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Mortgage Broker News | 06 Feb 2015, 11:10 AM Agree 0
One broker who plans on spending $600,000 on marketing this year -- and has seen his business grow exponentially as a result -- believes the only thing holding his colleagues back from taking the same approach is fear.
  • Ron Butler | 06 Feb 2015, 11:54 AM Agree 0
    I agree with Mr. Allen that money for marketing and advertising is money well spent. As to the headline question of biggest marketing budget: $600K is not even close to the top individual brokerage marketing spend.
  • George | 06 Feb 2015, 12:06 PM Agree 0
    The math does not make sense. If he grossed $1,400,000, that is about $140m in mortgage production. The first question is what are the 90 guys doing?? That's less than $2m each.
    Second, to spend 43% of your gross on advertising is plain silly. Assume costs of the biz are another $200,000, they are left with $600,000. Over 90 guys, that's $6,000 net per broker. That's $3/hour guys. You call this a successful model??
  • Hal Tagg | 06 Feb 2015, 12:25 PM Agree 0
    I'll buy loonies for 50 cents each all day long. That is just what he is doing. Good for Mr. Allen.
  • Arbitrage | 06 Feb 2015, 12:36 PM Agree 0
    Eek...even if you assume the $1.4M is net after expenses that still only averages $15.5K per agent. Now if the $1.4M is net after paying the agents then let me be the first to begin the slow clap.
  • Craig Vetter | 06 Feb 2015, 12:39 PM Agree 0
    I deal with a number of Mortgage Brokers and help them dramatically grow their business. I think marketing is important but a lot of times people spend crazy amounts of money and they cannot quantify the return. You really need to establish a plan on what the marketing is for an whom you are marketing to. Spending money just to spend money is silly to me.
    If you want a great video on marketing check this out. Its Free and no opt-in required. It will not only save you money but when you do marketing you will think strategically about it.
  • Jake Abramowicz | 06 Feb 2015, 12:41 PM Agree 0
    $140M in mortgage production assuming no buydown. However that is far too low to make $600K worth on advertising. Good math George!

    I believe the number would have to be $500M in volume to justify half a million in spending on advertising.

    I know it's silly to ask but Ron Butler, would you say that's sort of a closer ratio in your experience?

    Perhaps you don't want to share your numbers, and that's totally fair if not.
  • Mike | 06 Feb 2015, 12:43 PM Agree 0
    I agree George. His numbers make no sense, we have 8 brokers and do that that volume and we are not in Toronto, our average house value is $215,000. We might spend $20,000 a year in marketing tops. Looks like Shawn thinks he can be another Amazon or Facebook, loose money for years then hope someone buys you.
  • Ron Butler | 06 Feb 2015, 12:51 PM Agree 0
    First of all Mr. Allen has not clarified the numbers expressed in the article and as mentioned, if the $1.4 million is net of agents commissions it is a great number. Let's not jump to conclusions.

    Jake, to answer your question we have a used a general principal of 4 to 1. the goal of every marketing dollar is to gross 4 times the cost in commissions. That does not always work but that is the target. Bear in mind that even if it is a lower ratio there is an ancillary benefit in referral. Someone sees it, does not need it but tells their brother.
  • Bernie | 06 Feb 2015, 02:11 PM Agree 0
    It is great to see this company generating a sizable income and great growth without selling out on rate. Great Job!!!
  • Barrie Broker | 06 Feb 2015, 05:02 PM Agree 0
    If we use the 80/20 rule these are excellent numbers, well done
  • steve kates v.p. | 09 Feb 2015, 11:55 AM Agree 0
    ha we spend over $800,000. a year advertising mostly in the GTA we have over 150 agent and have been doing it for the last 5 years
  • Ottawa Broker | 09 Feb 2015, 05:47 PM Agree 0
    don't understand the bragging rights for the highest marketing budget, seems like a ridiculous thing to proud about.
    Shouldn't it be the broker with the best return on his/her marketing budget??????
  • Ron Butler | 09 Feb 2015, 06:01 PM Agree 0
    Ottawa Broker, if you ever get to the point where you are spending $800K a year on marketing.......... trust me............ you will be proud of yourself.

    Also, man up, Steve Kates and I are not afraid to put our names out there, what's your problem?
  • steve kates v.p. | 10 Feb 2015, 09:05 AM Agree 0
    Ron and I have seen eye to eye on many issues ,he is one great broker ,
  • B.C. Broker | 10 Feb 2015, 12:08 PM Agree 0
    Dont even get started Ottawa Broker with Ron Butler. As you will notice in all other threads he posts he always has the answers as he needs to feed his enormous ego.
  • Larry Pomfret | 12 Feb 2015, 11:16 AM Agree 0
    Regardless of the calculation, I think we agree that the underlying premise makes perfect sense. If you engage in the process of broadening your customer contact channels and building new customer channels, your company will be much more likely to succeed.
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