At the start of 2022, nearly every multifamily operator across the country is experiencing record high occupancies, yet reducing marketing spend hasn't been a priority.
This means that many apartment communities are still funding marketing sources to generate demand that they don't currently need. Why would you pay to generate the web traffic and interest that could fill 20 units when you only have two available?
That is why cutting underperforming or unnecessary marketing sources, and then making your marketing spend more efficient by funneling money only towards sources that consistently deliver great leads, is a worthy endeavor for every apartment marketer regardless of occupancy. Doing so enables you to confidently dial your marketing spend up or down depending on performance, which means you could simultaneously raise revenue and decrease expenses when your occupancy is strong.
There are three primary ways you can begin to do this when your occupancy is strong:
1. Track Lead-To-Lease Conversion Rates Of Every Marketing Source
Tracking the lead-to-lease conversion rates involves implementing call and email tracking software to each of your marketing sources, which gives you the power to pinpoint where every lead for your apartment community originated from and measure their overall performance.
This software designates a phone number (or email address) for each of your marketing sources. Though every single phone call or email from a marketing source would ultimately get redirected to your leasing office's number or to the leasing agent assigned, this will give you the ability to go back and see how many prospective residents called the number or sent an email that's associated with one specific marketing source, such as your series of digital advertising campaigns in Google.
Once you can identify how many phone calls or emails each source generated to your leasing office, it becomes easier for you to see which sources are developing the most qualified leads and which ones aren't. When you can see how many of those qualified leads actually convert into leases, you can begin to prioritize the sources that led to the most conversions and safely cut funding to the ones that fail to produce a similar turnout.
2. Move On From Your Internet Listing Service Contract
Internet Listing Services (or ILS) like Apartments.com, Zillow, ForRent.com and others have long held their grip on the multifamily industry as many property management companies make these platforms an essential part of their marketing strategies. Especially during a time when nearly every operator is experiencing above-average occupancy, the ILS-centric approach becomes even harder to move away from because most apartment marketers often tie their current success directly to using them.
However, in our years of experience operating as an apartment marketing company, we haven't seen definitive proof that would match this line of thinking. While an ILS is certainly capable of delivering a high number of leads, most of those leads won’t end up being very qualified. What we often find is that many of the various ILSs deliver far more email leads than phone calls, and email leads convert to leases at a very low rate. (In fact, if you have a method of tracking lead-to-lease conversion rates, you may come to the same conclusion once you start measuring other, more targeted sources like your digital advertising campaigns, against your ILSs.)
We are, more or less, 'agnostic' when it comes to relying on an ILS. When you're experiencing a vacancy crisis and it actually delivers a desirable amount of qualified leads that consistently convert into leases, we would tell our clients to keep them for their apartment communities. When your occupancy is stable or an ILS does not deliver very many leases, however, we'd be the first to tell them to cut it and free up their marketing spend to use in more intentional ways.
There are three primary reasons why we believe more apartment communities should move on from their ILS contracts:
ILS lock into terms, costing you money even when your occupancy is strong.
Accepting an agreement with an ILS instantly hinders your ability to make your marketing budget dynamic because you've locked yourself into a term payment structure that never changes regardless of your occupancy, which likely isn’t the best use of resources knowing seasonality is ever changing.
The ILS model makes it unnecessarily harder, and more expensive, to drive more lease conversions.
A major hidden cost to utilizing an ILS is that your apartment community's listing is placed in direct comparison with competitor properties, and the only way to achieve higher visibility (or 'stand out' above others) is to increase your package and pay a higher monthly premium. So, unless you're paying for an ILS's top-tier package, your apartment community will simply begin to blur in with all the others and chances are slim you'll see a desirable amount of generated leads that ultimately sign a lease from it.
ILSs steal traffic away from other paid marketing sources, forcing you to compete against yourself.
The other major hidden cost is that ILSs purchase ads for the keywords related to your apartment community's name, meaning that when a prospective resident searches for you online, the link to ILS might end up being featured above the link to your own community’s website. If you're utilizing other paid marketing sources like digital ads, then you're essentially paying for another marketing platform to compete against your own marketing strategy.
3. Use Cost Per Minute To Evaluate Digital Advertisements
If your apartment community deploys digital ads, whether in search engines like Google or social media platforms like Facebook, then you may already be aware of the various metrics at your disposal to measure those ads' effectiveness.
The most popular metrics relied on by digital marketers include Cost-Per-Click, Bounce Rate, Conversions, and Keyword Relevancy. While each offers outstanding insight, the question we and others have debated for years is which of these metrics is the most valuable to evaluate? As we manage millions of dollars worth of digital ads for apartment communities each year, it was imperative for us to determine how best to evaluate a digital campaign's performance so that we could strategically help our clients maximize their marketing spend.
Our answer was defined by combining each of those metrics together to create a singular metric to measure the effectiveness of an apartment community's digital ads. We call it Cost Per Minute, and we believe it is the only metric necessary to gauge your effort in making your marketing spend comprehensively more efficient.
Cost Per Minute is calculated by dividing the Cost-Per-Click with the Average Time On Site from a specific ad campaign. In other words, if an ad campaign is driving visitors to your apartment community's website and they spend an average of 2 minutes and 30 seconds on the site, then if each click costs you $1.00, your Cost Per Minute for that campaign is $0.40 cents.
Cost-Per-Click / Avg. Time On Site = Cost Per Minute
$1.00 / 2.5 = $0.40/Minute
The lower your Cost Per Minute, the more effective your ad campaign is. It indicates that not only your digital ads are prompting more users to click on it, but that those users then are spending a significantly longer time engaging with the content on your website. This is why we built this metric specifically with apartment marketing in mind, because we know that the longer a prospect stays on your website and views photos or videos of your units, the more likely they are to become a legitimate lead.
The beauty of Cost Per Minute is that it corroborates what those other, more traditional digital ad metrics suggest. For example, if you have an ad set that is earning a low Cost-Per-Click, that would also result in a low Cost Per Minute. Or if your ads have a high bounce rate, meaning that visitors who come to your website leave it quickly, then that would result in a high Cost Per Minute. We did a study on our own websites a number of years back and found that visitors who actually converted into a lead spend 3-5 times as much time on the website as an average visitor, so this number in due time drives your conversions, too.
This one, easily decipherable metric gives you an objective measurement of each of your various digital ad campaigns. Using it can help you as you work to make your marketing spend more efficient and cost effective, as you'll be portioning more money towards ad campaigns that achieve the lowest Cost Per Minute.
For more strategies like these that help you raise revenue and decrease expenses simultaneously when your apartment community is full, download and read our ebook How To Manage Your Apartments When Occupancy Is Strong by completing the form below.