Over the last five years, Barry Jenkins has used Facebook advertising to grow his land business from a solo operation into a 16-agent team.

The marketing channel has been “hugely important” for Jenkins, a Virginia Beach , Virginia-based Realtor whose team closed $50 million in sales volume in 2016.

“You’re catching leads before they get to the [listing] portal, so the incubation period is greater, but the money is there.”

But the golden era of real estate Facebook advertising, a time when scrappy agents could hit the jackpot with a few bucks, may be coming to an end.

As Facebook vies with — or maybe eclipses — Google and Zillow Group for land marketing dominance, the social network’s ad prices are increasing.

Its ads should deliver a better return on investment far into the longer term , as marketing firms and Facebook find new ways to convert social media surfers into land clients. But their growing cost is handing an advantage to big spenders over agents with smaller budgets. 

This Facebook ad, which Barry Jenkins spent $180 to promote, has generated 20 seller leads and one listing (so far), he said.

“Looks like we’re at the cusp of [Facebook] ads becoming too mainstream, thus upping the price per impression,” Realtor Nicole Lopez recently commented in a Facebook thread, in which other agents lamented rising rates.

“Shutting the small guys out because we can’t afford to pay for the reach we once had,” said the Houston, Texas-based agent. 

Facebook video ads are almost like Google search ads within the early 2000s, marketing guru Gary Vaynerchuk argued in March, CNBC reported.

“We are paying $6 to $13 CPM [cost per thousand impressions] on Facebook immediately that are getting to be $50 to $80 in 36 and 48 months, and everybody is going to be sad that they didn’t jump on it,” he reportedly said.

Facebook’s price per ad more than doubled in both 2014 and 2015, according to SEC filings. Price growth then decelerated to only 5 percent in 2017, but has since picked up, rising 24 percent year over year in the second quarter. 

Slowing growth in Facebook’s ad inventory will “play out higher pricing,” Facebook Chief Financial Officer David Wehner said in a recent earnings call.

But for now, Facebook ads still are often a steal.

Real estate broker Shannon Moore said she recently spent about $750 on an inventory ad that yielded six contracts and many leads. Moore, who owns Port Charlotte, Florida-based Green Lion Realty, used Facebook’s targeting tool to push the ad to first-time homebuyers in her local market. 

This Facebook ad, which Shannon Moore spent about $750 to promote, has generated more than six listings so far, she said.

Jenkins says his cost per Facebook lead is around $5, compared to over $100 or more per Zillow lead. The difference between the two is that Facebook leads tend to be six months away from transacting, while Zillow leads are much closer to pulling the trigger, he said.

Facebook ads can deliver a much higher return on investment for agents than other ad products, he said, but only if they use follow-up systems to nurture leads into clients.

Fierce competition
Competition in Facebook marketing has increased so much in recent years that Jenkins has “unliked” the business pages of colleagues so their ads are less likely to spill into his network of Facebook contacts, he said.

“I still like them as people, but I don’t want them advertising in my sphere,” he said. “You were the only agent a few years ago. Now, there’s 20.”

But while he says his cost per 1,000 Facebook ad impressions has jumped more than sixfold since 2014, his return on investment has barely budged. That’s in large part because he’s learned how to design better ads, he said.

While some agents squander their money on poorly written come-ons, he uses laser-sharp targeting to serve up new or recently sold listings and homeseller guides to just the right people, he said.

Another reason he still gets a lot of bang for his buck is that Facebook has introduced more effective ad templates and targeting. 

That’s a key part of the social network’s growth strategy.

“[If] we get better at converting our impressions into things that are valuable for advertisers, [and] we get more efficient at doing that, we’ll be rewarded with better pricing and higher demand … as a result of that hard work,” Wehner, Facebook’s CFO, said in the earnings call.

Facebook’s debut of lead forms has been particularly helpful, Jenkins said. They allow Jenkins to run ads that can capture prospective buyers and sellers’ information inside Facebook, rather than having to lure users to a registration page on his website.

“I don’t care how well my website is done,” he said. “I’m never going to gain their trust the way that Facebook does … the quality of the lead goes through the roof.”

There’s no consensus on what works best on Facebook. Marketers have wide-ranging views about ad designs and targeting, with some arguing that Facebook lead forms aren’t as effective as simply featuring an agent’s contact information.

Facebook takes aim at real estate
Facebook is scouring the social network for techniques that pack the biggest punch. It wants to adapt the cream of the crop into industry-specific products.

“Our best ideas often come from our clients,” Facebook’s Keith Watts, who oversees projects covering the real estate and financial services industries, recently told Inman. 

That was the case with Facebook’s first custom product for the real estate industry, “Dynamic Ads for Real Estate.” Built for brokerages and listing portals (not individual agents), it allows advertisers to market relevant listings to Facebook users who have previously searched properties on their website.

“Real estate is a neighborhood we’re betting big on as a corporation ,” Watts said.