How I Replaced My $5,000/Month Zillow Budget When It Stopped Working

Marc Hedlund: Oftentimes, the people or you can't track it to the person that referred you. I've had quite a few of those where so-and-so referred you. I'm quick looking up my database. I don't recognize the name. And then I come to find out they had just seen my ads. They've been watching my videos. I don't even know the people, but they like my business page. Those, to me, that was the big one where I was like, “Oh, this is great.” It's almost like an extension of your friends. You have your friends that you're close with. that you talk to. and then you have your friends that are maybe out there that are supporting you silently. That's what I feel a lot of those were, and just using the ads to promote you as a person. 

Tim Chermak: This is The Platform Marketing Show, where we interview the most creative and ambitious real estate agents in the country, dissect their local marketing strategy, and get the behind the scenes scoop on how they're generating listing leads and warm referrals. We'll dive into the specifics of what marketing campaigns are working for them, how much they're spending on those campaigns, and figure out how they have perfected what we call the Platform Marketing strategy. This is your host, Tim Chermak. I'm the founder and CEO of Platform. I love marketing and I talk too much, so let's dive in. 

Tim Chermak: Hey guys, it's Tim Chermak. Welcome back to another episode of The Platform Marketing Show. I'm joined today by Marc Hedlund, who's in Fargo, North Dakota. Marc, welcome to The Platform Marketing Show. 

Marc Hedlund: Thanks for having me, Tim. 

Tim Chermak: Marc has a really, really cool story of someone who was investing in marketing at a high level. Even before he came to Platform, he was definitely serious about his business. I know, Marc, that you were spending nearly $5,000 a month with Zillow up until a couple years ago. And I know Zillow gets a lot of hate, it's easy to bash on Zillow in real estate circles, but the reality is if it's profitable and it's working, why wouldn't you do it? If you're spending $5,000 a month but that $5,000 is bringing in $15,000 or $20,000 a month, that's a very good business decision, right? 

Marc Hedlund: Yeah, absolutely. It was. At first, Zillow almost becomes addicting. They sell you zip codes or they sell you spots and when one spot opens up, they make it sound like you'll never get another chance at it. I was trying to gobble up what I could in my market. About six years ago, I left the team. I was their main listing agent and I left the team to go on my own. The only thing I knew from the team was Zillow leads. 

Marc Hedlund: I went that route and it was good. It's a lot of work sometimes, but I was seeing a return on it, a decent return to where it was doing well. And then one year, they flipped and it felt like the leads weren't as quality, the work was harder, and it just happened to be the same time I started to see Platform leads coming up on my Facebook. 

Marc Hedlund: I pushed it off, I brushed it off. When you hear it enough times, “We only work with one realtor per market,” finally I reached out and I think I made the comment. I said, “You guys are probably already taken, but is Fargo open?” It just happened to be, and then I said, “I got to try it. I got to jump on it.” 

Marc Hedlund: I like the idea of it more than working– I'm not a fan of cold leads. I will work them. The team I worked for, we had inside sales agents. They would usually warm the leads up before you got them. But working on my own, it was not my bread and butter. It paid the bills, but it wasn't what I liked. I started to see what you guys were doing and decided to make it. 

Tim Chermak: I wanna dive into this Zillow conversation because what you just said is a pretty prevalent trend right now, I think, in the industry where there's a lot of agents– We've actually done a lot of Platform podcast episodes of agents who have very similar stories to you, Marc, where they were very successful with Zillow leads, let's say two, three, four years ago, but about a year or two ago, the quality and the return on investment, frankly, that agents were getting from Zillow seemingly dropped off a cliff. 

Tim Chermak: I'm sure there's still some markets in the country where agents are getting great results with Zillow, because I will always say I'm marketing agnostic. If you can spend a dollar and get two, you should do that. No one ever has to necessarily choose between building a business the organic Platform way where you build a sphere and you build a brand in your market. You don't have to choose between that and Zillow from a budget perspective as long as it's profitable. 

Tim Chermak: If you're spending $2,000 a month on Zillow, but it's bringing in, whatever, $8,000 a month, why would you ever quit that? But that's really changed in the last couple years. I've heard a lot of agents say, “Hey, I used to get a great ROI on Zillow, and yeah, I kind of hated paying money to this big, evil, billion-dollar corporation,” whatever, everyone hates on Zillow, “but it was profitable. Why would I not do it if it's profitable?” That's definitely changing.

Tim Chermak: Before we dive into that, though, I just want to lay some groundwork for all the listeners of you're in Fargo, North Dakota. I'm actually from a small town not too far from Fargo, but I'm on the Minnesota side so I'm very familiar with Fargo. Most of our listeners are probably not. Just give us some quick facts. What is the general population of Fargo? What's the average home price? Just tell us about the market that you're in. 

Marc Hedlund: Sure. So, Fargo, I call it a border city right on the edge of Minnesota, North Dakota. I do a lot of business in both states, probably 75% on the North Dakota side, 25% Minnesota side. Population, Fargo, Moorhead, West Fargo. surrounding communities, probably around 250,000 when you include everybody in it. Our average price point now is probably about $340,000, $350,000. 

Tim Chermak: It kind of feels like either a big small town or a small big town. 

Marc Hedlund: Very much so. I came from a town, northern Minnesota, which had two stoplights. Moving down here, it felt like a big city. 

Tim Chermak: Are you from Roseau or Warroad? 

Marc Hedlund: I am from Roseau, yes. Thank you. Warroad is the 20 miles away square word that we used to call it whenever we played sports. Great community up there for sure. 

Tim Chermak: Fargo, like I said, it's this small town that feels like a big city or this small big city, right? I know that if you're not from the Dakotas or from Minnesota, in your mind, when you hear Fargo, you just think it's 50 below zero and there's maybe 200 people who live there or something. No, it's actually a pretty decent sized city now. There's some universities there. I know that's where North Dakota State is. They've won, is it the D2 [code] or no? Not D2. 

Marc Hedlund: Yeah, the North Dakota State Bison. The football program is definitely a great program. They're borderline between moving up a division and staying where they are. 

Tim Chermak: They've won the national championship for five years in a row or something like that. 

Marc Hedlund: Yeah, it's a ridiculous amount of– It's great for the community, I will not say anything bad about the Bison. I'm personally not an NDSU Bison fan. I went to college at UND. That maybe explains a little bit of it. 

Tim Chermak: Okay. Fighting Sioux. Just to be clear, because I'm going to lose a lot of respect for you if you answer this the wrong way, you still say Fighting Sioux, right? 

Marc Hedlund: Absolutely, yeah. In fact, I still have Fighting Sioux gear that I won't get rid of. 

Tim Chermak: Okay, perfect. It was one of those just crazy woke things where a couple years ago, they changed the name from Fighting Sioux, which is honoring the bravery of the Sioux warriors. They changed the name to, what is it now? 

Marc Hedlund: The Fighting Hawks or the Hawks? Fighting might even be too much for them. It's the Fighting Hawks, I think. 

Tim Chermak: Obviously, again, for those who aren't from Dakotas or Minnesota, there's a lot of history in the plains of the Native Americans and the battles that they waged against the American settlers and the US Army and all that. Naming North Dakota the Fighting Sioux was absolutely a way to honor them. Especially the hockey program I know at UND, people take deep pride in the history and heritage of Fighting Sioux hockey and athletics. There's a lot of guys in the NHL who played at UND. I know that's a big rivalry. I didn't mean to back you in a corner by bringing up NDSU. I apologize for that. 

Marc Hedlund: Nope. You're fine, yeah. 

Tim Chermak: But yeah, so there's lots of history and heritage up there. I guess the point I was making is that there is a lot going on there. It's not some tiny town that has 10,000 people. There's a lot of real estate transactions. You mentioned the average price point is now up around $350,000, but obviously if that's the average, that means there are plenty of homes in the Fargo area that are in the $400,000s and even the $500,000s. 

Marc Hedlund: Absolutely, and that's another nice thing that I've noticed even in the last couple years that I've been with Platform is my average price point has increased. You could say it's from a lot of things, longer time in the business or clients that are stepping up and stuff like that, but part of it is also just me being known or recognized as a more local expert. 

Tim Chermak: Yeah, absolutely. And as your past clients become move-up buyers and you're running all these Platform-style retargeting ads, what happens is you're just capturing more of that repeat business than you might otherwise get if you just left it to chance. Again, that's a very common trend across all these Platform podcast interviews is people say, “Hey, I've been on Platform for a year or two or three years, whatever it's been, and I've noticed my price level, my average price point has increased relative to the market.” That's something we hear from a lot of clients. 

Tim Chermak: Let's dive back into the Zillow conversation because I think that's gonna hit a pain point that a lot of agents are going through right now, that they maybe used to spend a lot of money on Zillow, but anecdotally, it feels like it's not working as well as it used to. I want to say, no, it's not just in your head. That's absolutely true. There are many agents that are experiencing that. 

Tim Chermak: So Marc, you were spending nearly $5,000 a month on Zillow. I know you mentioned the last full year you did it, you were able to track 20 transactions to that. If you're almost $5,000 a month, that means you were spending nearly $60,000 a year. If you did 20 transactions, just quick math tells me, okay, that means that each transaction cost you about $3,000 of marketing. It was, I mean, probably still technically profitable, but obviously after your commission splits and all that, there's not a whole lot left over. 

Marc Hedlund: Yeah. And when I finally dissected those numbers, I realized that a lot of it came from maybe one deal a month that was a bigger price point that I got that helped push me over the edge of being profitable or not profitable. It wasn't a steady income or a steady business of homes that are easier, good to sell. There was a lot of work on the back end and then around the front end of smaller buyers, and then all of a sudden, boom, here's a bigger one that helped push me in. It helped make the decision easier when all of a sudden, one month, you don't get that bigger buyer. 

Marc Hedlund: Part of it too was buyers are a lot of work and Zillow was mainly buyers. Everything that I've always been taught in real estate is that when you control the listings, you control the market. One of my biggest goals was I was gonna be heavy on listings and I wanted to focus more on listings. That, to me, meant I needed to get rid of Zillow. 

Tim Chermak: And again, you were spending a lot of money. This is not one of those stories of, hey, I was putting $800 a month into Zillow or something. No, you were a true believer. You were spending nearly $5,000 a month on Zillow spend, again, because it was working until it wasn't. What led you to, I guess, being intellectually open enough to start looking at other marketing strategies out there like Platform? Because I'm sure when you were spending that amount of money and you started to get frustrated with Zillow not working anymore, I'm assuming Platform isn't the only marketing company looked at. I'm sure you were looking at lots of different potential sources of how you could replace that lead flow that was coming from Zillow. 

Marc Hedlund: If I want to say, I'd gotten scammed on a couple. I had purchased into a company that promises search engine optimizers. They would do your Facebook leads like you do and you pay an upfront cost and then I didn't see anything. The ads were horrible. Probably if you scrolled through my earlier business page, you would still see some of them. They were not relevant to the community that I was in. They were just like they were throwing anything up there just to say, hey, look at what we're doing. They were showing zero return. 

Marc Hedlund: Zillow, when I finally made the aha about Zillow, when I started to see the leads drop off, I started to go to the zip codes that I was in and I looked at the agents that were considered above me. I called those agents because I'm friends with most of them and I said, “How much are you spending on Zillow to get where you're at?” When I found out the number gap of what they were spending compared to what I was, it felt to me like they were feeding the big fish and that they were just gonna let me pick what was left over. 

Marc Hedlund: Of course, when you go to cancel it, they all of a sudden, you magically get a few nicer leads or I don't know how that all works, but it was hard and it was scary to cancel. I made a point that I was like, “Hey, it's not working. I don't like these leads. They're not who I am. I would rather find a company that I could stay in front of mine with my own community, instead of trying to pick up cold leads and create them into who I am.” When I saw what you guys were doing and then you offered the, I don't know how you wanna call it, but you offered a plan where you didn't pay full price for the first six months, and to me, that was a no-brainer. If I can get something at half price, or whatever the discount was, for a six-month trial, why wouldn't you try it? 

Tim Chermak: So far, we've been talking about the actual financial ROI with Platform, or Zillow, I should say. It's like, hey, I was spending all this money and for a while, even though it was a lot of money going out the door, it was technically showing profit so you kept doing it. But the other side of that perspective that you just brought up, Marc, is that are these qualitatively, so not just quantitative, but are these qualitatively the type of leads that I want to be working with? 

Tim Chermak: Because let's be honest, a Zillow lead is a lot different than a warm referral lead or a lead from your database or a friend of someone in your database that saw your ads and then refers them to you. Zillow leads are usually complete strangers and you have to drop everything you're doing when that phone call comes in, take that call, and if they want to go look at a home on a Saturday evening or a Sunday morning, you have to. If you don't, they'll work with some other agent. 

Tim Chermak: A Zillow lead is really not working with you at all because they want to work with you. They'll work with any agent that'll basically go and open the door for them. That, to me, is a very structural inherent weakness of not just Zillow, but frankly, any sort of online pay-per-click lead generation. If you're just generating leads and you're not building a brand, like you're not attracting people who want to work with you specifically, you're just generating random leads of names, emails, phone numbers. That's not a very fun way of doing business when every time a lead comes in, you have to drop everything and cold call a complete stranger and hope that you're calling them before some other agent does. The way we do things at Platform is very different. Before I ask you the next question about what you've noticed the difference with Platform Marketing is compared to Zillow leads, I want to tee this up by just letting everyone know that Marc quit his Zillow budget, I believe, last year. 

Marc Hedlund: Two years ago. 

Tim Chermak: Okay, two years ago. He was spending nearly $5,000 a month. Now, Platform is, obviously, I mean, about half of that is what he's spending on Platform and yet his business is actually on pace to double from the previous year. So the previous year that Marc didn't have Platform all year, he sold about 35 houses. Is that right? 

Marc Hedlund: Yeah. And honestly, I look back to when I started Platform and I wish, you guys have said it and told all of us, I think, and I try to preach this, I wish I would have done it the way you said instead of doing it the way I did it. You guys give us a discount that first six months. I wish I would have taken that discounted amount and dumped it into the ad buys. 

Tim Chermak: Into more ads. 

Marc Hedlund: And in fact, looking back on it, I wish I would have taken my full Zillow budget, granted I liked the fact that I was gonna save a couple thousand dollars a month at the time, I wish I would have dumped it all into ad buys for at least six months or a year. I think that would have done– I mean, I couldn't imagine what $2,500 worth of ad buys a month would do. 

Tim Chermak: Well, just to start rolling the snowball bigger, faster. So you had sold about 35 homes in your last full year that you didn't have Platform the whole year. That's the base case. That's where we're starting from. This year is your first full year with Platform ads running and even though the market is frankly worse in 2024 than it was in 2023, and by the way, the market in 2023 was a lot worse than it was in 2022 and the same thing is true of 2022 to 2021. We'd have to go back 5+ years to find a year where the market was truly getting better every year, not wors, and yet, even though all of the market trends or that it's more difficult for realtors this year than last year and then the year before that too, you are on pace currently to nearly double the amount of transactions. 

Tim Chermak: You're gonna sell somewhere probably in the 60s of homes this year, 60, 65 homes, something like that, you sold 35 last year, and yet you cut your marketing budget essentially in half. So you're spending half the amount of money, but you're gonna sell nearly twice the amount of homes. Obviously, that raises an important question. What is different about these Platform leads or these Platform Marketing campaigns that is increasing your sales so much relative to what you were doing before with Zillow? 

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