Real Estate Wholesaling: $350 to $230 Cost Per Lead

This is a real estate wholesaling company in Pennsylvania. This one's actually simpler than most because the problem was nothing but a high cost per lead.

They were running ads on Google. The campaigns were actually set up really, really fucking good. The website was clean. They were running ads to that website. Their only problem was their cost per lead.

When they hired me, their average cost per lead was $350 from Google Ads. They were super happy with the lead quality. Things were going great for them. They just wanted to optimize the CPL.

When I dug into the ad account, I found multiple problems. The first one is they were tinkering a lot with their Google Ads account. I see this all the time with clients.

Less is more. This is one thing people need to understand. Another thing is that you don't just pay me for the buttons that I click. You also pay me for the buttons that I don't click.

This is very important because a lot of the time when you have a bad week of performance, the best thing you can do is do nothing about it. The reason is that things fluctuate. At the end of the day, there's a machine that decides when to show your ads and when not to show your ads. This machine can make mistakes, and you can only try to fix it by giving it the right input.

The other side of the coin is that there are people on the other side. Not everyone is the same. Let's say this week you get 100 people searching for the keywords you wanna show up for, but only 90 of them are actually serious. Then next week, it's a different 100 people, but only 10 of them are actually serious. This happens.

If you keep making changes and adjustments over a short period of time, you're going to be disrupting the system. Disrupting the machine learning process that Google needs to optimize.

But in order to have the confidence to see bad numbers and still decide to do nothing, you need to have seen a lot of bad numbers in the past and dealt with them in different ways. You need to know when to pull the trigger and when not to pull the trigger.

You also need to have the right infrastructure, which these guys had maybe 95% of. The only 5% missing was them not posting qualified leads - offline conversions. Google would never know which of those leads was actually a qualified lead, which became a deal, and which didn't.

But their biggest problem was tinkering too many times. Their previous bidding strategy was maximize conversions without a target CPA. But they'd changed it six times in the past 30 days. They'd add a target CPA, then remove it, then change it, then remove it, then change the number. That's the tinkering I'm talking about.

I did two very simple things.

First, I changed the bidding strategy to maximize conversions with a target cost per acquisition. My target CPA was set to $250. I was aiming to reduce their cost per lead by $100. I know their markets because I've worked with other clients in these markets, and I know that $250 is very much achievable. I also thought we could even do better than that, but I didn't want to suffocate the campaign.

Second thing - if you've been reading my case studies, you'll probably find this to be a very common thing - setting up offline conversions. This is one of the most important things. We have to remember at the end of the day, your goal is not leads. Your goal is money. Your goal is deals, revenue.

If you're not tracking those metrics, your offline conversions, then you're optimizing for leads. And if you're optimizing for leads, then you're probably not going to be a top 10th percentile performer in your industry. You can't really compete hard with people in your industry if you're not tracking these things and passing this data back to the machines that could learn who to show your ads to and who not to show your ads to.

These two changes alone got their average cost per lead down from $350 to $230. That happened over a six-month period. Not every single month we'd get our cost per lead down. One of the months, actually, we had a horrible CPL. It was $320.

At that time, my process was still the same. It didn't change. I would still add my negative keywords. I was still running my typical A/B tests on the website. I'm still doing everything I generally do to manage an ad account. I did nothing differently. And I decided I'm just going to bite this bullet and it's going to pass. And it did pass. It was just a bad month.

One thing that's also interesting about Google - if you're a Google Ads nerd you'll see this - there's a tool called Google Keyword Planner which tells us how often people search for something and how much it should cost to bid on these keywords. Google generally releases the data for the prior month on the 15th day of the next month. So if I want to see how many people searched for "I want to sell my house fast for cash" and I want to see the search volumes for August for my areas, I'd have to wait until September 15th to actually see those numbers.

That horrible month I was just talking about - when I was looking at the keyword planner on the 15th (because I was very curious to know what went wrong), I figured that the searches dropped by around 40%. For whatever reason, I honestly don't know why the searches dropped, but they dropped.

When they dropped, everything went up. Supply is down and demand is still the same, so prices went up, the bids went up, everything went up. Which explained my cost per lead. They still need to aggressively bid because every single lead, even if they're going to pay 40% more for them, is still worth a lot of money.

And two, you're not running a day trading business. You're running a business that you evaluate on a weekly basis, on a monthly basis, on a quarterly basis, and on an annual basis. As long as your KPIs are tracking towards the numbers you want them to be, you're good. Do not make those changes, please. Less is more.

Cost per lead went from $350 to $230 over 6 months. Same lead quality, better efficiency.

Bidding strategy (switched to target CPA at $250). Offline conversions implementation (qualified leads and deals tracked). Stopped the over-tinkering (less is more).