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Paid vs. Organic: Which is Better for Real Estate Crowdfunding?
By Adam Gower Ph.D.
Social media presents a great opportunity to get your message in front of a wider investor network. It also presents a dilemma about whether you need to use paid ads to enhance your message or not.
The Limits of Organic Reach
The dream is to be able to build your social media accounts on nothing but organic reach.
It’s only a dream today because reach has been handicapped again and again on every platform. Once social media platforms realized how much they could make from ads, organic reach lost its power.
In the earlier days of social media, everything you posted would have automatically been placed in the feeds of everyone who followed your profile. But, the golden days for organic reach are over now. Today, only around 3% of your posts make it into your followers’ feeds.
Organic reach was powerful in its day. There were strategies to fully harness it, ways to increase reach, and some of your posts were likely to even show up on new peoples’ feeds if they were interacted with enough.
While all of this is still true today, the baseline reach has been so crippled that you can’t rely on organic reach alone if you truly want to see growth and get your message in front of different investors and prospects.
Social media presents a great opportunity to get your message in front of a wider investor network. It also presents a dilemma about whether you need to use paid ads to enhance your message or not.
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A Place for Advertising
Advertising has taken the place of organic reach. What you can’t do organically, you can do with social media ads. The benefit of advertising on social media today is that you can target your audience extremely specifically. You’re not just paying and praying it finds the right feeds.
You can create an ad profile to reach a targeted group of investors even if you have a smaller budget. To get to the best results, start with a smaller budget of $10 – $50 per day, and refine your audience profile, constantly refining your messaging and audience until your ad spend is equating to approximately 3-4% of your conversions.
Put another way, for every $3,000 to $4,000 of ad spend, you should expect to see $100,000 of investment in your deals.
That said, this won’t happen immediately even if you use a proven strategy honed to your specific value proposition. And keep in mind that while you can reach a highly targeted group of prospective investors across different social networks, your paid campaigns shouldn’t replace organic posting 100%.Â
You still need to have a robust, professional digital presence so that when prospects see your ads and do some research on you, they find a developer who provides them with high value educational content, consistent messaging and appearance, and who they can relate to as an authority in the field.
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Creating a Broad Mix
The purpose of using organic reach and advertisements in unison is to create an effective mix to reach your target investors in as many ways as possible. What you want is to get your important content in front of the right eyes as often as possible.
You want your ideal investors to see your content wherever they are. One email isn’t enough, because they may not see it. One Facebook post may not be enough, because it could be lost in the mix. Because you don’t know exactly where your ideal investors will see your content, you want to put it everywhere to catch their attention one way or another.
You can do this by creating a mix using organic reach and advertisement together.
Add in traditional advertisement as well when you find a particular ad-set that works, and then test that against another ad-set. With real estate investment online, the cost of conversion is going to be very different from other industries where a 20% margin on ad spend is considered stellar.Â
In real estate crowdfunding you can expect 25x return on your ad-spend depending on your minimum investment levels, but you must have patience before seeing results.
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Social media presents a brand-new opportunity to reach a highly targeted new group of investors as well as reaching out to your existing network, but it doesn’t come free. Organic reach still works, but it works even better alongside sponsored posts and advertisements. Build the right mix and keep refining it until you’re getting meaningful investments as a multiple of your ad spend.
If you have only just started in real estate development, have completed no deals, have no email list, but know you want the freedom and wealth being a real estate developer brings, then I suggest your first step is to start evaluating deals so you can recognize a good one when you see it.
Here’s where you should start. You’ll learn everything you need to know – the different types of real estate, different development strategies, how real estate cycles influence the market, and all about due diligence.
If you want to find deals and raise money for them so you can start your real estate development business, then learning how to conduct due diligence so you can pitch your deals better to investors is a great place to start.
If you’ve already purchased one or more real estate project and are seeing more opportunities than you can finance, then now is the time to start building your investor network so you can finance all your next deals quicker.
You’ve already got some momentum; now start finding and educating prospects about what you’re doing so you can build an email list of people to pitch to when you’re ready to raise money for your next deal.
This is what we build for private clients all the time – it’s called the Investor Acquisition System and you can access the entire program right here so you can find prospects, and convert them into being deep pocketed, repeat investors in your deals.
If you are a seasoned pro with multi-cycle experience, a substantial portfolio, a decent deal pipeline, and find yourself spending too much time raising equity capital because you’re still doing it in-person, then it’s time you put technology to work for you.
The wonderful thing about doing this is that you’re not going to be doing anything different than you’re already doing and, guess what, you’ll never have to sit through investor meetings again.
Sounds crazy I know, but I lay the whole thing out for you in this white board workshop where I personally show you exactly what it takes for you to transform your equity raising into a fully automated, capital raising machine so you can find new investors while increasing commitments from your existing network.
