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: Alright, everybody. Welcome to this week's REI Marketing Nerds podcast. As always, this is Daniel Barrett here from AdWordsNerds.com. How are you? Hope you are having an awesome week. Hope you had a wonderful weekend. I hope everything is excellent for you all the time, and this week I'm going to kind of get in to something that I'm… What I'm doing here is talking about an opportunity in real estate investing marketing, and the reason it's an opportunity is because I have not figured this out yet 100%. [0:01:17.1]
I'm going to kind of open the curtains here and I'm going to talk about something that's been a challenge for us that I think is a big potential opportunity to get connected to motivated sellers, but I will be honest in saying unlike most of the stuff I talk about on this podcast, this is not something I have tested and proven and done 100 times. This is something that we are actively working on and researching and testing, but it's not something we have really figured out. So, I want to be open about this because our goal at AdWords Nerds is to push the industry forward in terms of innovation, right. It's to… this is in our kind of company core principles or mission statement or whatever you want to call it. [0:02:02.9]
It's not just that we want to be the best; we want to be a huge source of innovation. We want to be the people that are making the new strategies and tactics that are working in the space and part of that is, I believe this, I mean we're getting into philosophy a little bit about this. But part of that is competition, okay. And part of it is just this sense that like, "Hey, people around you are doing the same thing. People around you are working hard on this. People around you are innovating themselves." And all that serves to push everybody forward, including me. You know like the story I always think about is that, you know, the whole story of the 4-minute mile where everybody thought it was impossible to run a 4-minute mile. Everyone said it couldn’t be done, and then of course, somebody did it, and then all of a sudden, everybody can run a 4-minute mile. Right? It's like the moment you know it's possible, people start putting their attention and their effort there, and all of a sudden the previously impossible becomes normal. [0:03:06.2]
Right? So, this is kind of what I'm doing here. I'm putting out kind of a call to the arms and saying, "Hey, let's figure this out." And what I want to figure out, what I want to talk about here, is YouTube. YouTube. Now, I'm going to talk a lot about YouTube and why I think YouTube is a huge channel. I will say right now, I don’t really see any investors using YouTube as a, you know, a major lead source for motivated sellers. There are certainly real estate investors doing YouTube ads for motivated sellers and they're fine, and I would guess that some of those people are generating leads. Some of those people aren't. But I would wager a lot of money that none of those people are using YouTube ads as their primary source of high-quality motivated seller leads. Please correct me if I'm wrong. [0:04:00.0]
If you're listening to this and I'm wrong, shoot me an email. I'm dan@adwordsnerds.com, and let me know. But this has been our experience. You know, we have run a lot of YouTube ads and they've all been fun, just fun, but I truly, truly believe that this is not even a tiny fraction of the potential of YouTube. And I want to tell you why because I think it's really critical to understand why, alright. If you look at the major advertising channels right now, the online advertising channels to look at, Facebook. You look at Google Search, even Bing to a lesser extent. These ad networks have experienced major price inflation over the past 5 years. For a long time, Facebook was you know way behind Google and Facebook is still cheaper because of the way that they, you know, the way it's structured, but it's steadily risen in cost as competition has increased, and Google has done the same thing, and so these channels are getting more and more expensive. [0:05:07.4]
Now, if you ask why that is, there's a bunch of reasons. It's actually really important for you to understand these reasons as you go on and try to find motivated seller leads, okay. So, in Google's case, you know, Google Ads and primarily Search ads are their income stream. That's what pays Google to be Google. And over time, Google has made a lot of strategic decisions designed to reduce inventory. Now what do I mean by that? Well, for an advertising network, inventory is spaces in which you can advertise. If you own billboards and you have five billboards, you have five spaces you can rent out to advertise, right, to advertisers. So, your inventory is five billboards. If you are a newspaper and you have, what's, let's say it's classified ad section, and that ad section can fit, let's say 50 classified ads. [0:06:06.8]
That is your inventory. You have 50 potential spaces, okay. That's how you monetize your paper, your billboards, your whatever. Now the problem becomes when you sell those five billboards, meaning you rent them out, let's say for the month of May. You rent out all five billboards or you sell all 50 classified ads, that's it. Right? That's it for you. Right? There are no more spaces. You sold 100%. Now that's awesome. You're maximizing your revenue, but you cannot really grow past that point until you increase inventory. So you got to buy new, you know, billboards. You could run two papers a day or you could double the size of the classified ad section or whatever it is. You got to increase your inventory to grow. Now, in Google's case, they run into a fundamental problem, okay. The fundamental problem is there is limited inventory. [0:07:01.9]
If you search for, you know, best pizza place near me and you land on Google, okay, you're not going to want to see a whole page full of ads. If you see an entire page full of ads, you're not going to come back, and google is going to lose their audience and then they won't have anybody to click on the ads. Right? So, there are only so many spots they can fill up on a given search page before people just throw up their hands and leave, so they have an inventory problem. For real estate investors, what this looks like is there are four ads on the top of every Google search page and there are typically four ads on the bottom, and that's it. So they have eight spots, alright. So they have eight spots on every search. Now how can they increase inventory? Well, they can increase the number of people searching. The more searches, the more times there are search pages and the more inventory they have, but Google kind of already has everybody. I mean, everybody kind of uses Google. [0:08:01.0]
They're like 90% of the market. It's going to be hard to get to more than 90% of the market. So they can't really grow by increasing their audience, so they can't really grow by increasing the number of ad spaces, so what do they do? They need to increase the price per spot. So if they can't increase the number of spots and they can't increase the number of searches, they have to increase the price the advertisers pay per spot. That drives Google's revenue up, and by the way, Google needs to keep raising revenue, okay. And that's exactly what happened. They've made strategic decisions in order to drive up the cost for every ad space that you occupy, and that is what has happened. Now if you look at Facebook, Facebook for a long time was a lot cheaper because they had more inventory. People spent longer on Facebook. They scroll down the timeline, you know, a whole bunch of times. [0:09:01.4]
They spend a lot of time on there, you know, they just consume a lot of stuff and so there are a lot more spaces on Facebook. So there's more inventory. And just like in any economy, right, the higher the supply, the lower the cost. If something is everywhere, you don’t have to pay a ton for it. Okay, cool. Makes sense. But the problem that Facebook ran into was exactly the problem that Google ran into. For one thing, Facebook ran into a lot of competition, so people have a lot of other places to spend their time online, so people actually spend less time on Facebook now than they used to, and there are only so many times you will be willing to look at an ad on Facebook before you throw your hands and you stop going to Facebook. If Facebook filled your feed with only ads, Facebook's audience would go away. You need to have, you know, your pictures of, you know, your grandkids and pictures of cats and funny videos, and you know, other stuff you actually want to see on your timeline in order to get you to come back and spend more and more time on Facebook. [0:10:04.3 ]
People that look at behavior and they know like look we put this many ads, usage time actually goes down. So Facebook is limited in the amount of ad inventory they have. Once they hit that point, prices started to go up. More and more people want to advertise on Facebook. There's more and more competition. Facebook knows that they're limited in the amount of inventory they have for their advertising, and so prices have to go up. And this is the problem that all of these channels run into -- Instagram, Google, Facebook, Bing. Everybody has an inventory problem and inventory problems in online marketing drive up costs. It is economic law. The only reason that costs are going to go down is because inventory has either gone up or because nobody wants to advertise there anymore, which by the way is the best. [0:10:59.2]
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Dan: So if prices go down, your competition is disappearing, well that's actually not that great for you as an investor trying to do more deals online. So, this is what's happening right now in the online advertising spaces. So that brings us to YouTube. Now here is the thing about YouTube. YouTube is the only advertising channel right now with no inventory problem. [0:12:00.6 ]
None. Now this is not because nobody is on YouTube. YouTube I think is the second biggest website in the world, second biggest search engine in the world, second biggest social media site in the world. So it's not because the audience isn't there. There are so, so, so many people on YouTube and by the way, people spending a ton of time on YouTube, ton of time. So, why don’t they have an inventory problem? Well here's the thing about YouTube. I think, I forget the exact statistic. I am going to give you my made up version. It's basically right. There's something like a year's worth of video, a year's worth of video is uploaded to YouTube every hour. Think about that for a second. It's really, those numbers blow my mind. A year worth of video is uploaded to YouTube every hour. I could be wrong. I could be wrong. I'm not going to Google it on the podcast. Go Google it. It's some ridiculous number. So the thing about YouTube is the amount of material on YouTube expands exponentially every single minute, and because it expands exponentially every single minute, we could not watch the amount of video on YouTube. If we all put our minds to it, you could never do it. [0:13:18.6]
It basically is infinite at this point, I mean for all intent and purposes, right? Because we're never going to watch it. And the average person spends a long time on YouTube consuming lots and lots and lots of video. So, you got the average person spending a lot of time in this place and there is no inventory problem, and I know this is the case because if you look at the cost for an ad on YouTube, it is almost literally exactly the same as it was five years ago. That is unheard of in this space, absolutely unheard of. The prices per clicks in YouTube are essentially like the prices per clicks in Google 10 years ago. [0:14:07.1]
I mean, it's like going in a time machine and going back in time. And there are, there's a lot of clicks, so many clicks. If you look at the average number of clicks that a really good Google AdWords account is going to send to you, it's in the 100-500 range per month. For YouTube, we are talking about thousands. So this is no joke. No joke. It's cheap. There's a ton of traffic. It's an incredible traffic source. It's incredible access to an audience that is incredibly hungry for content. What's the problem, Dan? Why haven't you guys used this for somebody's primary motivated seller lead generation tool? Why isn't every investor in the world using it? Well, I'll tell you. The problem is the traffic doesn’t convert. It's super cheap. There's a ton of it but it doesn't convert anything like the traffic from Google or even from Facebook, which tends to convert less than Google. [0:15:05.7]
Why is this? It's the difference between search advertising and interrupted advertising. Search advertising, I'm going to Google and I'm typing in "I want to sell my house." I'm seeking a solution and you put that solution in front of me at that moment. The moment that someone searches, you put your ad in front of them. That's an incredibly powerful switch of that dynamic. This is not someone sitting at home and you send them a postcard. They are searching for you, and you get in front of them. That's what makes Google so powerful. It's expensive. There's not as much traffic there as we would like, but it converts. You know the problem with both Facebook and YouTube, but YouTube definitely, is that this person is generally not searching for you. They're not typing in "I want to sell my house" into YouTube. They're doing something else. They're watching cutie pie or they're watching whatever. [0:16:02.5]
They're watching something on YouTube and you are putting an ad in front of them before they get to the thing that they really want. You are interrupting them. Now, I'm not saying that this doesn't work. There's a long, long, long, long history of interrupted advertising. It's called TV advertising, right, or direct mail for that matter. These are interruptive processes. So interruptive processes certainly work, but YouTube, because it's online and because of the nature of the material and the nature of the audience, it tends to drive a lot of traffic that just doesn’t convert. So the classic example of a real estate investor ad is being a picture of the house, "Hey, do you have a house you want to sell? I'll make you an offer in less than 24 hours, 100% free fair cash offer, blah, blah, blah." It doesn't work. It just doesn’t work. It's a new medium. It really is. It's not TV. It's not radio. It's not direct mail. It's something new. [0:17:04.6]
Audience tends to be younger, that could be a big part of it. They're in a highly distractive environment; that's a big part of it. But there are major, major, major reservoirs of leads available to the people that figure it out. So what I'm saying to you, same thing I've told my team, I mean I told my team, "I want to crack YouTube over the next year. I want to figure it out. I want to be the one that figures it out." And I'm giving you the same challenge. Let's figure this out because this is a huge potential market that is currently completely untapped. As far as I'm concerned, it's like there's nobody in there. Nobody swimming in the pool in terms of real estate investors. So this is something that we can figure out, and I'm not saying it's possible, but I'm telling you, I think it's likely. Someone is going to make a lot of money, and I hope it's you. But I hope that if it's you and you do this because of this podcast, you tell me, okay? [0:18:02.9]
You tell me what you do, and I'll tell you why. I am putting my team on this. We are working on this hard. We want to be the ones to figure it out. If we do, I will let you know. Hey, I hope this episode stirred some stuff up, got you thinking. Put some time in. It's worth it. As always, if you are interested in this kind of content and you're interested in learning more about real estate investor marketing, I have a free Facebook group. It's called the REI Marketing Nerds Facebook group. You can on Facebook, type in REI Marketing Nerds, or you can go to AdWordsNerds.com/group. That's AdWordsNerds.com/group. Tons of awesome investors in there. I'm in there every single week. I would love to see you. As always, if you want to learn more about me, go to AdWordsNerds.com. That's my website. As always, guys, this was a blast. I hope you have a good week. I hope your rest of your week is increasingly amazing. I'll be talking to you soon. Cheers.
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