Amidst the current refi frenzy, it’s not surprising that 2 of the 5 most-searched-on banking phrases are “mortgage(s)” and “mortgage calculator(s).” And the competition to advertise next to those search results is equally frenzied. For example, on Overture you’d have to pay more than $3 per click to be listed among the top four advertisers on any of the major mortgage-related keyword phrases.

Costs appear to be similar at Google. Its estimating tool recently predicted a per-click cost of $2.70 to be in the top-3 slots. Our test ad, which ran for just a few minutes, racked up 665 impressions and 5 clicks at an average price of $3.70 per click. However, we were attempting to be number one with a maximum bid amount of $10. While we did hit number one a few times, it appears our ad was usually number two, since our average bid position was 1.9. If we’d continued advertising on “mortgage” Google estimated we’d get 1,100 clicks per day for a total cost of about $3,000/day, or $90,000/month
(see Table 1).

If your advertising budget falls somewhat below
$1 million per year, you can still advertise for mortgage shoppers, you just have to choose more targeted search terms that bigger players don’t bother with. As you can see in Table 14, a lower-volume search phrases can be used to target mortgage shoppers at a lower cost-per-click.

For example, you can target buyers within certain geographic boundaries such as city or state. In our tests “mortgage + yourcity” generally had a significantly lower CPC (Table 8, right). However, on the state level (“mortgage + yourstate”), the costs varied considerably by state. On average, it was more expensive to add a state to the search phrase. The top four bidders on plain “mortgages” paid an average of $3.12 per click on May 29. On average the top four bidders on “mortgages + state” paid $3.60 per click, a 15% premium.

However, there was a wide variety in bids. Bid amounts primarily depend on the value of the mortgages sought by Web users of a given state combined with the propensity for those shoppers to get a mortgage from a company they visited.
For example, in California where mortgages values are high and many Internet users are experienced and willing to apply online, “mortgage California” sells for more than $9.00 per click, three times the rate of plain “mortgage.” However, in states where mortgage amounts are far lower, prices are considerably below average. For example, “mortgage South Dakota” is only $1.59 per click, about half the unmodified rate.

A mortgage company operating in the Pacific Northwest would expect to only pay about $400/month to maintain the top position on “mortgage + Oregon or Washington or Seattle or Portland” (see Table 8, below). Of course, the volume would be just a fraction of the “mortgage” volume, less than 150 prospects per month, at a cost of slightly under $3 each. But you’d only have to book a single mortgage for a reasonable payback on the expense.

Table 1

Google AdWords Cost Estimates for
Nationwide Mortgage Advertising

for AdWords pay-per-click

Search Term	Clicks/ Day	Cost/ Click	Cost/ Day	Average Position
mortgage	1,100	$2.71	$2,972	1.2
refinance	270	$4.60	$1,241	1.2
mortgages	190	$3.59	$680	1.1
home loan	64	$4.42	$283	1.4
refinancing	50	$4.01	$200	1.5
Overall	1,674	$3.21	$5,376	1.2

Source: Google, 6/2/03; assumes maximum bid amount of $10 per click

Table 2

Google AdWords Cost Estimates for
Pacific Northwest Mortgage Advertising

for AdWords pay-per-click

Search Term	Clicks/ Day	Cost/ Click	Cost/ Day	Average Position
Mortgage Oregon	0.8	$1.97	$1.61	1.0
Mortgage Portland	0.5	$2.67	$1.41	1.0
Mortgage Washington	2.3	$3.46	$7.94	1.0
Mortgage Seattle	0.8	$2.32	$1.85	1.0
Overall	4.5	$2.88	$12.82	1.0

Source: Google, 6/2/03; Assumes maximum bid amount of $10 per click; excludes the word “mutual” to avoid searches on “Washington Mutual Mortgage.”

 
 

Table 3

Household Income of Mortgage Searchers

mortgage searchers vs. total Internet, March 2003

Income Group	% of Mtg. Searchers	Total Internet	Index
Less than $25,000	8%	12%	67
$25,000 - $49,999	22%	29%	75
$50,000 - $74,999	29%	22%	133
$75,000 - $99,999	14%	16%	86
$100,000+	27%	21%	132
	100%	100%	100

Source: comScore Media Metrix qSearch, 5/03                          mtg. = mortgage

Table 4

Mortgage Sites Visited by Mortgage Searchers

March 2003

Website	Unique Mtg. Searchers	% of All Mtg. Searchers
bankrate.com	275,000	15%
realtor.com	266,000	14%
mortgageexpo.com	251,000	14%
lendingtree.com	235,000	13%
wellsfargo.com	179,000	10%
homestead.com	143,000	8%
homestore.com	133,000	7%
ameriquestmortgage.com	126,000	7%
bankofamerica.com	125,000	7%
citibank.com	125,000	7%
Total	1,860,000	100%

Source: comScore Media Metrix qSearch, 5/03   mtg = mortgage

Table 5

Mortgage Searches by Location

March 2003

Consumer Location	Number of Searched	Share of U.S. Mtg. Searches	Share of WW Mtg. Searches
School	85,000	2.2%	1.8%
Work	2,680,000	69%	55%
Home	1,230,000	32%	25%
Total U.S.	3,910,000	100%	82%
Non-U.S.	849,000	n/a	18%
TOTAL	4,840,000	--	100%

Source: comScore Media Metrix qSearch, 5/03   mtg = mortgage

 

Table 6

Mortgage Searches by Search Engine

estimated searches in March 2003

Search Engine	Mortgage Searches	% of Mortgage Searches2	Total Search Engine Share3
google.com	1.4 mil	29%	37%
yahoo.com	1.2 mil	24%	24%
msn.com	780,000	16%	19%
AOL (prop & Web)	530,000	11%	9%
teoma.com	160,000	3.2%	0.1%
ask.com	130,000	2.6%	1.7%
netscape.com	87,000	1.8%	0.9%
overture.com1	53,000	1.1%	0.7%
CompuServe	30,000	0.6%	0.2%
Dogpile	30,000	0.6%	0.6%
Total	4.8 mil	100%

Source: comScore, 5/06/03, estimates for the March 2003

(1) Includes only searches done at Overture.com, Overture also displays paid listings at MSN, Yahoo, AOL, and other search engines.

(2) Percent of searches on any mortgage-related term

(3) Percent of all searches, mortgage and non-mortgage.

 

 

In March, MortgageExpo was the second-most popular mortgage related site among mortgage searchers, attracting 250,000 unique mortgage shoppers.

 

Table 7

Overture Mortgage Bids by State

ranked by average bid across the highest four bids

&

Source: Overture, 5/29/03;  *Each state averages 1,270 monthly searches, for a total of 64,000 searches for all 50 states, just 10% of the “mortgage” volume

 

Table 8

Mortgage Keyword Selection

Source: Overture, 5/28/03         (1) Included with the volume in “mortgage”