There are many benefits for apartment communities that utilize digital advertisements to highlight their units and amenities. Digital ads increase awareness about their apartments, and they can be targeted towards prospective residents actually interested in them. They also generate traffic to the apartment community's website, which is a key first step in converting more leads into leases.
But perhaps the most important benefit of digital ads is that there's no fixed price, meaning every apartment community can afford them. Unlike expensive subscription packages on Internet Listing Services that cost the same amount every month, apartment marketers can be dynamic and spend however much they want on Google's or Facebook's ad platforms depending on their demand. This makes it possible to save marketing dollars when occupancy is strong.
There are many different factors that need to be weighed when considering how much of an apartment community's marketing budget should actually be set aside for digital ads. That is the purpose of this blog—to help every apartment marketer set a digital ad budget that delivers results and maximizes revenue.
These 5 questions will help us get started:
1. What kind of apartment property do you have?
There's a large disparity between Class A and Class C properties when it comes to digital ad spend, especially when considering their supply and demand, budgets, and target group of prospective residents.
We've seen Class C properties spend as little as only $50/month on defensive campaigns in Google and meet their occupancy goals. Meanwhile, some Class A properties, particularly the ones in a lease-up situation, have spent upwards of $2,500 to $5,000/month on digital ads to achieve the same outcome.
Class A properties, in particular, must spend more on ads because they're competing with similar luxury-style apartments with massive marketing budgets, and they experience a longer leasing cycle with their prospective residents.
This all may seem obvious, but acknowledging your property type is the first step is setting an appropriate digital ad budget.
2. How many units do you have at your property?
The amount of units at your property weighs heavily on your ad budget. Basically, the more units you have, the more you need to be willing to spend on digital ads because they are your lifeline in generating the necessary amount of web traffic you need to maintain a healthy occupancy.
If you have 200 units at your property and your trailing 12-month turnover rate is 50%, you're going to need to rent 100 units per year to achieve maximum occupancy. Now, if it takes 100 visits to your website to rent one unit, then you must also attain 10,000 web visits to your website annually to meet that occupancy goal.
More units equals more prospective residents, hence more people searching for those units. This means you're going to have to pay for more digital ads to generate the amount of web traffic necessary to fill those units.
3. What is your average rent?
Like unit count, apartment communities with a high average rent also need to proportion more to their digital ad budgets than others. This is because communities with a higher average rent also accumulate more lost rent when their units sit vacant.
For example, if your community's average rent is $600/month, then every single day of vacancy costs $20 in lost rent. If your average rent is $1,500/month, however, the cost is $50/day per unit in lost rent.
If the community with the higher average rent could spend $25 more on a digital ad campaign to rent a unit just one day faster, they'd be getting a much better return on their investment than the community with the lower average rent.
4. What is the maximum and minimum amount you can spend each month on digital ads?
The reason we ask this question is because every apartment community experiences its own unique seasonality, so it's important that you're able to identify your busy and slow seasons and plan your digital ad budget accordingly.
If you know your occupancy is going to fluctuate, your marketing shouldn't stay the same year-round. You should be prepared to spend more on digital ads during your busy leasing season as you'll desperately need more leads to account for the amount of turnover that occurs during that time. Then, when your occupancy is stable during the slow season (typically the winter months), you can dial back your ad spend and save money because you don't need as much web traffic or leads.
You can identify your busy and slow leasing seasons by reviewing the last 12-month period of organic traffic to your apartment community's website in Google Analytics. More web traffic means more demand, and therefore, more turnover.
Again, every community is different when it comes to determining their maximum and minimum dollar amounts. We would at least recommend a minimum ad spend of around $300-$500/month if it's within your budget. This amount is enough to fund defensive and remarketing ad campaigns in Google, leaving a small amount aside if you need to also run offensive, keyword-targeted campaigns or utilize Facebook.
On the maximum side, we've seen communities settle around somewhere between $900-$1,200/month on digital ads. This amount makes it possible to run ads on both Google and Facebook simultaneously so that they can generate as many leads as the community needs to maintain its occupancy.
One good rule of thumb is to have a minimum and maximum ad budget that reflects your unit count. In months when occupancy is stable, you should spend about $1/unit per month on digital ads. When demand is high, you should spend about $3/unit per month.
5. Where are you currently spending your marketing dollars?
To get the most out of your digital ad budget, you need to know where you're currently spending your marketing dollars, and whether or not those sources are getting your desired return.
The truth is, spending most of that amount on Google or Facebook ads is far more effective than an ILS, where you're willfully letting potential residents compare your apartments directly with your competitors, or other traditional marketing sources. In fact, one multifamily company we work with turned exclusively to Google and Facebook ads to highlight their properties because those sources generated their most qualified leads.
This is especially important for communities worried about the additional costs of running digital ad campaigns. One method of acclimation is to drop down a tier on an ILS package and use those funds toward Google or Facebook, and then be sure to track those sources for a few months. If those digital ads are bringing in more leads, you can confidently cut other, less-effective sources from your marketing.
Bonus Question: What if you didn't have to do the thinking?
With RentVision's predictive marketing system, that's possible.
We created two metrics, Future Occupancy Projection and Future Occupancy Target, that forecast your future vacancy and automatically make adjustments to your ad spend to generate the right amount of web traffic you need.
All you need to do is determine your maximum and minimum budgets and let the system work. If your Future Occupancy is below your Future Target, it will increase your ad spend closer to your maximum amount because you need more traffic. If the inverse is true, it dials back the spend closer to your minimum amount so you can save money.