The multifamily industry spends around $170 per unit yearly on marketing costs – over $50,000 annually for a 300-unit property, or $1.7 million per year for a 10,000-unit portfolio. The bulk of this spending goes to advertising, yet the typical owner/manager still struggles to determine if this money is delivering cost-effective results.
Many advertising decisions are made without clear data on how effective different forms of advertising can be. The multifamily industry can change this by using principles of direct marketing to assess which advertising methods will generate the most leads and leases for the least amount of cash outlay.
John Helm, CEO of MyNewPlace.com stresses the importance of consistently tracking the effectiveness of each advertising source in a white paper Cost Effective Resident Acquisition. His team worked with the heads of marketing for several owner/managers in implementing the recommended analytical approach.
In every case, the owner/manager was able to identify that 20%-30% of their advertising spend was simply not cost-effective. In many cases, they were able to cut this spend, redeploy half the “saved” dollars and replace, or even increase, the number of leads and leases generated.
There are five basic steps owner/managers can take to evaluate most cost-effective lead sources:
1) Identify Sources
2) Determine Common Metric
3) Benchmark Sources
4) Allocate Spend (and Effort)
Using these basic steps can help multifamily housing managers identify ineffective cost areas of their advertising spend. That money can then be reallocated to more efficient advertising methods, resulting in better leads and leases for the same or lower costs.