Public Storage (NYSE:PSA) Q4 2019 Earnings Conference Call - Final Transcript
Feb 26, 2020 • 12:00 pm ET
[Operator Instructions] Our first question comes from the line of Shirley Wu of Bank of America.
Hey, guys. Thanks for taking the question.
Joseph D. Russell
So my first question is on the marketing spend. So it's up roughly 50% in 2019. So I was curious as to what your thoughts are on the effectiveness of any incremental spend? And how you think that's going to trend in 2020?
Sure. Shirley, it's Tom. I'll speak a little bit about our advertising spend in the quarter and then outlook as we head into 2020. So we've been communicating a pretty consistent strategy on advertising throughout 2019. We've liked what we've seen with the increase in spend through 2019. And so as we've spent more money, we liked the demand response we received from customers. Advertising was up 40% in the fourth quarter. That rate of growth did moderate from the third quarter and as we've discussed on our last call, we proactively pulled harder on the advertising lever in the third quarter during the busy season to attract more customers during that time period. Stepping back, we continue to have real advantages online.
Our brand name, which is synonymous with our product and a top-search term, drives a meaningful portion of our move-ins, either direct to site or through unpaid channels. Roughly 2/3 of our move-ins come through unpaid channels. Those are our largest channels. In addition to that, about 1/2 of our paid move-ins come through brand search and brand advertising, which comes at a lower cost. So those give us some advantages with which we are utilizing today online. We talk a lot about Google. Google is a primary portion of our advertising spend, and we really like that tool, given it's dynamically managed and very local and granular, so we can set our bidding strategy similar to how we set our pricing on a very local level.
But in addition to that, we do utilize social media and affiliates as well. So we spent a lot of time talking about Google, but it's a broader marketing plan. As we head into 2020, I would anticipate that if we continue to like the incremental traffic that we're seeing from the advertising spend that we'll continue to spend. And so far, in 2020, we continue to like what we've seen. So I would anticipate that we continue to pull on that lever, along with rental rate changes and discounting to drive traffic to our stores in what is a what remains a challenging operating environment.
Got it. That's helpful. So and then on the flip side, can you talk a little bit in terms of what you're seeing for your move-in rates in 4Q and so far into 1Q as well as street rates?
Sure. So as you know, Shirley, we don't really like to talk about street rates. We think that move-in rates are really more valuable. So move-in rate were 2.4% in the quarter, which is a little bit better