How to Prevent the Coming Mortgage Drought
Your Internet marketing costs are going up. A lot.
You know this, but you just don't how bad it is going to be.
Imagine you have in your hands a stack of $1 bills. Actually,
make that a stack of $5 bills. Now imagine that every time a new
visitor comes to your site you hear a ding sound from your
computer. And every time you hear that ding, you take a $5 bill
and put in the trash can by your desk. Every once in a while you
miss the trash can and a $5 bill lands on the floor. You get to
pick that up and put it back in your hand and you can use that
$5 bill again to aim for the trash can.
That is what is happening to many mortgage web site owners and
they don't even know it. Most of their marketing dollars are
flowing like a waterfall into the trash. More on this in a
Why Your Costs Are Going To Increase?
Three separate, seemingly-unrelated, factors have occurred over
the past few months which will severely impact your online
Dialing For Dollars
1)The Do-Not-call Registry. No longer can you, or services on
your behalf, cold-call individuals to generate mortgage leads.
The end of telemarketing means the expense normally allocated to
cold-calling, will now be directed elsewhere: most likely to
direct mail and online marketing.
"The rain may never fall till after sundown.
By eight, the morning fog must disappear."
2)The monetization of the net. No longer can you call a
colleague and boast, "Hey, I am ranked number one for the term
"California Home Loans" and I am getting more FREE traffic than
I can handle."
The idyllic days of Camelot are over where even small dogs could
rule the pack. Search engine algorithms at every major search
engine have been replaced with a 100% pay-per-click (PPC) model.
In case you have been living under a mouse pad for the last
year, the model is pretty simple: if you want to be ranked 1st;
you pay the most per click.
Only Google, which is about 50% pay-per-click, has any
assemblance of a "you can get ranked first" hope left.
Undoubtedly with Google's pending Initial Public Offering (IPO),
where pressure from the investor community will convert the
Camelotesque search results to monetarily driven PPC links.
Additionally, in January 2004, Yahoo reported a 62% increase in
fourth quarter profits. Did there visitor volume go up? No.
Their visitor counts held steady, but there online PPC
advertising dramatically increased.
As further indication, we monitor several PPC bid keywords and
noticed a 25% increase in the amount bids in just under three
months. It is going to keep climbing.
The net effect of the monetization of the net, is that
advertisers like you are paying companies so they can deliver
visitors to your web site
The Coming Death of Spam
3) Do-Not-Spam laws. Recent laws by the US Government have
banned unsolicited email, which was a source of mortgage leads
for some companies. While this option is not dead yet, it is
dying. The effect will be to shift the monies formerly applied
to bulk email to other venues: online advertising and direct
All three of the above items previously generated a majority of
the mortgage leads, and now each option is ceasing to be a
viable alternative. The adverse effect on your marketing budget
is that there will be more dollars competing for top ranked PPC
Pay To Play
This brings us to the pay-per-click market. If you want to be
found via an Internet search, you have to pay to play. How much
you ask? Probably substantially more than you planned to budget.
In a pure market we would anticipate that the total internet
marketing costs associated with a closed loan will translate to
at least a $70 per lead over the short term.
Here is an example: As of January 2004, the top four PPC bidders
for "Wisconsin Mortgages" were paying over $19.00 per click, not
per lead, per click. How many clicks does it take to convert to
a lead. If that answer is five clicks, you are paying almost
$100 for just the lead.
Dollars Flowing Like Water
Imagine a summer in Seattle and playing in the backyard spraying
the garden hose water everywhere. If the hose is left running a
few minutes extra, well, that is all right. Now imagine Southern
California, during the summer, with drought conditions. The same
water coming out of the garden hose is suddenly very precious as
the cost per gallon increases as an incentive to prevent waste.
It is the same with your mortgage leads. They may have been like
cheap and abundant water, but that is drying up, to your
Xeriscaping Your Mortgage Leads
In Southern California a whole industry has been created by the
occasional water shortages - Xeriscaping. Xeriscape is the use
of low water plants for landscaping.
Now here is the tricky part... You have to be more efficient
because you are paying for the water, but your potential
visitors get to use the water for free, as you are paying for
each click they have that drives them to your site. And as the
clicks become more and more expensive you are highly cognizant
of that costs, but since your customers aren't paying for the
click, they can run up your PPC costs in a short period. That
sound you hear is all those $5 bills filling up your trash can.
Marketing Means Solving Customer Problems
Depending on the keyword, many unknowledgeable companies are
spending $1 - $20 a click and driving the potential customer to
a web page that makes absolutely no sense to the visitor, i.e.
an "application page" or an "about us" page. In effect, you
could be throwing about $5+ away for every PPC visitor.
There Goes Another $5
Another way of how to make PPC visitors more efficient is to
weed out what you don't do. In example, if you find yourself
receiving many bad credit inquiries and you do not service those
type of loans, possibly consider adding the phrase "Good credit
only," to your PPC ads.
With the cost of mortgage leads increasing, and expected to
continue the upward trend, you will need to become more
efficient with your web site and each lead you receive. You must
have the information your customer is seeking or they will
Money Down The Drain
With the cost per lead increasing, it is astounding at how many
mortgage companies we test to see how they respond to customers
and how long it takes to follow-up (if at all) and how poorly
the response from the mortgage company can be. We suggest
testing your own web site to see what you will find.
Preventing The Drought
The first step to preventing wasted water is to review where it
is going. Analyze where you are spending your marketing money,
choose keywords more wisely, and test your web site to determine
how effective your content is. Strive to answer all customer
questions on your web pages so that they will either apply or
call you. If you do everything right, you can get your visitors
to go with the flow, leading directly to a closed loan.
Web site: www.mortgagepromote.com
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