I am assembling some facts in prep for the NMHC Tech Conference in Phoenix this weekend. Looking at the numbers, I can’t really understand where the recent groundswell chant of “More Leads, More Leads, More Leads” is coming from.
Here are the first couple of facts:
- ~3.5mm units in the Multi-Family category we serve. Note that I used 50+ units per property as the threshold. There are 17mm or so total rental units in the US. (source: NMHC Quick Facts)
- 40 – 60% of all units turn over each year (source: conversation with NMHC research)
Doing the math (3,500,000 units * 40% turn)/12 months = about 115,000 units will be leased each month in the total market. At ApartmentFinder we generate WAY more leads than that ourselves every month. Hmmm.
If I had to take an educated guess at total number of leads generated each year by the big marketing players in our space (For Rent, Apartment Guide, Apartment Finder, apartments.com, rent.com, My New Place, …) I would guess somewhere between 10 and 25 million leads.
Here are some estimates:
Start with total revenue from those top 6 players.
Primedia’s latest investor presentation shows ~$210mm from Apartment Guide and Rentals.com. There is not a ton of publically available info on the other companies, but I am pretty sure that some are bigger and some are smaller. Let’s say that all of the other 5 generate $100mm each on average in revenue (way low…). So $700mm in revenue.
Now take a CRAZY high number like $50 per lead – that would be 14mm leads – and a less crazy number like $25 per lead is 28mm leads per year.
So, right now as an industry with my ridiculously conservative estimates, the leads we generate is between 10 and 20x the leases the industry signs. And the industry wants way more?
An aside: A few careers ago I worked with a leading internet travel site. We had call centers and we took orders online. For a while, we had our phone number plastered everywhere. It was on the home page, on all of the interior pages, on our banners, on our pop-unders, in our emails, etc. We figured that more calls (leads) meant more sales (leases). When we tried testing some our marketing we found that more calls did not always mean more revenue. In fact, we took our telephone number and started putting it deep within the site – reserved for people who either were about to book travel as they had done all of their research and were ready to transact or had a real customer service need like re-ticketing or cancelling. Revenue stayed about the same, calls went down, expense went down and profit went up. It worked well enough that we tried a forced on-hold time before we would pick up the call. The idea was that if you really wanted to book travel you would wait a little bit to speak to an agent, if you were just asking flight times – you would drop. Essentially, we were trying every way possible to improve the quality of a call (lead). Where is the lead quality conversation in the multi-family industry?