You're listening to the “REI Marketing Nerds” podcast, the leading resource for real estate investors who want to dominate their market online. Dan Barrett is the founder of AdWords Nerds, a high-tech digital agency, focusing exclusively on helping real estate investors like you get more leads and deals online, outsmart your competition, and live a freer, more awesome life. And, now, your host, Dan Barrett.
Dan: All right, hello and welcome to this week's REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWords Nerds, and welcome. Welcome to the show. If this is your first episode in or if you have been with me for the entire time, I cannot tell you how grateful I am for you to be here. As always, you can go right to REIMarketingNerds.com. That is REIMarketingNerds.com to find all our past episodes, more information about us and what we do and more, so go there and check it out. [01:15.7]
This week, we have a pretty timely topic. If you've been listening to me for a while, you'll notice that I really do a lot of work to make this podcast evergreen, by which I mean, look, the stuff that I'm talking about, even though online marketing and SEO, and Google Ads and Facebook ads, and all that stuff, even though it's always changing, it's constantly changing, it's constantly updating, it's constantly evolving, I try to make this show just as valuable next year and two years from now as it's going to be today.
And I do that by focusing on the long-term stuff, the strategic stuff, the mindset stuff, the stuff that is part of an inherent to what real estate investors do and what motivated sellers want. Right? So, that's what I try to do on this show. [02:11.6]
But every so often, these changes, these kind of big changes to these platforms that we all depend on come through and they affect real estate investors, and I always try to be an objective source of information as much as I can, an unbiased source of information about that stuff, so that I’ve got you covered and I’ve got your back, and you can come to me for that kind of update.
The other thing is that a lot of times this news will emerge and it'll be pretty unclear what it actually means for investors, and so whenever we get news like this, I'm going to try to directly connect it to what I'm doing with my clients, what my team is seeing out there in the real world, because most of you know this that this is what I do all day, every day. Right? [03:05.2]
Motivated seller leads are how I make my living. It's how I feed my kids. It's how my team feeds their kids. This is what we do. And we work with hundreds of clients around the country. We work with investors big and small. So, we have a really good picture of how these things are actually going to affect you in your market right now.
That’s the preamble. Let's actually get to the news, and the news is that Google is announcing some pretty big changes to how Google Ads are going to function for real estate professionals, which is going to include real estate investors. Now, to be clear, we are talking about Google Ads. This is not going to affect SEO, so if you're thinking about how your website shows up in Google organically, the types of clicks that you don't pay for, none of that is going to change. None of that is being changed by this announcement. This announcement is specifically targeting Google's ad system. [04:09.4]
I want to put this in context. Okay? You have to understand the broader context of what's happening in order to understand why this is occurring and I think what it's going to do is give you maybe a little bit of an idea of what you can predict from these changes.
About two or three years ago, Facebook settled a lawsuit with the ACLU, the American Civil Liberties Union, and the ACLU, their basic argument was that Facebook's ad-targeting mechanisms, for example, you could target a very specific zip code or you could target a very specific demographic that could be age, it could be gender, it could be ethnicity, right? There's a lot of things you could target people based on the language they spoke. [04:56.6]
The ACLU’s argument was that this, when it was applied to, for example, advertising for housing opportunities or for loan opportunities, that the ability to segregate who saw those ads and who didn't amounted to the capacity for racial and perhaps religious and ethnic discrimination, and that kind of stuff in the housing market has been against the law for a long time due to the fair housing act and in all sorts of stuff.
So, the ACLU basically said, Hey, red lining certain areas for housing opportunities is illegal when you do it by mail and when you do it in the real world. When you go door to door, you can't sort of decide who you want to rent in your neighborhood or you can't decide that you don't want to make a mortgage loan to someone based on the color of their skin in the real world. But everyone now is doing this stuff online and, more and more, the online space is where housing opportunities and loan opportunities [are found]. That's where people find them. [06:04.3]
And so, the ability to do that online violates the fair housing act. That was the argument that the ALU was making. Now, to be clear, this never went to court and I'm sure there are legal arguments on both sides. I'm not here to tell you that I understand the niceties of the legal argument at all. I don't, but Facebook, in reality, in art history, right, Facebook just settled the case, and part of the settlement of the case was that they said they were going to institute pretty wide changes to how their advertising system worked to prevent this kind of potential discrimination going forward
What did they do to make that happen? Well, a couple things. One, they removed a whole bunch of additional sort of third-party datasets from Facebook advertising sort of command. You used to be able to, for example, target people based on all sorts of different online transactions that they might have been involved in for all this stuff, the car that they drove, their amount of income, and Facebook got rid of the ability to do that. [07:14.2]
After that, a couple of months after that, what they ended up doing was instituting a special advertising category, and if you are an investor and you have run any Facebook ads before or recently, you have seen this. And basically what it says is, Hey, if you are involved in real estate, you have to opt into this advertising category, and when you do that, it restricts the targeting methodologies that are available to you.
For example, you cannot target a specific zip code. You cannot exclude a specific zip code. You cannot there's all these demographic options that might be available to you if you are, for example, marketing a pregnancy test or your marketing bras, or you're targeting your shavers or whatever. For all that stuff, you have a lot of demographic targeting options you can use, but when you're in real estate, you can't. [08:07.6]
Largely, the way that you can target on Facebook now via real estate is either by putting in a radius so you do a radius around a specific location or you can upload a mailing list to Facebook and target that way. Okay, so that's the idea there and we've been living with those changes on Facebook for a long time.
Now, in Google, we have not had those restrictions and I think that's for a variety of reasons. I mean, I think there's something to be said for the idea of like, Hey, in Google, we're targeting based on what they're searching for, so there's kind of an extra layer of whatever you want to call it, let's say, volition on the part of the searcher, for whatever reason, we just haven't had those changes in Google.
But I think it's pretty clear, if the ACLU or a similar group, they haven't brought a case like this to Google yet. I think it's pretty clear that they were planning on it because obviously Google is a mammoth, gigantic part of the online advertising world, and if you care about it over on Facebook, you're going to care about it over on Google. [09:14.0]
In my opinion, Google is largely getting out ahead of this, exactly what happened to Facebook, they are getting out ahead of it by sort of announcing changes on their own. Let’s dig into exactly what they have announced, okay?
Google basically put out this thing called the Google Ads Housing Policy and they said that they are going to be changing the rules for real estate, the ads that deal with any kind of housing opportunity or loan opportunity. It’s the exact same thing that's going on in Facebook. They're going to be changing the rules for how those accounts operate, come October 19, 2020. When you’re in the middle of October, they're going to be rolling this out. All right?
Now, what do these changes actually do? What do they actually mean? [10:01.6]
The primary changes that we need to know about the things that are going to affect you the most if you use Google ads to get motivated seller leads are that you are no longer going to be allowed to target by zip code. You are no longer going to be allowed to exclude areas by zip code and you will no longer be allowed to use demographic information to exclude people.
All right, so let's dig into this a little bit because it's actually a little bit more nuanced in Google than it is in Facebook, and that might not be immediately obvious to most people, so let's dig into this a little bit.
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The majority of our clients at AdWords Nerds and most of you know that I work with real estate investors that want to get more motivated, seller leads and deals online, so Google Ads is a huge part of what we do, and zip code targeting is how most investors think about where they invest and where they want to mail, and where they want to target. Right? This is very, very common and it's probably the most common thing that people come to us with. They come to us with a zip code or I should say a series of zip codes.
Losing zip code targeting is a serious issue. However, it is probably less serious than it might sound for one. We have actually found out at AdWords Nerds, we've actually found that over the course of the last couple of years, radius targeting in Google, picking an address and saying a five-mile radius around the address or a 10-mile radius or 20-mile radius or whatever it is, doing that kind of targeting can actually be more effective than zip code targeting. [12:18.5]
This is for a couple of reasons. For one, Google zip code targeting while you could target very exactly, it would almost always produce leads out of those zip codes a fair percentage of the time. This has to do with the limitations on how Google is allowed to know where you are when you search, unless you offer them that information, right? And so, Google will kind of use a variety of ways to try to figure out where you were located, but it just wasn't “the” most accurate thing in the universe, and so it kind of ended up being very similar to radius targeting anyway. [12:57.9]
The other thing is that a lot of times investors will bring a very specific number of zip codes to Google ads. What we have found over the last two years specifically is that the amount of competition in Google Ads means that going after a small search volume.
Let's say, I'm only going after my home zip code. I'm really zeroing in there. I'm going after my home zip code and that is going to limit the total amount of searches that are available to me, right? In my zip code, there's only a certain amount of people that are going to type in “sell my house fast” or whatever it is at a given time. And so, if I limit that volume, what it does is it makes every single click super important because there just isn't a ton of them to go around in this hypothetical example.
What ends up happening is that investors get frustrated because they kind of have this high level of competition because the, the hottest zip codes tend to have the highest level of competition, and they have relatively low volume and they're kind of stuck in this weird zone where, if you're not extremely well optimized and extremely well managed, it's very difficult to get the volume of leads they need to do a deal. [14:15.0]
In our case, much of the time, we will find that moving a client with a really restricted zip code targeting sort of strategy to a radius strategy, even if the radius is relatively small, will actually produce cheaper leads overall and more leads overall.
Now, that's obviously it's not going to be universally true, but generally we’ve found it to be true. And so, I actually think that moving to radius targeting will in many cases, probably not all cases, but in many cases actually improve results. Right? You might get leads that are kind of not exactly where you want, but generally the cost per lead I believe will come down for most folks. Again, you’ve got to take it on a situation-by-situation basis, but generally that's the way that I think it's going to work out. [15:04.9]
I'm not super worried about losing zip code targeting and zip code exclusions. I think that I would rather have the tool available to me as a purely strategic issue, purely when you're just looking at how we generate leads, yes, I would rather have it, but I don't think that losing it is the apocalyptic occurrence that many people seem to think that it is.
Now, let's talk about demographic exclusions because this is probably the thing that most investors know the least about. Okay, now I think most people understand in Facebook, you can target people based on how old they are and whether they want to watch Watchmen on the weekend or whether they like football or whatever, because people tell Facebook this stuff by liking pages and interacting with posts and yada-yada-yada. [15:59.6]
With Google, Google has always had much less of that information. They've had much less of that historically, because when you go on Google, you tell them what you want by searching for stuff, but you're not really going on Google and saying, I football and I want to watch Watchmen this weekend, right?
This is one of the reasons that Google bought YouTube. It's so they can have more access to this kind of information. It's been historically a strategic weakness in their advertising battle with Facebook, but it does exist. It is in there. It is part of the Google platform, and you can and you have been able to target by, for example, income level, gender or age range.
Now, the problem with this data is that it is less useful, in my opinion, than the information, the equivalent of information in Facebook, primarily because Google just has less of it. [17:00.8]
Let’s say, you’ve got 100 searches and you want to break down what the demographic information of those searches are. Google will typically be able to tell you 30 to 40 percent of them what the information is, but it just doesn't know a lot about the majority of the searches that you get. So, demographic information, demographic targeting has just typically been less useful to investors in Google Ads than the equivalent targeting methods in Facebook.
Now, we have been using demographic tools and exclusions, for example, excluding maybe the absolute top income range or excluding particularly young searchers, and that generally has helped us to bring lead costs down, but the impact is relatively minor and I'm not particularly worried about losing it. Again, it's one of those things that I would rather have that it was nice to have, but it is not a core part of our strategy. [18:00.0]
Now, what's interesting is that, and I can't exactly tell from Google's policies, we're going to have to feel this out, it does seem that we will still be able to use bid adjustments for demographics. They say the demographic exclusions will not be there, but we should be able to still use bid adjustments.
By that, what I mean is, when someone is, for example, in a certain demographic that you really want—let's say they are in an age range that is typical for your best clients or let's say they are a certain age range or a certain income level that you particularly want to target—you should still be able to dynamically bid more when those people are searching. You do this in the bid adjustments interface in Google, so you can say, Okay, if someone's in the 45 to 65 range, I want to bid on average 25% more for their click and I want to be at, let's say, 25% less if someone's in the 25 to 35 range. I believe that is still going to be possible. It's hard to say. And mostly we've been using bid adjusted limits rather than pure exclusions anyway. [19:11.4]
Overall, let's kind of summarize all this up. For one, I think this change was always going to come. It was inevitable when what happened with Facebook happened and I'm actually surprised it took Google this long to do it.
I think the other thing is that, look, if this really is a change that's going to help a more diverse population get access to the resources that real estate investors bring to their communities, I think it's only a good thing, right? I think generally anything that increases access to help and liquidity in the marketplace, which is what real estate investors do, I think that's great, right? Yes. Does it make our job of finally targeting motivated sellers a little bit more difficult? Yes, it does, and, yes, it's never fun to lose tools that are in the toolbox. [20:05.7]
But I think, overall, these were not the most important things that real estate investors do. I do not think that it's going to make getting motivated seller leads significantly more difficult than it already is.
The other thing is that I think the amount of confusion and the lack of information that most investors are going to have is going to give you a competitive advantage, because you’ve just listened to this show. You know what's coming. You know what the deal is. You know what to do about it.
So, I'm not particularly worried about you. I'm more concerned about the bunch of people who are going to wake up on October 19, not realize that they have to opt into this new stuff and Google will tell you, by the way, just go check your account. Don't pop up a window for you and you can see it. And they're going to drop out of the market because they don't realize that Google stopped their ads.
That is going to do it for this week's episode of the REI Marketing Nerds podcast. I hope this was useful to you. [21:03.3]
Hey, REIMarketingNerds.com is the place to go. You can get the show notes for this episode and all my past episodes, and you should join our Facebook group. Just go on Facebook and type in “REI Marketing Nerds.” You'll find it. I'm in there every single week, posting stuff, trainings, posting information, answering questions. There's a bunch of really awesome real estate investors in there, sharing tips and tricks and what works for them to find more leads and deals online.
As always, this is Daniel Barrett from AdWords Nerds signing off. I wish you all the best, and I will be talking to you very soon.
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