This post is the second of a series of six posts dedicated to the results of The Real Estate Agents study conducted by Network Communications, Inc., The Real Estate Book and The OSR Group. The scope of the series is outlined in this post.
The key driver of marketing investment by top agents is the length of time they’ve been an agent and the amount of money that they earn in commissions, according to analysis of The Real Estate Agents Study that we conducted.
The net effect of this observation is that top agents are able to use their marketing clout to increase their impact on the market. Consumers looking for homes are more likely to encounter a top agent’s marketing message more frequently, in more different media than another agent. This consistency and repetition of marketing messages is a basic foundation of successful marketing programs, and top agents benefit from this consistency in terms of higher lead volume and higher earnings.
One wrinkle we noted in the research was that agents relatively early in their careers invested a higher percentage of their commissions in marketing than any of the other top agents. One reason for this may be that the emerging agents understand the importance of establishing a strong marketing presence in their local community, and are willing to bear the cost of that incremental investment in order to increase the odds of their building a strong real estate practice.
Top Agents Spend $7464 A Year on Marketing
The average top agent spent $622 per month on marketing, or a total of $7464 in a year. The agents were asked to quantify how much they spent on all forms of marketing: advertising, personal sales collateral, web marketing, web sites, direct mail and e-mail marketing.
Overall, top agents spent 8.4% of their commission revenue on marketing.
Of the total, 43% spent less than $500 per month, or less than $6000 a year. 73% of the agents surveyed spent less than $1000 per month.
The difference in marketing spend in relation to commission revenue was notable. Agents making more than $200,000 a year spent $19,764 on marketing: 148% more than agents who earned between $75,000 and $200,000 a year and 262% more than agents earning under $75,000 a year.
It is in analyzing the spend by agents according to the number of years of experience that we see the more significant commitment newer agents make to marketing compared to more experienced agents. Agents with less than 5 years of experience spent 9.3% of their earnings on marketing, while agents with more than 20 years of experience invested only 8.0%. This relationship speaks to the higher earning power of the more established agent, but it also points out the investment newer agents make to establish themselves in the market.
Internet Marketing Accounts for 31% of Total Marketing Spend
In the survey, we also asked agents to quantify how much they spent on internet marketing, including their personal web sites, internet listing services and other forms of internet marketing.
The average top agent spent $2,352 a year on internet marketing, or 2.7% of their annual commissions. The total was approximately 1/3 of their overall marketing spending. (We see in a later section of this series that agents believe they allocate a higher percentage of their budget to their interactive marketing activities, suggesting that the absolute dollars on internet marketing will increase.)
Of the total respondents, 30% spent less than $100 per month on internet marketing, while another 32% spent between $100 and $250 each month.
Brokers Continue to Support Their Agents Marketing Activities
Given the difficult conditions of the housing market, we were interested whether the level at which real estate brokers supported marketing activities by their agents had changed at all. We’ve witnessed anecdotal instances of brokers trying to generate more incremental revenue from their agents in these tough times by introducing proprietary marketing programs, such as broker-specific magazines and internet marketing packages.
In general, the top agents we surveyed reported very little change in the support they are getting from their brokers. Of the total, 63% said support had not changed at all, while 13% said the brokers had increased support in response to the difficult market conditions.
Agents cited three primary kinds of support they received from their brokers:
- 67% said that their brokers provided a name that customers trust;
- 60% said that their brokers provided a web site and online support;
- 52% said that their brokers provided basic marketing materials that they could customize.
In Part 3 of this six part series, we’ll look at what media top agents use the most.
