WS1486: How To Execute An Effective RE Ad Campaign | Dan Barrett

EPISODE 1486

[INTRODUCTION]

Dan Barrett (DB): In any marketing funnel, there is only ever one thing that is most constraining the flow of leads through that process into your acquisitions person’s calendar, there’s only one thing. Now, it might be the landing page, it might be the ads that are driving traffic, it might be the cost of the market, or whatever. But there’s only ever one thing. And so if you know that, the question becomes not how do I handle everything it was, the question becomes what is my one thing right now? And then what do I do to make that thing better?

Whitney Sewell (WS): This is your daily real estate syndication show. I’m your host, Whitney Sewell. We are back with our guest, Dan Barrett. I hope that you listen to yesterday’s show. We talked through his journey into this space, which is quite interesting. But then we also got into Google Ads. What is that? And why should you know about it? So, is that something that you should be considering as you’re looking for more investors, or you’re trying to grow your leads, right? And your incoming leads in your business? 

Well, Dan focuses on real estate investors, and he is an expert in Google Ads, and you’re gonna hear that today. And if you didn’t hear yesterday’s show, it’s gonna be obvious, but we’re gonna jump into what is an effective campaign look like. He goes into great detail from specific keywords to differentiating your approach, you know, so you stand out amongst other people, and how does that work on Google Ads? There are so many things that he’s talking about that I have a clue about beforehand. So I learned a lot. And I know that you are too.

[INTERVIEW]

WS: Dan, welcome back to the show. Okay, you left us hanging yesterday, you’re out on this funnel, we’re trying to figure out our strategy and where we’re at and this marketing plan, right? Oh, you know, sometimes it can be a little overwhelming, I think, right? As we come in, we’re trying to promote a business, especially for we’re just getting started. Because we were worried about what the website should look like, and where should people click? And what color should that button be? And, and now all of a sudden, there’s this thing called AdWords that maybe we should be thinking about, and if somebody else had some success on that, and it’s a lot to take in, right? 

And, I’m grateful for your expertise, and even your focus, you know, into real estate, in this thing. And so I think it’s so helpful to know somebody like yourself when you’re gonna do AdWords. So welcome back to the show. Let’s dive in.

DB: Thanks, man. I’m super happy to be here. And yeah, you could tell I like talking about this stuff. So give me an excuse. So I’ll go, I’m good.

WS: Well, let’s jump back in you were telling us about the funnel. And you know, we’re trying to figure out, you know, in this funnel, where people are coming from. How big or small and where they’re at? Help us to think through that a little bit as we dive into thinking through. Also, how do we execute an effective ad campaign? And what does that even mean? 

DB: Yeah, so I think if you have a sense of what kind of audience you are trying to gin, right? If you have a sense of like, we were talking about top of funnel versus bottom of funnel, right? We’re top of funnel is they are largely unaware of you. They’re doing generalist research, maybe they’re aware they have a problem, right? But they don’t know exactly, they’re still making a decision. That’s all top-of-funnel type stuff. Bottom of the funnel is “I made a decision, I’m ready to sell, I’m ready to invest. The decision I gotta make as who. Who do I do that?” So that’s top of the funnel, bottom of the funnel.

If you have a sense of where you want to focus, that is going to open up some strategic possibilities for you and close other ones, right? So one of the things that I’ll typically tell people is, like you said, it seems very overwhelming, right? You got a million things to worry about. I will always say like, in actuality, it is much simpler than you think it is. The mental model that I found has really radically changed how I think about this process, we mentioned this before, we were chatting before we started recording, it’s called the Theory of Constraints, right? The theory of Constraints was created by this guy, Dr. Eli Goldratt, he was a physicist from Israel, came over to the states, started working in the manufacturing process. And for me, I literally had a friend who like owned a factory, and was like, “Hey, can you help me, you know, improve my factory.” And Goldratt came in and said, factories should have the sort of scientific operating principles. 

But as a physicist, he also brought this idea of, you’re not trying to optimize every single tiny piece of a thing, like you mentioned, like, I don’t have to do my headline and my button, and my website, and my Google Ads, or my SEO, my Facebook, I don’t have to do all that stuff at once. Goldratt said, what you are optimizing is the system as a whole. 

So if you back up and you say, “Okay, my real estate investing business is a system, it is a series of interconnected pieces.” And those pieces interact with each other, right? Like my marketing funnel interacts with my acquisitions person, my acquisition person and how they close interact with my CRM, which interacts with how much money I get in my checking account when I close on a deal, right? These are all interacting pieces. 

And so, Goldratt’s insight was that if you view that system as a whole, that is designed to produce something, in this case, it’s revenue for the investor. There is only ever in that system. One thing that most constrains is the output. So if you mapped out your whole investing business and you’re like my marketing funnel, my acquisitions person, my back end processes, the types of deals that I do, the way I close the market, like you put all those things that align, there’s only ever one thing that is most limiting what you get out the back end. And so your only job, if you want to truly optimize that system is to figure out what that one thing is, and fix it. That’s it. You don’t have to worry about anything else. 

Because like a chain, if you imagine a chain, there’s always the weakest link in the chain. And if you really pull on that chain as hard as you can on both ends, it’s always going to break at the weakest link, and never anywhere else, that’s where it’s going to bring. So you could spend all your time making every other link in the chain stronger, it doesn’t make the chain any better. You have to make the weakest link stronger, and sort of back this up and say, “Okay, let’s bring this down to earth and talk about marketing. 

In any marketing funnel, there is only ever one thing that is most constraining the flow of leads through that process into your acquisitions person’s calendar, there’s only one thing. Now, it might be the landing page, it might be the ads that are driving traffic, it might be the cost of the market or whatever. But there’s only ever one thing. And so if you know that, the question becomes not how do I handle everything it was, the question becomes what is my one thing right now? And then what do I do to make that thing better? 

So for example, if you were saying like, “Hey, we’ve got a great back end system, like our team is amazing. Our acquisitions, people are great. I know, I can get money for deals. I’m crushing it right? My problem is, I need more investors, I need a bigger audience.” Right? If that’s the constraint for you, okay, great. What we’re going to do is top of funnel type stuff. I’m going to do a podcast, I’m going to make a YouTube channel, I’m going to get out to the biggest audience possible. If instead, you’re like, look, “I got a big audience, I got my email list on my watch podcast, very popular. My problem is people are getting over the line and actually putting money down and investing with me.” You say, “Okay, well, we might want to think about the sales pitch that we’re using, we might want to think about the medium, maybe we switched to zoom instead of phone calls. Or maybe we switched to in-person, instead of zoom. Maybe I need to put different acquisitions person on my team.” 

I’ll give you a case study where there’s a real-world example, a coaching student of mine, really successful real estate investor in Baltimore, have been crushing it for years and years and years. And someone who has their back-end logistics so tight, like one of the best operational investors I’ve ever met, right? And we were having this conversation, we’re talking about their ads, because they’re running Google Ads. And they’re like, we’re not really getting appointments, right? Like, we’re getting views on the ads, we’re getting clicks, we’re getting leads, but they’re not turning into appointments. That’s the constraint. Okay? 

So we started looking at that say, like, alright, and is this something with the ads? Is something with our copy? Is this something with, you know, in there, we’re like, what about the person who sets the appointments? And it turned out that they had just switched recently from his wife, who had been setting all their appointments previously, who was locals from the area, new everywhere, you know, would talk to you be like, “Oh, you’re you’re 123 Main Street. That’s right, by Vinnies pizza, like and have that conversation.” Right? They just switch to an appointment setter from the Philippines, and that appointments that are perfectly English, flawless English, but no local knowledge. And what they found was the appointment setting rate dropped off a cliff, when they made that change.

When they switched back to using his wife to switch appointments, all of a sudden appointments came back, deal flow starts going through. So if we had spent all our time saying, well, let’s test another landing page, not only am I putting in more time and more effort, I am not actually impacting the output of the system. I’ve got to focus on that one thing, wherever it is. Does that make sense?

WS: It does. That makes a ton of sound sense. Yeah, sometimes finding that one thing can be difficult for me. I know or figuring out what should be our focus right now? The weakest link? Right? There may be three weak links, but there’s still one that’s a weakest.

DB: Yeah. So for us at AdWords Nerds, right, the work the way that we try to do this, because we only work with investors, we literally have a map of every investors lead generation system, which basically starts when someone sees the ad in Google all the way through to when they put money in the investors checking account through a close, right? So this is the that’s the system. We map that out. And then we take average performance values at each step of that system across all of our clients every quarter. 

So we say this quarter, how many views should the average client expect? How many clicks should they expect, right? How many leads should they expect? How many appointments should they expect? How many closes should they expect? How much cash, how much return should they expect? And we get that average? Right? We literally track the amount of volatility that those numbers see over time. So we do a standard deviation analysis and say, what are the standard deviations, if you’re within one standard deviation, your clicks might be 100, or 80. Or there might be 60. Those are all within one standard deviation, statistically expected, whatever. 

But, if you are above or below, in any given point, we say, that’s the constraint. Which step in the process is the furthest away from the average? And that’s how we attempt to identify what the constraint is in a given moment. It can be a bit of an art rather than a science. Even if all you did was sit down and map out your business as a chain of events, and put the numbers in for like, on average, this many people come in here, this many people end up over here, this many people end up at the end, even just by doing that, more often than not, a constraint will start to pop out. And if you could just approach things from that perspective, I think most people will find themselves far more effective at actually creating positive change than they think they can. 

WS: Yeah, tracking the numbers. So you know, what’s happening, right? If you’re not tracking and how can you improve it? This is a great example of that even you talking about tracking every piece of the process. And, we have tried to do that in numerous parts of the business, you know, but specifically, in this case, you know, investors, I mean, we can have so many people coming to our website, but then it’s like, you know, maybe not, not many signing up this month, or what I’m like, “Oh, what happened? You know, what was different than the month before?” And, that can be difficult for us to figure out, but if we don’t track it, there’s no way we’re gonna know. Right? 

So, I love the detail that you’re talking about. Yeah, I just love how numbers can shape and help us find that weakest link in this case, right? It’s so important to speak about, you know, like, what an ad campaign is how this helps us with that. What does that look like? f somebody says ad campaign, maybe, you know, speak at a high-level thing, go pretty deep. You know, what does that look like for somebody in our business?

DB: Yeah, so the most common ad campaign that investors are going to run specifically for motivated seller leads, right, which I think is probably the most common application of Google ads within real estate investing is going to be a Google search campaign. Right? So essentially, what that means is you’re targeting people that go into Google and type something in, right? 

So I’m going into Google, I’m typing in sell my house or we buy houses, whatever it is. So what I’m going to do is I’m going to create a list of keywords I want to target. And I will always tell people that keywords are not what people are typing into Google, they are what you are telling Google you want. And those are two different things. So we don’t have to get into necessarily the complexity of there are different types of keywords. And they overlap with each other in different ways. But you can basically think of it as the more specific the keywords you put in, the fewer the amount of people you are going to get in front of and the more focused those people are going to be. Right? 

So what I always say, like as an example, right, if I go out on a Friday night, and I’m a bachelor, and I say, “Look, I’m gonna meet someone tonight”, or “I’m gonna meet someone, it’s time for me to sell time.” All right, and I go in with a set of criteria. And if that if that set of criteria is, you know, they got to live in the area. That’s it and be available, right? That’s my only criteria. I’m going to have a broad swath of people to talk to, right, there’s a lot of people are going to meet that criteria out on any given Friday night. All right, a big odds, but a lot of variation in that audience, right? That’s a lot of different people. I didn’t even specify agenda, right. So there’s a lot. 

Now if I go out, and I say, “Okay, I’m gonna meet somebody tonight, Friday night, they gotta be six foot three, Swedish in origin, brown hair, blue eyes, wears glasses and likes,” then that is a very specific target. That’s a very specific target market, that audience is going to be very small, but they’re going to be very focused, right? So you want to think about there’s a trade off between audience size and audience focus, or another way of putting that is, there’s a trade off between audience size and lead quality. 

So we can go broader in our keyword selection. And we are going to get a much bigger audience. We are going to get more in on average, more retail style weeds. There’ll be motivated sellers mixed in there, but there’ll be a bunch of retail, right? And if you can handle retail leads, or profit off those in some way, right, you’re off to the races. Similarly, we can go really specific. I only want people who type in exactly sell my house fast and kinetic. Now I’m getting really specific in terms of who I want that audience going to be very small but the lead quality I get on the other end is going to be significantly higher. 

There’s one other element that you want to think about when you’re making these strategic trade offs, which is that Google ads is an auction. Right? When I say I’m targeting a keyword, what I’m doing is bidding on the people that search for that keyword and competing in that auction against other advertisers. So there is a sort of corollary effect that happens here, the bigger the audience, the cheaper my leads tend to be. Why is that? Well, there is more supply. And anytime there is more supply, and the same amount of demand, price goes down, right, econ 101.

Similarly, if I shrink my audience, right, and I’m only going after the most motivated leads, there is low supply, high demand, which means prices rise, on average. So we have generally kind of a spectrum where you’ve got big audience lower close rate, lower cost leads over on the left. And then over on the right, you’ve got small audience, higher costs, higher close rates. So this is the basic sort of strategic division. 

Now, once you have that, you should set your keywords up, sir, make these strategic decisions, you gotta write an ad. The way that ad writing works in Google Ads today is we write these things called responsive search ads, they are text ads, or you can add little images and stuff if you want. But they’re generally don’t show up a whole ton. It’s mostly text ads. If you imagine you type something into Google, and you see the search results, they look like that. All right, so you are generally writing ads that are going to appeal to the audience you targeted with your keywords, the more specific you can be in your call to action to them, the more specifically I can speak to them, generally, the better they’re going to respond. 

So if I, for example, write an ad, let’s say you go jump on Google, and you’re typing in like, you know, what am I going to do with my best podcasting real estate award? You know, I don’t know, where am I going to put it, you just see an ad that says, podcasts are great, you know, you’re like, alright, that’s cool. But if you see an ad that says Whitney, Whitney, you have the best podcast and real estate, click here to win a million dollars, right, you’re gonna click that it’s specific to you. So the more specific the ad copy gets, the higher the response rate. 

Again, you can start to see how all these pieces, the keywords and the strategy and the ad copy, they start to interact with each other. If you write a really specific ad to a really broad audience doesn’t necessarily work. Similarly, you write a really broad ad to a really specific audience doesn’t necessarily work, you have to match those things together. And finally, when someone clicks on that ad, you’re sending them to a webpage, generally, your website, I would say, you don’t really need anything super specific. I generally send leads to people’s regular real estate investing websites all the time, although we do design and develop landing pages for our clients. 

But I say the thing you want to keep in mind is, do you clearly say what you do, you clearly tell the seller why they should work with you, and you give them a clear way to contact you. That’s really it. So you got big old phone number, big obvious form with not too many fields, you got a really compelling headline that tells them why selling to an investor or working with you is going to be awesome. And you’re off to the races. Those are the basic components of a Google ads campaign, it really hasn’t changed that much over the last, let’s say, 10 years, the specifics change how the systems work under the hood changes a lot. But in terms of matching your strategy, to your keywords to your ad, to your website, that stuff is basic marketing one-on-one, it’s never going to change all that much. 

WS: That’s a great layout of just thinking through that process of an ad campaign and what that means. I think anybody in our business coming to somebody like yourself, it’s helpful to understand that a little bit so we can talk about what we need, right? Or you understand what you’re saying? Maybe a little better. 

And so what should somebody expect? You know, I was thinking about, you know, somebody has been doing AdWords for a long time, or maybe they have a growing brand, you know, versus somebody that’s just getting started, and they’re trying to do some AdWords, what kind of, you know, the expense should somebody expect as far as to put towards something like, you know, AdWords? 

DB: Yeah. So what I would say is, I will invert that question a little bit, which is based on what I want to spend, what should I expect? Because it isn’t the case, for example, that you need to spend some kind of minimum amount in Google ads in order to get a positive ROI. As I mentioned earlier, like I run a Google ads campaign from my own company and only spends a couple 100 bucks a month. 

But I am also not expecting 10 clients a month from that campaign. So it comes down to a couple of different factors, which I would tell people to do. First thing I call this berets law, because I’m a narcissist, and I’m going to name everything after myself. Right? So it’s berets law. I’ve always wanted an eponymous law like a name along with my name, so with this in mind, which is your budget should be something you could afford to lose for six months in a row, whatever that number means for you. It doesn’t mean you have to spend that number, but do not go over that. 

Because what I’m trying to counteract is this thing that every single real estate investor says, which is, if I’m making money, I’ll spend more on all right, and what that does is create this kind of anticipation, like, “Okay, I’ll put a bunch of money in, I’ll do a deal, I’ll get the money out, and then that will allow me to replenish my budget, and I’ll keep going.” But we all know that real estate is a fickle master, okay, the markets change, it can take longer to close than you expect, right, the sort of the sales cycle of real estate is quite long. 

And so if you are depending on that, to stay solvent, you open yourself up to the risk of going bust. And the number one rule of being successful in the market is don’t lose money and stay in the market, right? Warren Buffett’s most successful stock investor of all time, or at least one of them, he made the vast majority of his money in like the last four years. I mean, it is mostly a matter of staying in and doing work. So you’ve got to make sure that you are aiming for the long term. So that’s number one, right berets law, don’t spend more than you can afford to lose for six months. 

The second thing I would say is you want to take into account the size of your market, and what you’re trying to achieve. If you are targeting Orange County, California, it’s an expensive market competitive, your cost per lead is going to be higher than if you are targeting, you know, the middle of nowhere in Nebraska, right, you got five people, there’s not a lot of competition, your cost per lead is going to be lower. 

Similarly, your audience size might be larger in OC than it’s going to be in Nebraska, right? So you want to take that into account. So where you are targeting affects what you probably need to spend. Similarly, and this is sort of counterintuitive for a lot of people, the bigger geographically your target market, the cheaper it tends to get. So it is significantly cheaper to generate leads nationally than it is to generate leads locally. And that’s because it puts you into auctions all over the country with lower average competition levels than if you’re like, just focus, for example, on Houston, which is an incredibly competitive market, right? So it’s like, you’re just your average, or cost per lead drops. Alright, so you want to take into account your overall strategy. 

And then like I said, what are you looking to do? If you are looking to generate, let’s say, a deal a month, which for us at AdWords, and it’s like, when we take on a client, this is a major milestone, getting the client to a deal a month, we know, on average, and I will say just this just for us, like different people are gonna have different results, and you might be better might be worse, right? But just for us, on average, our baseline is one lead out of every 12 should go under contract. That is our average. So we know on average, not always, but on average, if we get 12 leads in the door, you should be putting one under contract. 

So if you’re saying “okay, well, I want a deal a month, that’s 12 leads a month.” It might cost you $100 a lead in your market, it might cost you $500 a lead in your market, depending on your competition. And so you need to get a sense of that and factor that in, if I can only spend $1,000 a month, I’m not going to get 12 leads a month in a market where they cost me $500 a lead, I’m going to get two leads. And that means I’m doing a deal every six months. Well, that is fine. 

And in fact, for many investors, that would be a massive improvement in their overall cash flow, you just got to have the right expectation going in. If you go in and say I’m going to do 100 deals a month, but you’re only spending $1,000 You’re gonna have a bad time pretty much no matter where you go. I always say like, it’s important to stay attached to reality. People like me who do Google ads as a service will pitch you on the fantasy that you can get deals for pennies on the dollar. And what I always point out is in any efficient economy, which by the way, ours is that is impossible. If you could get deals for pennies on the dollar, how long would it be until the level of competition rose to one that was no longer that profitable? It will be very, very quickly. So you want to be attached to reality and have the right expectations before you get started in this type of marketing. Does that make sense? 

WS: It does. I like what you’re saying as well you know as far as your budget should be something that you can lose for six months in a row. I feel like even what you’re talking about now, it gives some time for figuring out what works for you as well and making adjustments I would say you know and even on that note, how do you differentiate yourself? You know, if you and I are focused on the same market, we’re both putting in $500 a month, you know, we’re both looking for the same type of investors. How do we stand out?

DB: Yeah, that’s really interesting. I think it depends a little bit. Right? And it depends on from whose perspective are you answering that question, right? Like for us, if we’re managing an investor, right, we’re primarily looking for a strategic advantage, right? We’ve got more data on this type of lead generation than literally anyone outside of Google, right? We manage millions of dollars of ad spend a year is all we do all day, every day, our competitive advantages, we just know how to do this better. But if you are talking from the investor’s point of view, one of the things that oh wait, I’m a huge believer in this, that real estate investing as an industry is in the middle of a profound shift in the type of market that we serve. Right? 

This is Eugene Schwartz wrote breakthrough advertising in the 50s. Right and breakthrough advertising classifies different markets, basically, the only one you got to know is when you have a solution-unaware market. They know they have a problem, but they have no idea that there’s a solution. So, that is the kind of market that investors have been marketing to for decades. And you know that because what does all real estate investor marketing say? It says, we buy houses, we buy houses for cash, and get a fast cash offer. All it does is tell people what you do. That means you are marketing to a solution-unaware market. 

But today, we’re not in a solution-unaware market. Right? We’ve got HGTV running literally shows 24 hours a day about real estate investors. We’ve got open door offer pad Trulia, Zillow, all these people moving heavily into that space on Zillow is not doing that anymore. But moving heavily into that space, the Silicon Valley-backed buyers, startups, all that stuff, people know they can sell their home online, this is not a new thing. 

And that means that this market is transitioning from a solution-unaware market, to a solution-aware market. And when you are in a solution-aware market, your marketing has to change from telling people what you do to telling people why you instead of opened, why you instead of the 9 million other syndicators that there are, right? Why you and so I am a huge believer that the best path for your personal marketing is just that it is personal, it is unique, it leans into your own individual idiosyncrasies, the things that you like the things that you the sort of cultural groups that you belong to the idiom that you speak. And these are all things that are so important for building a personal relationship with the seller, the investor, whoever is on the other end of that transaction. And if you can do that, that’s what makes you different, like open door can’t compete with I’m real, and I’m local, and I’m like you. They cannot compete with that, it is impossible. 

So if you lean into that, I think you solve the vast majority of your own marketing problems. And the nice thing about it is, we all have a different way of doing it. My way of doing that is different from your way of doing that different from someone else’s way of doing that. And there is more than enough room to make a ton of money doing just that. Does that make sense?

WS: It does. This is great. It’s good to have a good understanding of this or better understanding, I should say, we didn’t say good, but much better. Yeah. And how to think about this. And because even that, you know, you’re talking about being overwhelming. And no doubt coming in and thinking about some of these big players in the industry. Well, how can I even get started, right? And a lot of guys, a lot of people won’t even get started because they feel overwhelmed or they see somebody else’s just so big and going it’s like, well, I can’t compete with that. Man, we got to learn a little bit and figure out how we can get our foot in the door right even if we have to use a pry bar, but we’re gonna have to stop this segment. 

Dan, grateful again for your time, and no doubt an expert in this space seems you know, this type of marketing is not going away. Like we talked about, you know, just seems like we need somebody on our team like yourself, and how can people get in touch with you and learn more about you?

DB: Yeah, so AdWordsNerds.com is the website that’s AdWordsNerds. So AdWordsNerds.com. We’ve got a blog, podcasts, or YouTube channel, all sorts of stuff, free content. We put it out all there all the time. So I would love for people to come and check us out at AdWordsNerds.com.

[END OF INTERVIEW]

[OUTRO]

Whitney Sewell: Thank you for being with us again today, I hope that you have learned a lot from the show. Don’t forget to like and subscribe. I hope you’re telling your friends about The Real Estate Syndication Show and how they can also build wealth in real estate. You can also go to LifeBridgeCapital.com and start investing today.

[END]