Last year in October I had the opportunity to attend a Hobbs Herder Mega-Managing Convention down in Irvine California. First off my hat is off to Hobbs Herder. They dominate the agent advertising and branding space with some of the highest quality materials custom designed for the agents that they work with. What was interesting sitting in the room with a number of owners of real estate firms is that virtually without exception the agents and the owners were hurting and they were hoping that this conference would give them the tools and direction to ultimately turn their businesses around.

Unfortunately I came away with the impression that the company was teaching dinosaurs how to be better dinosaurs. It's really the demographics of the real estate companies in general. Typically the offices are paid a cap up to a certain amount per agent who closes transactions with the company, however the company provides little if any advertising or business for the agents themselves so agents will go from company to company looking for the lowest cap that they can pay while getting the most support and services for the money that they pay. Ultimately it turns out that it is normally a war of personalities rather then agents getting real value. Everyone says their broker is the best and its almost a religion for agents comparing their wonderful brokerage vs someone else's wonderful brokerage and how good and special the broker of the office is and how supportive they are of their business.

Anyway what offices and companies like Hobbs Herder attempt to do is get agents to spend their money on marketing and advertising which promotes the agent while at the same time promoting the brokerage in general and at yet the same time sharing a percentage of the revenues generated by the agent with the brokerage they are advertising. Now I don't know if you are following all the money that is being shared in expenses from the agent to advertising and the brokerage, but rest assured there isn't much left over typically for the agent.

I have been approached by a number of companies over the past few years which have been touted by some Mega Agent as being the best lead generator since sliced bread. One that I tried for a number of month was "Custom House Publishing". They provide a 12 page branded newspaper with articles and the ability to customize most every page of the newspaper in favor of the agent and then mail the newspaper out to in our case I believe 12,000 people at around 60 cents per piece...

If you do the math that's $7200 every month or two that we were spending to get a newspaper out. Now you would think that at $7200/month that we would get some business out of it. At least enough to pay for the paper. Well think again... We may have tracked one transaction to the newspaper and unfortunately once we got tired of paying the $7200/month (which only took about 8 months) there was very little return after the fact of people who may have kept the paper around. Ultimately the bang for the buck was pretty bad.

When we opened up Portland Oregon, Qwest Dex Yellow pages made me a deal for a banner on the front cover of 618,000 phone books advertising our real estate business to the toon of $26,000 for the year down from $100,000. We bought the panel the day they were closing the book and paid for it over the next year. We got lots of phone calls from the ad but they were mainly from people who were looking for help with their phone service. We may have tracked about 15 leads during the course of the year that actually was interested in something real estate related.

We also did the Harmon Homes a bit, Real Estate Book and a few other venues mainly because agents wanted to see their pictures in the books and again very little return on investment. How did we pay for all of this advertising... Well from our Internet Real Estate business.

Bottom line is we do almost zero offline now and our spend on actual advertising online is pretty minimal as well, almost everything we do is SEO related to our websites.

In Bellingham this year we will do approximately $800,000 in GCI (Gross Commission Income) +/- . This is split on a 50/50 basis with the agents who actually write the contracts, however this year we will spend maybe 80 hours this next year on SEO. This is mainly because we have done the SEO in prior years. If you figure out just maintenance on that this next year at say $3000/month which is being generous that's $36,000 invested to generate $800,000 in GCI. Now I don't know what the economics of your business is but $36,000 to return $800,000 in my book isn't a bad investment. Of course we have some office overhead and some administration overhead, but generally speaking our overhead is very reasonable and controllable. In fact we could let everyone go in the company if we chose to and the websites would keep on churning out leads day after day for months before it was impacted by any significant decrease in web ranking. Now calculate the ROI on that... Well anyway its great return...

So when you are looking at ROI for SEO consider that if its done right its easy to maintain and it should create returns for you for a long time. If you discontinue your post card campaign which provides some return how quickly will it quit returning on the money invested? Pretty quickly...

Obviously in the short run don't quit what you are doing to generate business, however do invest in a solid SEO plan and expect that eventually you'll be able to cut back on the mailings, open houses, and other activities and ultimately the marginal cost of your next lead may very well be close to zero.