Q4 Marketing: Thrive or Dive?
It's that dreaded time of year again. Q4 has your real estate investing marketing slumping along with the temperatures. Competitors start snoozing as deals dry up, but does your pipeline and revenue have to take a holiday hit too? In this week's info-packed podcast, Brandon Bateman cracks the code on smart marketing through the year-end slowdown. He reveals must-know tips like why some digital channels thrive while direct mail takes a dive in Q4. Brandon also shares tactical strategies to keep your team motivated and pipeline full, even as others start phoning it in. Whether you're tempted to cut budgets or go all in this November and December, this episode brings the marketing cheer you need to close out 2023 strong. Don't miss Brandon's holiday slowdown survival guide for real estate investors. 0:00 - Should You Keep Marketing in Q4? 2:30 - Solo vs Team Marketing. 5:00 - Demand Generation vs Harvesting Channels. 7:30 - Supply and Demand Changes in Q4. 10:15 - Planning Around Team Vacations. 12:30 - Capitalizing When Competitors Sleep. 15:30 - The Bottom Line for Most Companies. 16:50 Tune in next week!
Q4 slump got you down? Don't hibernate, dominate!
"Hello and welcome back to another episode of the Collective Clicks Podcast. This is your host, Brandon Baitman, and today it's just me. I'm going to make a short episode answering one of the most common questions I get this time of year from people in the real estate investing industry. That question is: 'Should I continue marketing in Q4?'
The simple answer to that question is: it depends. It depends on quite a few things. I think, just like so many other things, you're going to get a lot of varying answers depending on what someone's personal experience is. Oftentimes, they're just projecting their own situation onto you and making it black and white. I'd like to break this down a little bit more generally as to what things you should consider if you're thinking about whether you should be cutting marketing, doubling down on marketing, or what your path should be for marketing in Q4 compared to the other quarters.
The obvious source of this discussion is that Q4 is a tough time in the real estate investing industry. Fewer people are interested in selling their houses, especially as we get into November and December. For a lot of companies, this tends to be a time when they struggle a little bit more than they do in other seasons, both with acquiring properties and with dispositioning properties if they're doing an immediate wholesale compared to a flip or something like that. Let's talk about some of the things that you might consider.
The first thing that makes this pretty easy, in my opinion, is if you're a solo operator. If this is just you and you're taking the phone calls and you're dispositioning deals and you don't really have any staff that relies on you, then what this really comes down to is what do you want to do? If you are okay not making income in Q4 and you just want to cut that back for a period of time and take a break, enjoy the holidays with the family, whatever the case is, I'm not here to tell you that's a bad idea.
Circumstances where I see people cutting back a lot in Q4 is where you have very minimal operations and there's not a lot of things that depend on consistent revenue. However, things get a lot more complicated when you add a team into the mix because just because you don't care about making money and don't want to work in Q4 doesn't mean that your team feels the same way. Usually, they very much want to get paid in Q4, and oftentimes they might have larger expenses this time of year than they do other times of the year.
I generally see this mindset across our clients. The smallest tend to be the most variable in terms of if they're marketing in Q4 or not, whereas our larger clients tend to be very consistent at keeping their budgets stable or even increasing budgets into Q4. So that's solo vs. team marketing.
Something to keep in mind for sure, because this is a harder time of year compared to other times in the real estate investing industry. You have to decide what you want to happen to your business. Option number one is you can have a decrease in revenue. Option number two is you can have an inflation in your costs because it can be assumed that for a given amount of marketing this time of year, you are going to produce fewer deals. Generally, that's why some people consider cutting things back this time of year.
If we think about that, if you need to maintain the same revenue, this is where you'll find some companies even doubling down in Q4. It's because you want to keep the revenue as stable as possible and you want to keep things efficient for your team so that they're making money. Take an acquisitions manager, for example, who's paid based on closing deals. They might need more leads or more marketing dollars spent this quarter in order to do the same amount of income that they would have in another quarter, right? Some people are sensitive to that, so you might actually want to double down, or you just accept that this is going to be a little bit slower of a quarter.
But if you have a team, cutting marketing is really dangerous to do because then you have a very unmotivated team at that point that's just fighting for scraps, and it can leave some pretty major damage to your revenue for Q4.
I think it's also worth considering the types of channels that you're in. All marketing channels in Q4 work a little bit differently. I want to break down marketing channels into two specific categories so that you can start thinking of it that way. You have channels that tend to be interruption channels, where you're generating demand. This is what I call demand generation channels. This is going to be like direct mail, cold call, text, TV advertising, right? Because all these people aren't people that were asking for you to reach out to, but you still reached out to them. Some people would say yes, direct mail's inbound, for example, but you still went to them with the postcard.
These demand generation channels tend to take a pretty big hit in Q4 compared to the other type of channel. The other type is a demand harvesting channel. A demand harvesting channel basically allows you to buy the demand that exists out in the marketplace, but you're not creating that yourself. You're not sending someone a postcard and then they're thinking, 'You know what, I do want to sell to this cash buyer.' You're having someone come looking for you, right?
So the channels that we manage, we do a lot of PPC, Facebook ads, and SEO. Facebook ads is a good example of a demand generation channel. PPC and SEO are great examples of demand harvesting channels. The advantage of demand harvesting is you're only paying for what comes to you, and that tends to be demand that already exists in the marketplace. I'll give you an example. Let's just say it's Christmas Eve and you can send a postcard to this person who might have a house to sell. What are the chances of them really caring about your postcard on Christmas Eve? Pretty low. Let's just say that person was actively searching on Google for a way to sell their house for cash. What are the chances that it's worth you buying that click for them, like in pay-per-click advertising, for example? The answer would be very high.
Some people assume that because the overall demand is lower in Q4 for selling houses, that means that some of these marketing channels won't work. But the reality of what that does to PPC marketing is it just decreases the number of people searching. If someone's searching and you can choose what price you want to pay per click, if they're searching, then you can still buy that click and you're guaranteed that this is a person who's searching right now for a way to sell their house. If it's Christmas Eve and they were actively searching for a way to sell their house, what are the chances that they could be a motivated seller? The chances are pretty high, right?
That's why PPC is going to really diverge from other marketing channels. There are some other components of supply and demand that we have to think about in terms of marketing channels. It doesn't mean that PPC is going to work way better this time of year, but what it usually means, and the feedback that we've gotten from most of our clients, is that some of the search engine channels like PPC and SEO through Bing and through Google tend to hold more consistent this time of year. It's dependent on a few other factors.
Let's talk a little bit about auctions and the different things that could be going on. In PPC, it's just your standard supply-demand equation, right? We have a supply, which is the number of people searching, and then we have demand, which is the number of people trying to buy those clicks. What's going to happen to the price? You could think of it like, for example, let's just say the supply is going to go in half. Go back to your high school or college economics class, right, and remember what happens when you decrease supply but demand stays the same. The equilibrium price is going to go up. That's what would cause PPC to get more expensive this time of year.
However, something that also tends to happen this time of year is people pull back on their advertising budgets. If demand goes down and the supply were to stay the same, then we would actually have a decrease in price. Most of the time, and this is going to vary by market, every market goes its own way in Q4 depending on what your competitors decide to do. What we see is that the supply pulls back and also the demand pulls back, and oftentimes the price is relatively unchanged. It's just at a lower level of volume.
Potentially, you could be in a market where everybody pulls back quite a bit and you could even have a return on investment increase in Q4. Or maybe your competitors are just really holding to their guns and looking for the same size slice of the pie, but the pie is getting a little bit smaller. That means it's going to be a little bit more expensive for you.
People ask me, 'Is it going to be a better return or a lower return in Q4?' and it's a hard thing to answer because that's like predicting the psychology and the decisions of all the investors across the country. I can tell you, all things equal, it would get more expensive because the supply goes down, but demand almost always goes down as well. So depending on how that happens, it will be a little bit different.
This also gives some context as to other channels and why they struggle potentially a little bit in Q4. I'll give a great example of this that we know very well: Facebook ads. Now, I'm not saying that you shouldn't do Facebook ads in Q4, but what I am saying is whatever return you're used to, it'll probably be a little bit lower in Q4. The reason is, if we just take ourselves back to this standard supply-demand equation, we have to remember with online advertising platforms, this is happening dynamically all the time. So if you think about supply and demand for social, in this case, we're not paying per click; we're
paying for what's called an impression, which means one pair of eyes seeing our ad. That tends to go in a bid auction system, where whoever's willing to bid the most for that impression wins the bid auction.
Now, what happens to the demand for people's impressions on Facebook this time of year? The real estate investing space might be trying to pull back in Q4 a little bit and maybe save some budget, but guess who's not pulling back this time of year: everybody else. All the e-commerce stores are basically spending a large chunk of their yearly budgets right now because they're all fighting for people to buy their Christmas presents online. All the local retailers that are doing brick and mortar are running their campaigns to get people to come into the store, so the demand for the impressions on Facebook tends to shoot way up in Q4 because every other industry that sells any kind of consumer good is going all-in on their Q4 budget.
So you tend to see the CPCs go up, the CPMs go up, and if you thought of your channel as 'I spent $1000 in Facebook ads and it created 10 deals,' that same amount of money is probably going to create fewer deals, or if you need to maintain that return, it's going to cost more to get it.
We just ran through a lot there. To summarize, I think that if you're considering whether you should be marketing in Q4, I think the first thing you need to ask yourself is 'Am I solo or do I have a team?' If you have a team, I think cutting marketing is a very dangerous thing to do. If you're solo, then you just need to decide what you want to do.
I hope that helps provide some context for your decision-making. Thanks for tuning in to this episode of the Collective Clicks Podcast. If you have any more questions or topics you'd like me to cover, feel free to reach out. Stay tuned, and happy investing!"
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