Every four years, the election season brings a natural decline in customer demand for home services. Marketing costs rise as all channels become saturated with campaign spending, and consumer sentiment declines. Additionally, almost one in five Americans are already maxed out on their credit. These factors, combined with projections from some of our partners, suggest a challenging fourth quarter.
Due to these conditions, home service companies are increasingly asking whether they should push, maintain, or pull back on marketing spend after the summer peak. The answer is complex. Over the last two years, we have tested various strategies with larger groups during demand and shoulder seasons. Here are our findings at CAMP Digital:
Option 1: Become aggressive in both spend and TCPA (target cost-per-acquisition) to drive revenue but at increasing cost to both budgets and ROAS (Return on Ad Spend). This method increases lead volume through a higher budget and more aggressive bidding. An aggressive approach can drive revenue and keep your technicians busy, making it suitable for high-growth companies. However, the downside is a potential decrease in ROAS, which may not align with the goals of companies focused on EBITA, profit, or efficiency.
Option 2: Maintain Ad Spend: This approach involves keeping marketing budgets unchanged, assuming all other variables remain constant. However, based on previous election years, we typically see an increase in marketing costs due to heightened ad competition and consumer ad fatigue. This leads to a decrease in overall lead volume but generally maintains a consistent ROAS. This strategy is suitable for companies that do not want to deviate from their established budgets.
Option 3: Pull back a bit, conserve spending, and look for infrastructure investment opportunities (e.g., call center outbounding or email campaigns), relying on weather and natural demand. This approach generally results in less revenue but a higher ROI. It works well for established companies or those not focused on high growth and with strong membership programs.
What we found ineffective was when companies waffled back and forth. As we enter a challenging fourth quarter, it is crucial to define your goals. All three approaches require a great operations team, as good operations can overcome many challenges. Flexibility in the ROAS goal will also enable higher funnel opportunities, such as Video and Display, which are excellent when demand is low in the shoulder season.
