We at LeadPoint work extremely hard to create a marketplace that successfully delivers quality leads to our buyers.  The basis for this is that happy buyers increase their orders which in turn reward the marketing sources who submit the leads into the market.

You are able to tell that your work is paying off as revenues for your company grow as a result of buyers increasing their lead purchases and sellers increasing the volume of leads they submit into the market.  It is also nice, however, to be recognized from time to time by a neutral third party.  This was the case of a recent article by Michael Ferree in his popular lead gen blog LeadCritic.  In an article called “Quality Companies do Rise to the Top,” Michael writes:

“I surveyed 4 significant lead buyers (in the mortgage space) which constantly mentioned receiving excellent quality leads from LeadPoint, QuinStreet, MortgageLoan.com  and Adchemy. I know first hand that these companies employ leaders in the space that care about the consumers’ experience, lead quality and the lead buyer. If you are in the mortgage space you should take a look at these companies for leads.”

While it was great for LeadPoint to be individually singled out, it was also exciting that one of our top lead providers, MortgageLoan.com, was recognized as well.

Up until recently, lead buyers have traditionally only been able to purchase a market blend of leads through the LeadPoint exchange.  With a market blend, if a buyer creates an order for 2,000 leads, he/she might receive 250 from Source A, 100 from Source B, 25 from Source C and so on.  LeadPoint carefully measures the quality of each lead and the quality of each of our sellers to ensure that the overall performance of the market blend meets our high standards.

Based on interest from both buyers and sellers, we have added functionality that offers greater transparency providing buyers with the ability to purchase leads directly from specific lead sources.  MortgageLoan.com is one of these sources.  They submit leads into our market blend, but we also enable buyers to purchase leads directly from MortgageLoan.com from within their LeadPoint account.  Thus, of the four sources that Michael mentioned, two of them involved LeadPoint.

Offering the ability of purchasing leads directly from specific sources is an important innovation of the LeadPoint marketplace.  It supports LeadPoint’s goal of providing greater transparency and of being a single destination for all of one’s lead buying needs.

As a single market that offers numerous lead sources, we greatly simplify the lead buyers’ efforts to test new lead sources and optimize orders based on the sources that work best for them.  Having strong partners like MortgageLoan.com who are developing strong brand recognition for their quality is important in this endeavor and we look forward to more of our strong sellers getting the recognition they deserve as they develop their own brand identity within our marketplace.

If recent activity is any indicator, the lead generation industry, which did particularly well in comparisons to most other industries during the economic downturn, looks primed for strong growth in 2010.

First there was news that “goliath” Google may be entering the lead gen space with its mortgage comparison engine called AdWords Comparison Ads.  Next, there was the announcement that lead provider QuinStreet had filed for an initial public offering.  Each of these events on its own is reasonably considerable.  Together, not only do they suggest that the lead generation space is thriving, but that it is also growing in credibility.

Google’s entry into lead gen comes with potential pros and cons. With over 60 percent market share of all U.S. search queries, a potential con is that as the dominant search engine, Google has an unfair advantage in generating leads from both paid and organic search.  With their “black box” of search, Google has the ability to simply place its mortgage comparison engine at the top of its search results, which in effect immediately handicaps all those who pay to raise their visibility within its search engine results.

In addition to this ability, Google also has vast knowledge of the search habits of all those who uses its search engine.  With this knowledge and their ability to give themselves preferential treatment, Google should have the ability to generate higher quality leads at lower costs than many other companies.  Google also benefits from strong brand recognition among the public and will certainly be able to leverage this to their advantage.  By either undercutting competitors’ prices or just providing greater quality, Google could quickly grow market share and drive competitors out of business similar to what it did to Yahoo’s search business.

A benefit of Google’s involvement is that its entry into lead gen helps to further legitimize the sector to the outside world.    A Wall Street darling for having dominated the search engine sector and in the process becoming one of the most successful businesses over the past decade, Google’s decision to target lead generation for future growth demonstrates that it sees the industry as still having tremendous upside.  This has the potential to drive new growth within the industry by bringing in additional investor money and business interest from the outside.

Additionally, with Google as a competitor, all players within the lead gen space will feel greater pressure to deliver an improved customer experience to strengthen customer loyalty.  Companies who currently don’t care about providing a strong customer experience will be driven out of business, leaving only trustworthy companies to compete in the space.  An overall improved customer experience could further fuel growth for those players left as those who consistently provide the strongest customer experience will attract more companies to try out lead gen for their marketing needs.

QuinStreet’s $250 million IPO announcement is a nod for lead gen and a further sign that the economy is on the road to recovery.  In Q1 of 2009 there were zero IPO filings.  Since then there have been 95 filings with 20 of these occurring in the month of November alone.  Registering for an IPO doesn’t mean that QuinStreet will actually go through with it, a great deal depends on the investment community’s appetite for the company’s management, business plan and continued growth momentum.  The filing does, however, show that QuinStreet management feels that they will be able to make a strong case for a public offering.  There are many reasons for going public.  One of the leading reasons is to take advantage of growth opportunities, such as acquisitions or increased financing of one’s business plan, which requires capitalization to act upon.

By going public at this time, one might conclude that QuinStreet management is looking to take advantage of increased capitalization at a time when they feel they can best capitalize on it.  By “sizing up” their business now, they may believe they will be better situated to take advantage of growth opportunities over the next 12-18 months.  Possibly even Google’s entry into the lead gen space is a contributing factor as QuinStreet could feel that in order to more effectively compete with Google they will need to be better capitalized.

The two above events suggest a blistering start for the lead gen industry in 2010.   At the same time, neither event may have a sizeable impact at the end of 2010 or beyond.  Google has yet to prove successful in a product outside its core area of competence (i.e. search).  There is a laundry list of product offerings that Google has entered where it is only doing just so-so.

Ultimately, it only makes sense for Google to compete directly in the lead gen space if the company will make more by generating leads and selling them than it does to just run an advertising platform where others pay you money to run ads.  By competing directly with its customers, Google could drive customers away or out of business and potentially make less money than it did before it entered the space.  Additionally, running a successful lead generation company comes with new overhead that Google didn’t have before when all it did was just take money from advertisers.

While QuinStreet’s IPO suggests that the company is buoyant about capitalizing on new lead gen growth opportunities, a cynical view is that the venture firms that financed the company as well as its management may just want to cash out on their investment and hard work.  After a protracted downturn in the market dating back to 2007 for mortgage, this may just be the first real opportunity to do so.

Regardless of your interpretations of the above, watching how these events develop in 2010 and beyond should be highly interesting.  At LeadPoint we look forward to both events helping to further drive growth in the lead gen industry and contributing to increased levels of innovation.  As the leading technology company and lead exchange within lead gen, we believe increased competition only helps to drive companies to provide a better customer experience which in turn attracts more business to the lead gen sector.  The companies who strive to provide the best possible customer experience and continue to innovate all benefit from this in the long run.

While current economic conditions have affected LeadPoint’s growth, sound business planning including diversification in products, growth in foreign divisions, and payoffs in technology investments have minimized its full impact on our business growth. Evidence of this is that while the majority of news headlines report employee layoffs, at LeadPoint we are announcing new hires.

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