How much should a home builder budget for marketing? The industry consensus is 1-3% of projected sales revenue for marketing alone, or roughly 5-7% of the total cost of a home once sales commissions, model merchandising and sales staff are included. Here is how to build that budget and put every dollar in the right channel.

Crafting a strategic home builder marketing budget is essential for reaching and engaging the right target audience in the real estate market. With the ever-evolving landscape of consumer behavior and technological advancements, effective marketing has become more crucial than ever.

By carefully allocating resources across various marketing channels, home builders can optimize their return on investment (ROI) and drive sales. This blog post will provide a comprehensive guide to creating a home builder marketing budget that aligns with your business goals and maximizes your impact.

We’ll delve into key considerations such as:

• Understand your target audience: Who are you trying to reach, and what are their preferences and behaviors?
• Setting clear objectives: What specific outcomes do you want to achieve with your marketing efforts?
• Identifying essential marketing channels: Which platforms and tactics will best connect you with your target audience?
• Allocating resources effectively: How should you distribute your budget to maximize results?
• Tracking and measuring performance: How can you monitor the effectiveness of your marketing campaigns and make data-driven adjustments?

By following these guidelines, you can create a home builder marketing budget that drives sales, enhances brand awareness and positions your brand for long-term success.

Determining a Marketing Budget

How Much Should Your Budget Be?

The question of how much to allocate to a home builder marketing budget is a complex one, with no one set dollar amount that serves as the answer for every business. The ideal budget depends on various factors, including business size, market conditions, target audience and specific marketing goals.

While there are no hard and fast rules, the generally accepted consensus among industry professionals is to allocate 1-3% of projected sales revenue to marketing (not including model merchandising expenses, real estate commissions, or salaries and bonuses for any online sales staff).

At Milesbrand, for the specific branding and marketing services and efforts we provide, an effective home builder marketing budget is most often 0.5-1% 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 5-7% of the total cost of a home.

Remember, your marketing budget should be a strategic investment, not a cost. The key takeaway from this is understanding that marketing spend affects sales revenue. Investments are important.

Allocating Your Home Builder Marketing Budget into the Proper Channels

Once you’ve determined your overall marketing budget, it’s time to allocate those funds across various channels. Here’s a breakdown of the key areas to consider:

Paid Digital Marketing

Digital marketing is 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 track performance. Marketers like digital marketing campaigns because of the return on investment In fact, a Litmus report says that email marketing generates $42 in return for every dollar spent, while a study by Nielsen found that online ads generated $2.18 for every dollar spent.

• Paid Search (SEM): Continue to invest in SEM, as it’s one of the best ways to capture buyers actively searching for new homes. However, it’s important to be mindful of rising costs due to market shifts. More home builders are utilizing paid search and with less home buyers in the market, cost per click and cost per lead is increasing. Don’t spend more than 15-20% on brand terms, and don’t forget to use Google Display, YouTube remarketing and in-market ads. Consider using advanced targeting options and optimizing your ad campaigns for mobile devices.
• Paid Social Media: Facebook and Instagram often garner a large percent of digital spending 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: This type of advertising is a growing channel for reaching consumers. These ads are delivered to connected TVs, streaming devices and gaming consoles, providing a way to reach a targeted audience with measurable results. Streaming radio advertising, a natural extension of OTT, offers audio-based ads on platforms like Spotify and Pandora. Combining OTT video ads with streaming radio creates a multi-sensory experience, reaching users across various devices and reinforcing messaging with targeted results.
• Email Marketing: Build and nurture your email list to send targeted promotions, community updates and exclusive offers. Regular email communication also helps build trust and loyalty with potential customers. It can also be a powerful tool for driving conversions, whether it’s encouraging web visits, scheduling appointments or completing online forms. Paid email can also be an invaluable strategy to target specific demographics or interests.

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. Utilizing a dedicated landing page strategy for your digital marketing tactics will greatly increase conversion rates.

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. Think of your website as your online storefront or model home. It’s the first impression potential homebuyers have of your brand, and it can significantly impact your success. Here are a few key elements needed for a successful home builder website:

• User-Friendly Design: Ensure your website is easy to navigate and is visually appealing, with clear calls to action and a mobile-friendly design.
• Comprehensive Information: The website should provide detailed information about your communities, floor plans, amenities and pricing.
• Engaging Visuals: Use high-quality images, videos and 3D tours to showcase your homes and communities.
• Interactive Tools: The website should include virtual home tours, interactive floor plans and more to enhance the user experience.
• Strong SEO: Optimize the website for search engines to improve visibility and attract organic traffic.
• Lead Generation: Collecting leads 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, download a brochure or request a tour.

Once the website is launched, the budget should also include funds to maintain and improve the website. These consistent changes will also assist in how well the website ranks in search engines.

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, public relations and more. Home buyers desire content, so don’t skimp on this part of the budget.

Written content marketing involves creating and distributing valuable, relevant and consistent content to attract and retain a defined audience. By providing valuable information and resources, you can position your business as an authority and build trust with potential customers. Hiring a content writer for your marketing team is helpful to produce great content for your website and blog.

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.

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 brochures, 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: Home builders should budget for events for both home buyers and realtors to showcase their homes and communities. These can include muddy boots events, grand openings, CE courses and more.

Frequently Asked Questions About Home Builder Marketing Budgets

How much should a home builder budget for marketing?

The generally accepted consensus is 1-3% of projected sales revenue for marketing, excluding model merchandising, real estate commissions and sales staff salaries. Once those are included, the all-encompassing marketing budget typically falls closer to 5-7% of the total cost of a home.

How much should go to branding and marketing services specifically?

For the branding and marketing services Milesbrand provides, an effective home builder marketing budget is most often 0.5-1% of the total sales price of a home, depending on the size of the home builder.

What should a home builder marketing budget include?

Paid digital (search, social, OTT, email), the website and its upkeep, content and visual assets like photography and renderings, signage, print and collateral, the sales center, and events and Realtor outreach. The website typically has a four- to five-year lifecycle, so budget for its refresh too.

Set the Foundation for Your Home Builder Marketing Strategy with Milesbrand

Creating a well-crafted home builder marketing budget is essential for driving sales and achieving your business goals. By carefully allocating resources, understanding your target audience and leveraging the right marketing channels, you can maximize your ROI and establish your brand as a leader in the homebuilding industry.

Milesbrand can help you develop a comprehensive marketing strategy that aligns with your unique goals. Our team offers a wide range of home builder marketing services, including branding, traditional advertising and digital marketing. Ready to take your marketing to the next level? Contact us today to learn more about how we can help you find the right balance in your budget.