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$1 Billion on Advertising!

By: Matt Jones
 

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“So Geico spends $1 billion a year in advertizing. What are your thoughts on that?”

That’s what my friend and fellow agent Guy Loft from Madison, Wisconsin posted on Facebook yesterday.  My initial reaction was WOW!  But then it started me thinking and I wanted to share some of my thoughts with you my readers.

I was stunned by the size of the annual ad budget — I mean you can’t seem to get away from their advertising, but a billion dollars!?  But as I thought about it I needed to put it into perspective, so I did a quick Google search to learn more.  Here’s what I discovered:

Geico (Government Employees Insurance Company) is owned entirely (since 1996) by Warren Buffett’s Berkshire Hathaway and is the third largest writer of car insurance.  If you know anything about Warren Buffett, you know that he got to be the richest man in America by being very smart when it comes to business.

It turns out that the $1 billion advertising expense was against a total revenue of over $28 billion.  In other words, as a percentage of sales the advertising cost was only 3.5% of sales.  Our industry experts teach Realtors® to spend 20% of gross commission income (GCI) on advertising.

I say that if you leverage technology you should be able to generate much more business than you can possibly handle and have enough to refer some out to other agents or build a team for under 10% of GCI.  Still, 3.5% is a tiny number when put in perspective.

Another interesting item I discovered was that in 2011 when they had their first losing year since 2003, can you guess what they did?  That’s right, they increased their advertising spending.  In other words they advertised more not less.

We as agents are often tempted to cut advertising when times get tough.  If I’ve heard it once, I’ve heard it a thousand times: “But I can’t afford to advertise.”  The truth is that you can’t afford NOT to advertise.  But clearly you have to advertise smart when times are bad, and that means getting the most bang for your advertising buck.

I’ve written several articles helping agents to evaluate which ad sources have the best return on investment, but the bottom line is that the lowest priced leads you can generate today are from the internet, assuming you do it right.  And that means having very efficient lead capture so you maximize every single opportunity.  That’s why I invented my LCM Gateway system — the same technology that’s been used by over 20,000 agents nationwide.

So I don’t suggest you spend $1 billion this year on advertising, but I do suggest you evaluate what you are spending to generate your sales leads.  If you’re finding it a tough market, invest more.  But always invest smart.  Know what your return on investment is or don’t do it.

So if you’ve struggled with online advertising or you’ve seen minimal results, please take a minute to check out my LCM Success system.  You’ll be amazed at how much you can generate with almost no investment.  Many agents are generating 2-3 new inbound leads every day without spending a dime.

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Matt Jones PhotoMatt Jones is the founder and CEO of FavoriteAgent.com, nationally syndicated columnist, broker, and best selling author of LCM: The Secret to Success in the New Age of Real Estate, The Ultimate Listing Presentation, Traffic: How to Sell Fast and Net More, Becoming a Mega-Producer, The Science of Online Marketing, 10 Steps to Real Estate Success, 20 Questions: Everything You Always Wanted to Know about Real Estate but Were Afraid to Ask, The Virtual Office Model, Max-Bang!, and The NEW Ultimate Listing Presentation. Jones' North Carolina-based company has been profiled by major media outlets as an innovator and a pioneer in the industry, and CNN's Pulse on America claimed FavoriteAgent.com is "changing the way real estate is being done in America." This article is syndicated in the following locations: iTunes, YouTube, Stitcher Radio, BlogMattBlog.com, RealBlogging.com, NewsGeni.us, TheCommissionCheck.com, RevampedAgent.com, and now Amazon Kindle.

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