Without audience targeting are Google Ads Dead? Think again…
Early this month Google announced new restrictions for targeting specific audiences. The restrictions apply to content related to housing, employment, credit, and those who are disproportionately affected by societal biases. The news of these restrictions created quite a stir among industry brokers and lenders who heavily rely upon targeted Google ad campaigns. All which may have you asking if these changes will kill future reverse mortgage advertising on the world’s most popular search engine. In just a moment we’ll hear from our online SEO expert Josh Johnson to find out.
Google’s restrictions are not necessarily novel nor unexpected. It was just over two years ago Facebook faced scrutiny from federal regulators for allowing those offering credit or housing finance to restrict ad audiences by race or religion among other questionable metrics that would violate HUD’s fair housing rules. An investigation by ProPublica broke this news in October 2016. It was nearly two years later in August 2018 that HUD filed a formal complaint against the social media giant for discriminatory advertising practices. Seven months after HUD’s complaint Facebook announced sweeping changes. Both Facebook and later Google, took a blunt approach much to the chagrin of lenders and service providers.
What ad filters are going away? In its official release Google revealed, “credit products or services can no longer be targeted to audiences based on gender, age, parental status, marital status, or ZIP code.”
Is this the end of Google ads for reverse mortgages? To answer that question I reached out to Josh Johnson who heads up Reverse Focus’ Online Dominance SEO program and Google marketing. Here’s his explanation.
Here’s what makes Google unique from other platforms and why reverse mortgage Google ads will continue to reach the intended audience.
To summarize, older homeowners are intentionally seeking out reverse mortgage information on Google which means, yes-your ads will be seen by your target audience, even though you can no longer target specific age groups.
Treasury Sec & Former Fed Chair’s candid comments on inflation & interest rates signal a reality check
Last Tuesday brought us a rare display of sanity from Washington D.C. Economically speaking it was as if the fact that the earth isn’t flat but round had been discovered. Eureka! Treasury Secretary and former Federal Reserve Chair Janet Yellen conceded that interest rates may have to rise to prevent the economy from overheating. That’s D.C. jargon for preventing runaway inflation, something the Federal Reserve has not always succeeded in doing.
Yellen tempered her comments stating she’s not so much concerned about inflation but should it require attention there are tools to address it. That tool is for the central bank to raise interest rates. Does this mean the government’s spending spree is over? Doubtful. Both parties have proven themselves to be accomplished spendthrifts.
While Yellen no longer pulls the levers at the Federal Reserve, her words did capture the attention of Wall Street, economists, and President Biden himself. The factor that will determine if or when the Fed raises rates is if transitory inflation becomes entrenched in the American economy for an extended period of time. On this show, I’ve repeatedly expressed my concerns that our central bank’s massive infusion of cash into the economy may dramatically increase the costs of goods and services.
Outside of what a gallon of gas or milk may cost in the future, any policy change by the Federal Reserve will have a notable impact on reverse mortgage borrowers and lenders. A good place to begin to measure the potential fallout of rate increases can be found in HECM-to-HECM refinances.
Low rates have inflated HECM production with refinances of existing HECMs representing a historic percentage of new FHA HECM applications. Just how much? In March 2020 as the pandemic hit our shores 24% of all new FHA application case numbers were for HECM-to-HECM refinances. Fast-forward one year to March of 2021 and that percentage doubled to 48% of FHA case numbers. That means nearly half of HECM loan applications are from reverse mortgage borrowers seeking to extract more of their home’s value courtesy of today’s low interest rates.
Last month I incorrectly speculated this trend would cool sooner than later. It appears in fact that the refi boom is going strong. Perhaps the more important question is what happens when interest rates tick up modestly and home appreciation plateaus or even slightly dips? When that happens much like the coal miners of yesteryear we will have to dig deeper to maintain or grow production. That will require more effort, market penetration, and creativity. In the meantime, the good news is the conversion rates from FHA case number to funding will be impressive thanks to refinancing transactions. With that in mind now is the time to build your rainy day fund to boost your future marketing and normalize your cash flow.
Riding the wave is thrilling and profitable. Yet, as every surfer knows, once the wave has passed you have to paddle out and set up for the next set.
What are your thoughts about potential interest rate hikes, HECM-to-HECM refinances, and their impact on our industry? Opine or educate us in the comment section below.