Why 90% of Your Marketing Budget Feels Wasted (And Why That’s Okay)

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What is up?

What is up, everybody?

At the science of flipping family.

I am excited about this episode because it is a solo episode where I get to basically teach you some tactics, systems, philosophies.

And today is going to be more about the philosophy.

Most people in our space of real estate investing, they think of marketing as a cost and not an investment.

So, we're going to talk about all things marketing, how to look at it, how to look at the ROI, how to really strategically plan for the money to be made.

All things related to marketing and revenue is what we are going to talk about on this episode.

Now, I have done this business for 18 years, and I have spent tens and tens of millions of dollars on marketing over those almost two decades.

So, when I tell you the things you're going to hear in this episode, write them down.

I have the wisdom to have gone through the experiences.

And not everyone can say that.

So I want to make sure you understand this is not just theory.

I have done this.

And these are going to be data-driven results that I have found in my own business so that you could look at how you are marketing and the money you are spending for marketing in your business.

Now, I'm going to stop here and start to dive into all the different verticals, right?

There are a lot of different verticals that you could choose.

And the first thing I'm going to talk to you about in terms of verticals and how you can be marketing is there is not a right or wrong answer.

There's no bad way of marketing, right?

Because

whether it is cold calling, TV ads, direct mail,

PPC, PPL,

email marketing, none of these are bad.

Driving for dollars.

I mean, there's a lot of different verticals, right?

Bandit signs, none of them are bad.

You just likely have either heard misinformation or you have improper expectations on the result of the information.

And so I'm not going to go vertical by vertical and rip off KPIs you should be expecting.

What I want you to understand is what would be standard expectations for what you are doing.

I just had a great conversation with one of my students about they have a pretty decent marketing spend, right?

And they are leaning into almost rebranding their company or the marketing company because they think that they're not necessarily seeing the results because potentially the brand of their company.

And I told them it has less to do with the brand as much, meaning the name of the brand, as much as it has to do with the value that the person hears or sees

in the messaging you could call yourself it doesn't matter LLC but if the value that the person hears or sees as a function of that during the marketing they will call you back right

and so that is really important for you to understand is the perception of the brand is critical.

Okay.

What are the value stack that you can offer your client, in our case, a seller more often than not, that can help them say, I want to call this company, this person?

And so in that,

you want to make sure that whatever marketing you are doing is offering value to the person receiving the marketing.

Now, again,

I want to maybe take a step back even further and help you guys understand the point of the marketing.

There's marketing that is specific to just brand building.

Some of you think that you need to have some really clever, genius company name for your branding.

I don't personally agree with that.

I think if your company name or the name that you are branding and marketing with is straightforward, tells the story of what you're trying to do, like I have a company, US

National

Home Buyers.

Is there any question

where we buy homes?

Is there any question what we do?

None.

We buy homes in the US, right?

Like clear as day, US national home buyer.

So

I want you guys to realize like it doesn't have to be clever, witty, cute.

Like you don't have to be named Apple,

right?

So like just don't overthink that part.

but then also understand what is the, what is the marketing that you are trying to do or what is the marketing you set out to do trying to do?

For some of you, you might be considering making your marketing budget partly a brand play.

Maybe you're very localized.

So maybe you want your TV ads to be a major component of your marketing spend.

Right.

So let's just say you're in Columbus, Ohio, and you are Johnny buys Home Columbus.

Well, that is very specific.

It is very strategic, and no one is going to question that Johnny buys homes in Columbus.

That TV ad would be very good when someone is looking to sell their home, right?

And so the vertical of TV in that sense could be very good and could come off well.

Now, does Johnny Buys Home Columbus translate when you send out a piece of direct mail.

Not as much.

Because

when you open up direct mail or when I open up, think about how you open up direct mail.

I'm not always looking at the

company.

I'm looking what's in the direct mail.

So like for us, we send out those checks, like guaranteed offer checks.

So someone putting their brand of Johnny Buys Columbus on the check

is not nearly as important

as the number on the check.

You guys follow me there?

The number on the check is going to be way more important than the fact that you're trying to put the brand of Johnny buys Columbus, Ohio.

So, you all, again, thinking through verticals and thinking through what you're trying to do with marketing

is going to dictate kind of the vertical you go in and what should the expectations be.

If you're going for a branding play while at the same time making money, TV would be a much better vertical than direct mail.

TV would be a much better vertical than cold calling.

All three of these, all three, TV, cold calling, direct mail, they all are trying to get you your next deal.

All of them are.

But out of those three, what do you think would bring the most brand recognition?

Is TV by far, right?

And so understanding the point of your marketing can really help you dictate where you spend your money.

So that is part number one of this episode is do you care about the brand you're putting out there?

Is that a part of the play that you're trying to do?

And in some verticals like cold calling, for example, or door knocking, it isn't important

at all, right?

And so.

I would not utilize my intention of branding in those verticals.

They all, again, they all get deals,

but if you're looking for the branding play, then there's some that are better than another.

Now, the other component that I want to dive in here is again, looking at all the different platforms from PPC, PPL, TV, direct mail, cold calling, etc.

Having the expectation

Well, let me rephrase it.

Making sure you have

realistic expectations is going to be paramount.

If you expect to start a PPC Google, Google PPC campaign, and you expect to get your first deal in 30 days, I wish you the best of luck.

Because the reality is, just like TV, direct mail, PPC,

you might find the highest motivation in your clients, in the homeowners,

but you need runway to find them.

So, this conversation I just had with a student, we were talking about how, like,

and I don't know the exact percentage,

but a massive percentage of the marketing you spend, the

money you spend on the marketing, a massive percentage goes to nothing, is wasted.

And it's a very small percent of the marketing you spend that generates the deal.

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So, for example, if I spend $100,000 and my cost to get the deal is $5,000,

my hope is

I can get 20 deals.

That's my hope.

Right?

but even then

to get one deal out of a hundred thousand dollars spent it's still going to cost me five grand which means 95 of that hundred grand at that moment is wasted it's wasted marketing at the moment

right

and so you got to realize if you have an expectation uh that is incorrect you might give up before you even start,

right?

It's a very small percentage of the money that you are putting out there is going to actually get you deals now many of you guys have heard this a lot right you've heard this

you want to look for a 3x

row as

row as stands for return on ad spend

you want to aim for a 3x row as that is correct and by the way that's kind of the minimum threshold of a successful marketing campaign 3x row as

And that is correct.

You really do.

So if you spend a hundred grand, you want to be making $300,000.

That's how you would look at that ROAS, right?

But how much of that 100 grand found the deals?

And it's going to be a very small fraction.

The rest is going to waste.

So then you can start to think about the first part of this episode, which is the branding play.

Is there a part of that spend that can be utilized for branding?

So that way, if someone hears you or sees you again in a different way, a different vertical, or around town, they recognize the brand of you, even though they didn't yet transact with you.

Right?

It's the same thing I have found about my podcast.

Because my podcast has been able to reach such highs,

I have found more people are finding me

than ever before.

Not because I am more successful or have made more money, it's because I have found a way to create a brand

that now people want to engage with me.

They want to do business with me.

Okay.

Now, I'm not telling you guys to start a podcast.

My point of that is if a large part of your marketing spend is wasted, I would make an argument.

Some of this marketing that you are doing, if you're spending $100,000, I would make an argument that some of that $100,000 should be going into a vertical like a TV

or pay-per-click advertising that has branding around it.

Okay.

If you spent $100,000 on cold calling, which is really hard to do, by the way,

you're not going to get any branding out of that.

None.

But if you use pay-per-click advertising and TV is two are probably the most prominent, then at least you're getting some branding.

Because if someone watches that commercial or if someone clicks on your ad, they're going to go to a website and they're going to know that you are Johnny Buys Columbus Homes or, you know, they'll see the commercial and know you're Johnny Buys Columbus Homes.

So a portion of your marketing budget should be allocated

to verticals.

that have both of the points.

It's a way to get a deal and monetize it and and get your 3x ROAS, but it is also a way for you to have some brand recognition.

Now, here's the tricky part about marketing and branding.

They're similar, but people think it's synonymous, right?

That it's all one in the same.

And it isn't.

I've found in my experience, the bigger my brand gets, the more money I make.

But not all marketing is making me more money.

I can't tell you how much money I have spent that didn't give me any return at all.

I basically burnt the money on fire, right?

Like I lit it on fire, it didn't give me a return, it is gone, right?

That has happened more times than I'd like to admit.

But as I say all the time,

the longer you stay in the game, the better chances you have to win the game.

That has also been my reality.

Because now I've done this business for almost two decades.

I've been able to create a brand just around staying in the game long enough to create enough credibility, enough influence, and enough authority that now money is finding me.

Okay?

So marketing is really imperative.

It is different than branding, though.

Like we talked about, cold calling

is a way of marketing.

Door knocking is a way of marketing However, when you knock someone's door you have a conversation you leave most likely they forgot your name They don't know the company and they forgot all about you if they didn't transact with you.

Okay, you have very little to no branding But it is a way of marketing This is why still today, I know this sounds crazy to everybody.

This is why TV still has some of the highest

retention when it comes to commercials.

This is why commercials on the Super Bowl are so expensive.

As much as it is about a gaining clients play,

it's just as much about a brand play.

You want all the eyeballs on you.

That is why Budweiser or Cheetos or Coca-Cola, they spend all this money, 5 million or whatever they're spending on a 30-second ad.

is because they know all the attention is going to be on them for those 30 seconds.

So they make these commercials incredibly entertaining, funny, et cetera, like Dunkin' Donuts with

Ben Afflack and Matt Damon, Tom Brady.

Like, great.

I still to this moment remember that commercial for Dunkin' Donuts.

So I want you to think more like a marketer, more like a brand play,

more like an advertiser,

because they're all similar.

But you want to try to put your money in all of it.

Now, there is nothing wrong, just so we're clear about what i'm saying

i am not saying there's something wrong with door knocking i am not saying there's something wrong with buying ppl which is pay-per-lead leads there's no branding play when you buy a lead no one knows you're even buying it but you there's nothing wrong with that it is a true just i buy a lead is but it's not marketing either you're just acquiring potential clients That's all you're doing.

There's no branding involved in that.

Okay.

So that's part of the point of this episode is to get clarity on what are the expectations you are trying to achieve.

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There's two great friends of mine in Columbus, Ohio.

That's why I kind of thought of it.

Tiffany and Josh High, two great friends.

They run multiple different marketing strategies, just like I do.

I do more on a wider scope than they do.

They focus very much in their own city of Columbus.

But the reason why they do it is really highlighting what I'm talking about here.

They're running TV, they do direct mail, they have cold calling, right?

They have a network affiliate of

agents working leads.

I'm bringing that to light because the people who understand what I'm saying, that's how they're working their business.

Now, I might have a much larger budget than you.

So is maybe Tiffany and Josh, but it doesn't matter.

If you're going to be spending money, understand what you're trying to do.

And by the way, if you have a minimal marketing budget,

that is totally fine.

I would encourage you to probably start calling realtors.

Why?

Because again, you're serving both points.

You're building a brand around the conversation you're having with realtors and you're getting a potential deal, right?

And it is

not mutually exclusive.

And in this way, it is actually kind of one in the same.

You see, realtors have fed me for years, and when I mean feed, I mean, they've given me deals and I've made money on off of them and with them for years, and it all started for the first conversation.

And that first conversation starts the idea and concept of who I am and what I do.

And then, once we transact, now they remember Justin buys homes in Phoenix, and then they'll continue to feed me because they know Justin buys homes in Phoenix.

Now, it may not be a branding of your entity, but it might be the brand of you.

The brand of you is massively important when we're talking about marketing with realtors.

Marketing with realtors is as simple as you think it is.

It is typically a call.

Now, if you get a good enough realtor database, you can start to email them, remind them you're here,

remind them that you're ready to buy deals, looking at deals, need to buy more deals.

Now, that branding will continue to go, and you do not need a large marketing budget to do any of that.

In fact, you really don't need any.

But if you are going to maybe spend a couple dollars, then you got to make a decision whether you give it,

you know, branding in terms of

people knowing your company, people knowing you.

If you're going to spend a couple bucks, then you're likely not going to care much about branding.

Okay.

Because the places that I would recommend you spend money would be something like PPL, pay-per-lead, or cold calling.

Now, the other play, which I haven't brought up yet, and I should have, is Facebook ads.

Facebook ads are relatively inexpensive, and they give you kind of the best of both worlds.

They give you a branding play as well as they give you the lead.

The challenge with Facebook ads

is that

you're really kind of relegated to a very wide range of where you're going to get the leads.

Now you can navigate that and get very pinpointed on where you're going to get the leads.

But then the cost per lead starts to go up enough where it may or may not make sense.

Okay.

But Facebook ads is a very viable way to get deals nationally.

Right.

And if you get deals nationally and you call it like, I'll give you an example, Joe buys homes

and then the ad says we buy homes cash, close quick, no commissions, but it's Joe buys homes, then the brand is right there on the ad that Joe buys homes, right?

And so if you have a little marketing budget, then I'm going to encourage a couple things.

Facebook ads,

pay-per-lead PPL, or cold calling, okay?

And by the way, As part of that, it's free to call and reach out to agents.

So I would say agents.

Now if you have a little bit bigger of a marketing budget, this is where you got to start thinking through like do I care about the brand yet?

Because a lot of times you don't really care about the brand until you want to be in a very specific market.

Okay, so like TV is very brandable, right?

PPC is very brandable.

So those two, I would say, are the two that you would say, okay, I want to build the brand around my marketing spend so that I have longevity and people will think about me down the road, even when they didn't just watch my commercial.

They may see my commercial, you know, two months ago and all of a sudden today they think about selling their home and they remember, oh man, I saw a commercial about Joe Buys Homes, Columbus.

And then they go look you up and reach out to you.

But that is why I'm trying to distinguish for you guys the difference.

When you reach the point of potentially doing TV ads or PPC ads, you know that those two verticals can better brand you

and Get you leads versus just get you leads, okay,

and realize if you're just going for leads the money you spend on cold calling for that example or pay-per-lead a vast majority of those dollars are going to be wasted a vast majority i don't know the exact percentage, but like 70% or more.

And it's the 30%

of the money you spend that will get you the leads or get you the deals that can give you the ROAS.

Remember, I talked about ROAS, return on ad spend.

So 30% of that marketing spend can get you the deal.

I'll give you a great example.

I was doing TV ads in Alabama,

and I think we did

three,

was it three months before we actually sold, we not only contracted and sold and profited on our first deal, and we made like 40 grand.

So we spent 30 grand

to make 40 grand.

Okay.

But that lead, I forget when that lead came in.

I mean, the vast majority of the 40 or 30 grand we spent

did not create the one lead, the vast majority.

We made 40, so now we're profitable, but

it was one lead that created the 40 grand.

The rest of that money did not create any leads or deals.

Are you guys following me there?

So that like is such a

gap between what you think is making money and what is really making money.

Now, the better you get in sales and negotiating, the more deals you are going to get from the leads that are coming in, right?

So then your ROAS goes up and you're making more and more money, but it's still heavily weighted to this idea that the vast majority of the money you're going to spend is not, I repeat, is not

going to generate you revenue.

So be clear with your expectations.

And when you are, then the first expectation should be this.

I'm going to go get a 3x ROAS

and I'm going to spend the money for six months consistently to reach that 3x ROAS.

You might reach the 3X ROAS after 90 days.

That's fine.

Be ready to spend the money for a minimum of six months.

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The next point to that

is

you got to remain consistent.

You have to have marketing stamina.

The reason why companies, myself, people, we win is we just don't quit because things things aren't going our way.

I'm not telling you to be silly and dumb and throw money at marketing that is absolutely not working.

Don't do that.

I'm not saying or suggesting that, but don't do it for 30 days.

Think it's not working and quit.

At a minimum, whatever marketing vertical you decide to go do,

you need to go do that for a minimum of six months.

Okay.

And then you will see the runway that was needed for you to make your money.

And at the end of the six months, you will look up and say, okay, I made money, I lost money, I broke even, whatever.

And then you can say, what could have made that better?

Maybe it's conversions, maybe it's leads, maybe whatever the case may be.

But again, when you start spending real money, do not give up before you give yourself enough runway to measure.

your results.

So if you do these things and have proper expectations around these things then you're going to ultimately be successful in your marketing do not sell yourself short understand there's free marketing you can door knock you can call agents that is all free it does not deliver branding

you can spend a lot of money on tv and ppc and that is expensive but it also delivers branding and i can't tell you how many times that we will get a deal because someone remembered the commercial or someone someone remember the ad

and clicked on the ad three months ago and just saved the website or remembered the name and then reached out to us.

So understand what you're looking to achieve.

Figure out how much marketing budget you have and attack it.

And lastly, give yourself enough runway to measure the results.

30 days, 60 days, 90 days, that is not enough runway.

You should measure all along, but it's just, in my opinion, not enough runway to give you true data for you to measure the result you want.

Now, friends, if this was good and you believe there's a couple people that should hear this about marketing and advertising and branding and expectations, please share this episode with everyone you think should hear this.

And I'll see you all on the next episode of the Science of Flipping.

At Capella University, learning online doesn't mean learning alone.

You'll get support from people who care about your success, like your enrollment specialist who gets to know you and the goals you'd like to achieve.

You'll also get a designated academic coach who's with you throughout your entire program.

Plus, career coaches are available to help you navigate your professional goals.

A different future is closer than you think with Capella University.

Learn more at capella.edu.