Real Estate Marketing & Advertising Budgets

The rule of thumb for most businesses when establishing an effective advertising budget is to place the budget at about 10 percent of gross revenues otherwise known as gross commission income to real estate agents. These days higher marketing budgets are being allocated for the more competative markets like the pharmaceutical industry, which spends about 20 percent of their company sales on advertising.

In the best-selling book, "The Millionaire Real Estate Agent", it states that Gary Keller, Founder of Keller Williams Realty, discovered that their top producers spend an average of 9.2% of their gross commission income on lead-generation marketing and about 1.5% on technology. These figures are right in line with most text book marketing budget estimations.

In another best-selling book, "Real Estate Rainmaker: Guide to Online Marketing", Dan Gooder Richard discusses the Advertising spending of the Keller Williams Real Estate Agents and establishes his own Marketing Budget Rule of Thumb:

• 10% of gross commission income for marketing in a mature practice that is in a maintenance or referral-only situation.
  
  
• 15% of gross commission income for marketing if you are new, plan to expand or want agressive sales growth.
  
  
• 20% of gross commission income for a 1 year marketing blitz, if you have intense competition or if you expect significant initial expenses such as a custom website.

Just based on the above real estate marketing budget rules of thumb, a real estate agent who earns $100,000 per year in commissions could be expected to spend $10,000 per year if they are established with a steady return client base, $15,000 for an agressive sales agent and $20,000 for an agent who is in a more competative area or who expects to have higher expenses this year.