a pro to pay-per-lead is the ability to dispute leads that are spammy or, you know, just don't exist. One of the things that I am hearing a lot lately though is that there's starting to get more and more pushback from some of the PPL companies on whether or not it is a situation where it can or should be refunded, whether it's truly a lead or not. And so that's one of the situations that I'm hearing quite frequently, and that's putting the sour taste in people's mouth because it's one of the things that they really were attracted to in the early going - that ability to dispute."

"Yeah, the - it's actually a part of this Facebook post that we had mentioned at the beginning. A few people mentioning, 'I was told that my dispute rate is too high and they shut down my account, but they were only disputing for the things that are listed that you can dispute for.'"

"Right, I think to really understand this, you kind of have to put yourself in the pay-per-lead company's shoes. This is very similar to, let's just say you buy a product and you see that product has a five-year warranty, but you have to register the product after you buy it to get that five-year warranty, right?"

"Afford to give the five-year warranty. It's because they know that 75 percent of people don't register the product, so then they're not going to actually have to provide the five-year warranty to those people. But it can still be something that influences the person's decision in the beginning because everybody just assumes that they're going to do everything right and they don't read the fine print, etc."

"Right, so then that company, their liability of that warranty is 25 percent of what it would have been otherwise because it actually is only redeemed by 25 percent of people. That's a situation where breakage is what makes the deal. You offer a rebate incentive, for example, and who's gonna actually mail in the rebate? You know, not everybody. But who's going to be influenced by the fact that the rebate exists in their purchase decision and then assume that the future them is going to go through the pain of getting the rebate? Everybody, right? So it's, uh, you rely on breakage."

"The way a lot of these companies work is they track something called the dispute rate across their different clients and they basically will increase your cost of leads as you increase the number of disputes that you're doing, right? So it feels like I don't have to pay for those leads that aren't good. But what they're basically relying on is you not being good at reporting those within 24 hours or whatever the requirement is. And then if you are really good at that, they just jack up your prices. So at the end of the day, it's like you're still kind of, you end up paying for it somehow, right?"

"Right, yeah. I know you're exactly right. And I think that brings up an important point, and that is, anybody who's going into the paid realm, it's part of the game. I mean, you can't, uh, you can't join a basketball league and expect to play every game with, uh, perfect refereeing. I mean, there's going to be bad calls, there's going to be missed calls, it's just how it is, it's the nature of the beast. But when you look at things over time, you average things out and all of that, the channel makes a lot of sense. But, you know, understanding that there's going to be some spam leads, there's going to be some listed leads, that's the nature of the beast."

"Now in your own PPC campaigns, you can actively fight against that and try to reduce the amount of listed leads and spam, which is something that we do, I think, very, very well. But it is part of the game."

"Oh absolutely, I would say it is part of the game. Funny enough, we had one of our clients the other day that sent us a whole, like, spreadsheet of all the leads and the reasons they wanted them refunded. And this is, by the way, a client that's doing, like, really, really well, so they're overall happy. They're so used to working with pay-per-lead companies, so they sent us this and we're like, 'You realize, like, Google's not going to refund your leads, like, they don't do that, right? You pay for the ad inventory. If you have invalid clicks, you can get refunds from that, which is really common in the world of fraud, but certainly not the leads.'"

"And then second, if I was trying to get refunds on clicks from Google, I would try to refund all the ones that didn't become leads, not the ones that became leads and then I thought it wasn't a good enough lead. I would do all the, you know, what about the 75 percent of clicks that never actually become a lead? Can we get a refund for those ones?"

"Yeah, and that's, disputing that is an enjoyable process, so have fun."

"Yeah, absolutely. I think one, um, one other factor of pay-per-lead versus PPC that's commonly considered a strength of pay-per-lead is the fact that there's not really a management fee, um, or it seems like there's not a management fee. How would you speak to that?"

"Right, pros and cons to the channel. You know, if I'm in early stages of one, there's this idea that going into PPC is an expensive channel. There's some, you know, there's that, that's a fair assessment to a point. But anyone who's tried scaling their outbound, you know, the costs are just a little bit more hidden, right? And so there's just, is it a more expensive channel? Perhaps, but it's a more efficient channel."

"So one of the things that I'm seeing is, yeah, you have a management fee, but the real question is what's the value? What are you getting inside of that management fee? If somebody's just going to set up the campaign and let it go, then yeah, you should expect to have a lower management fee. But if somebody's going to be incredibly hands-on, be essentially a part of your organization in being strategic and making recommendations, keeping eyes on the road, and also looking at your data each and every month and utilizing that data and its outcomes in order to train the platform to get smarter to ultimately drive you better leads over time, then that has a lot more value."

"And so you have to really assess what your timeframe for results is key - PPC more mid-term, PPL very short term. What are you getting? Because not all PPC agencies are created equal. You know, I tell people all the time that we're by far not the cheapest, but we're not the most expensive. But I believe we bring the absolute most value to the table because of how we approach management. So it's something to consider. And PPL, you don't have that, and so again, weighing the various pros and cons is going to help you determine which channel makes the most sense for you and where you're at in your business at this point."

"Yeah, oh, and I think, um, I think one place where that's pronounced, like, let's just say you're going to spend a thousand dollars a month, you're not going to want to work on your own PPC and pay for a management fee and pay for the ad spend, right? Because ultimately the management fee's just going to be too much compared to the ad spend and you won't get the results you're looking for versus with pay-per-lead, you're still just kind of like, it's not like there's not a management fee, it's just the management fee comes on a per lead basis, right? They are buying leads wholesale, they're selling them retail."

"It's just like, right, like to say that pay-per-lead doesn't have a management fee would be for me to be a flipper and buy purely from wholesalers and say that I don't have any acquisition cost for my marketing, right? That's not true, right? The acquisition's cost is the wholesale fee paid to the wholesaler and oftentimes that's a lot more than what it would be for your marketing acquisitions costs if you were going to do it yourself. But if you're going to buy one property, is it worth you spitting up this whole marketing machine? Probably not, right?"

"Right, it's worth just you buying the one. That's another place that the same type of model exists, right? As flippers become more prolific and they handle more properties, it doesn't make sense for them to pay the markup for a wholesaler to sell them a property. It makes more sense for them to generate their own and it's a very similar, but I think you hit the nail on the head, putting it in that context makes it more relatable to investors because that's something that's like, oh yeah, it makes more sense on scale that I'm going to run my own marketing and generate my own properties than buying them from a wholesaler and paying to market."

"So very, very similar. Well, let's talk about where this goes wrong though, um, because I think where a lot of people go with this though is they're like, well, no, I'm actually not paying a markup because I can see the pay-per-lead bids in my market are X dollars and you're telling me my cost per lead might be Y dollars. That's actually more than the pay-per-lead, so why would I pay a management fee and, um, have to go for this more midterm strategy instead of a short-term, easy and easy app strategy and, um, go through like this extra effort about having it be on my brand if pay-per-lead's ultimately cheaper."

"PPL as a supplementary channel, not mutually exclusive."

"Yeah, I can answer the question if you'd like."

"Oh no, if I'm being frank, you're kind of, you kind of are like digitizing there for a second. So I maybe missed a few of the things that you're saying, so go ahead and answer the question and I'll provide a commentary."

"Yeah, I mean, I think a lot of it comes back to what you had talked about before. See, pay-per-lead companies, they have, uh, you talked about the value of a management fee, the value of optimizing for the lead quality and understanding all those details. Pay-per-lead companies don't actually have, like, you have the smartest marketers, but just by nature of the model, you have some natural difficulty in optimizing. The reason being, they don't know what happens with your leads when they go into your system. What they know is how many of them get disputed, right? So what do they optimize towards? They optimize towards non-disputed leads, which is a really fair thing to optimize towards, right?"

"Right."

"That said, if we take something like, let's just say we're talking opportunities, right? If you take a quote-unquote opportunity, I can tell you right now, there's some keywords we have where it takes 12 opportunities to get a contract. There's somewhere it takes two opportunities to get a contract, right? To a pay-per-lead company, those look the same because we have that data kind of full funnel from our

end and we see the revenue and we can then tell Google, okay, optimize this way. So what ends up happening is if you're getting leads from a pay-per-lead company, you're probably paying a very similar amount for both of those two keyword groups, right?"

"So I think the important thing is to realize that yes, on a per lead basis, there might be times that a pay-per-lead is cheaper than your PPC campaign, especially in the beginning. However, as time goes on and your PPC campaign gets better and better and more refined, it's going to yield a much better return on investment over time. And that's something that I think, uh, for folks that are really trying to scale, that's a big, big factor and definitely should be considered."

"Yeah, yeah, absolutely, because they don't get a chance to do that part of the funnel. They just can't. They're delivering the lead and hoping that you don't dispute it."

"Exactly."

"And so they never get that feedback loop. So the channel never gets more intelligent as you're spending more time, more money, more data into it. You know, it's, it's that constant, um, you've constantly got your foot in the door, but you're never actually moving into the house."

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