August 10, 2022
How to Create a Home Builder Marketing Budget
Creating a home builder marketing budget is a challenging but crucial step to strategically reach and engage the correct target audience. Investing in multiple marketing tactics ultimately offers home builders greater opportunities to receive a higher Return on Investment (ROI).
Developers and home builders should create and monitor their marketing budget in order to evaluate the overall ROI based on their marketing strategy and learn where improvements are necessary and possible.
Take a look at our guidelines for what goes into building an effective marketing budget to efficiently advertise for a home builder or developer.
If the results of your home builder marketing efforts have been a little lackluster recently, now is the time to think about what you are going to differently to get the most out of your budget dollars. And if you already have a healthy budget, understanding where you might need to alter efforts or add new initiatives is key to improving your marketing efforts. And for those who drastically decreased or cut marketing efforts the last two years, it is time to reconsider this strategy.
As a home building company, you need to be both smart and strategically clever with your planning.
Determining a Marketing Budget
How Much Should Your Budget be?
How much should the average home builder spend on marketing? That’s the million-dollar question. There’s no one set dollar amount that will serve as an accurate recommendation for any business, especially the home builder and construction business.
Different industry experts have their opinions and recommendations that help in determining setting budgets, but most marketing experts will recommend budgeting 1 to 2% of projected sales volume on marketing (not including model merchandising expenses, real estate commissions, or salaries and bonuses for an Online Sales Counselor.
Other industry experts suggest the budget amount is dictated by how long the company has been operating. For example, if you’ve been in business ranging one to five years, spend 10 to 20 percent of gross revenue on marketing. But if you’ve been in business five years or more, scale the marketing budget back to between 6-12 percent.
At Milesbrand, for the specific branding and marketing services and efforts we provide, an effective home builder marketing budget is most often 0.5% to 1% of the total sales price of a home, depending on the size of the home builder. This budget would not include sales commissions or merchandising costs in the all-encompassing marketing budget, which might fall closer to 5% to 7% of the total cost of a home.
The key takeaway from this is knowing what your home building business can afford to invest in your marketing efforts and understanding that marketing spend affects sales revenue. Investments are important. And while it’s great to strive to have your investments in alignment with typical industry recommendations, getting started with a budget of around one to four percent of gross sales is probably more feasible. This can help your business begin to compete with other home building and construction companies in your area and build brand awareness.
Allocating the Budget Dollars into the Proper Channels
Digital: In this age of marketing and advertising, digital marketing is the by far the most prevalent marketing channel because it checks the boxes of the following key ingredients – ease of use, affordability, capability of targeting specific customer groups and ability to tracking performance. Marketers like digital marketing campaigns because of the return on investment. There are statistics that back this up:
HubSpot cites email marketing can generate $38 for every dollar spent.
A study by Nielsen found that online ads generated $2.18 for every dollar spent.
Influencer marketing generated an average of $5.20 earned for every dollar spent.
When it comes to digital advertising, focus on the following areas to get the most out of your investment – Search Engine Marketing (SEM)/Paid Search, Facebook/Instagram, Listing Services, OTT (Over-the-Top) advertising and Online Lead Quality.
SEM/Paid search is one of the best ways to capture buyers actively searching for new homes. Paid search is like surfing – you need to ride the wave and although this wave has been at an all-time high the last two years, it has crested. It is time to spend more in this area if you aren’t seeing the leads come in. As the market shifts, more home builders are paying for paid search with less home buyers in the market searching online, so home builders need to be prepared to see cost per click and cost per lead increase as the market gets more competitive. Don’t spend more than 15-20 percent on brand terms, and don’t forget to use Google Display, YouTube remarketing and in-market ads. In-market means Google believes someone is in the market for a home based on their online behavior.
Brand Awareness: Facebook and Instagram often garner a large percent of a digital spend and assist with brand awareness. Although their special audience categories have ratcheted down targeting options for home builders, both Facebook and Instagram are still incredibly effective sites to advertise on, provide tracking capabilities to enable home builders to measure and evaluate their advertising strategies, and provide retargeting ads. Make sure to use Meta Business Manager and the pixel for creating custom audiences.
OTT (Over-the-Top) Advertising is another platform home builders can utilize to capture leads and awareness. These platforms implement ad content to dedicated streaming services like Roku, AppleTV, Amazon Fire TV or an internet-connect TV. This platform also provides high targeted capabilities and measurable tracking.
A quick word on the quality of leads from digital marketing channels: as long as the advertising source is sending traffic to your website first, then the quality of leads that come through are essentially the same. If a visitor comes to your website and spends time browsing through multiple pages of information, that means it’s a quality lead. Their intention is there – they are shopping for a home.
Online Presence: Companies, no matter what the business, are already way behind their competitors if they don’t have their own website to create an effective first impression with potential customers.
Not only do home builders need a compelling and easy to navigate website, they should always be prepared to not only maintain, but continuously improve their website as well. Home buyer expectations continue to grow including the desire for more videos, interactive home designs, 3D tours and other home buying tools.
Not only will the ongoing updates to your website provide up to date information and home buying tools, but it will also assist in how well the website ranks in search engines. This means keeping the code on the backend up to date, as well as updating content on the front end. As new communities are added and removed, take time to look at the rest of the website and tweak underperforming pages, add videos, Matterport tours, etc. Include blogging in the budget as it is a fantastic way to keep fresh content on a website and boost search engine optimization results.
Lead generation should be at the forefront of a home builder’s marketing objectives by incorporating strong calls to action within the website. This can be accomplished by implementing easily accessible online forms to request information, join a VIP interest list or request a tour.
Bottom line, home builders need to make their online presence a priority and budget accordingly. Keep in mind the typical lifecycle of a website is four to five years with incremental updates along the way.
Content and Visual Representation: It is critical for home builders to budget accordingly for this important marketing line item including renderings, floor plans, 3D tours, professional photography, videos, blogs, etc. Home buyers desire content so don’t skimp on this part of the budget. Strong visual content can be shared not only on websites, but on social media, eblasts and much more. Find professional partners that can lighten your burden in this area. Just getting the right ones in place can unlock the next level of results for your marketing and your company’s revenue. Hiring a content writer for your marketing team is another good option to produce great content for your website and blog.
Additional Marketing Buckets: Here’s an outline of other marketing tactics you need to include:
Signage: All exterior signage needs, including onsite and offsite directional signage, fall within this marketing budget. It is beneficial to determine an average start-up cost for community signage for a new community to assist in future community budgets, then modify based on the number of community entrances, model homes, etc.
Print: Although print might lack the targeting and tracking abilities of digital advertising, it still provides an important tangible option to enhance brand awareness and build brand recognition. Though print isn’t as prevalent as it once was, there are still elements of print that can generate a positive return on investment. Direct mail campaigns can directly reach home buyers in their current homes and specifically target audiences by location. It can be cost effective as well. Keep an eye out for hyper local print pubs that cover the neighborhoods where homes are coming out of the ground.
Collateral: While many home builders may like the idea of moving to all digital collateral, home buyers still desire high-quality printed collateral to take home and review. Print collateral may include company and/or community brochure, home plans, price sheets, included feature sheets, site plan, points of interest, etc. Offering print collateral helps home buyers keep a community and builder top of mind during their home search!
Sales Center: When a home buyer visits a new home community, one of the first places they visit is the community sales center. Home builders should invest in this important space to provide exciting features for home buyers including visual displays, digital touch screens and topo tables to effectively showcase the community.
Events and Realtor Outreach: The pandemic halted in-person events but this is no longer the case in many markets. Home builders should budget for events for both home buyers and realtors to showcase their homes and communities.
Set the Foundation for Your Home Builder Marketing Strategy with Milesbrand
It is important to not only create an effective marketing budget and utilize your marketing dollars wisely, but your company must also implement effective branding and marketing strategies as well. At Milesbrand, we provide home builders with strong branding combined with both traditional and digital advertising capabilities. To get started, contact our team to learn more about our services and how to find the right balance in your home builder marketing budget.