As discussed in a previous post Google, Bing and others are considered passive advertising and are based on the user selecting the advertisement of the local loan officer or real estate agent and then contacting that loan officer or real estate agent in order to generate a lead. This is all passive and doesn’t allow the loan officer or real estate agent to determine who is going to click on their advertisement. Some users will click when they have no idea why they are clicking other than the advertisement was so compelling that they were curious. Others will click because they are earnestly seeking to do business but they cannot qualify and the advertiser has no control of these issues. It is not the responsibility of Google or Bing to qualify the traffic that is sent to the advertisers site. It is their responsibility to generate the traffic and because the advertiser is paying per click the deal is inherently fair to all parties. The problem is that while they are not responsible they have created the system that allows for a high click-through rate with a low *conversion rate.
It is the responsibility of the advertiser to create a website that does more than the traditional and over used template that does nothing more than present products that may or may not appeal to the user. It is the responsibility of the advertiser to create a compelling reason to contact them and for the user to desire to do so. This conversion process has been the focus of many of the largest companies online for over a decade. It is being worked on right now by countless numbers of focus groups and test beds to increase the conversion rates by .001% and millions are spent every week on this by Amazon and sites like it. Yet loan officers and real estate agents are not provided access to the types of researchers and uber-brainiacs that tackle this problem every day. What loan officers and real estate agents do have available is the advertising platforms and spending mechanisms that generate large advertising investments while not having the proper tools to take advantage of the platforms more effectively.
So cost per click is very expensive if the advertisers site is not running like a well-oiled data collection machine. What is left is basically CPM or Cost Per Thousand impression which is what sites like Zillow and Trulia provide. This is interesting if for no other reason than the CPM business model was one of the main drivers for the collapse of the internet in 2001. This is more interesting because Zillow and Trulia both launched in 2007 and adopted the same business model that decimated thousands of companies and trillions of investor dollars. To compound this questionable passive advertising model, Zillow charges approximately $95 CPM ($95 dollars for every thousand times a advertisers banner is loaded on the users browser) Compare that to the $65 CPM that Yahoo charged on average and it is little wonder why real estate agents and **loan officers are having a difficult time generating new business at a reasonable cost.
*Conversion rate is defined as how many visitors out of 100 take the action of creating a lead or contacting the owner of the website.
**Loan officers are not under the same advertising guidelines on Zillow or Trulia as real estate agents but they were included for purposes of demonstration.