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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 bit...

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 advertising expenses.

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
Camelot Lyrics

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 mail.

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 results.

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 detriment.

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 simply leave.

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.

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