LeadPoint believes there is a transition occurring within lead generation. This transition is similar to the transition of large media conglomerates generating most web content to regular citizens using wiki, blogs, videos and other tools to generate web content. Today what is termed “Lead Gen 1.0” is characterized by large, single-vertical aggregators who take the lion’s share of the profits that a lead generates as it travels from consumer to end user. Examples of “bigger/older” companies are particularly visible in the Auto Purchase and Mortgage leads categories.
Another characteristic of “Lead Gen 1.0″ is lack of transparency around the disposition of the lead. Very little information is shared back to the actual lead generator about what leads were valid, how many were sold, how much they were sold for, etc. Often, all a lead seller gets is a check 30-45 days after leads are sold.
Fixed pricing also characterizes “Lead Gen 1.0″ companies. Pricing of leads to the end user is typically flat, based on the last Sales Rep negotiated contract with pricing to the Seller fixed. Quality and lead types having no impact in the equation.
Finally, “Lead Gen 1.0″ is plagued by quality issues. Many “Lead Gen 1.0″ companies simply do not have state-of-the-art automated systems to track, rate and discipline the hundreds of affiliates that pass leads through their system. These companies’ primary source of lead quality feedback is from angry customer phone calls.
Because of these and other issues, understandably a transition is occurring to what LeadPoint terms “Lead Gen 2.0.” As opposed to “Lead Gen 1.0″, a smaller, more efficient lead marketplaces that serve multiple verticals is emerging. No longer do sellers who want to sell mortgage leads, auto leads and debt leads have to go to 3 different vendors, sign 3 different contracts, and deal with 3 different account managers. Another benefit of serving multiple verticals is the economies of scale these exchanges can reach. As a result, they can often charge much lower transaction costs to buyers and sellers than “Lead Gen 1.0″ companies.
Another benefit of “Lead Gen 2.0″ is greater transparency. Any seller or buyer can see exactly what they sold or bought, when they did it, how much it sold for, plus, in LeadPoint’s case, hundreds of other metrics to help them refine their marketing strategies. Market forces of demand and supply, powered by bidding (think ebay), drive pricing, not negotiated contracts and fixed pricing. This enables buyers pay more for more valuable leads and sellers who generate those leads to get a true market value for their effort.
Finally, Lead Gen 2.0 resolves many of the quality issues associated with its predecessor. By only allowing the most high quality sellers into the marketplace and working with buyers to provide feedback, companies like LeadPoint are able to track the quality of every seller in real time, often allowing us to address quality issues before receiving buyer complaints.
At the Affiliate Summit last week, many lead sellers were interested in understanding some of the best practices that LeadPoint sees around generating leads. While not an exhaustive list, below are a few things we have observed our most sophisticated sellers doing:
- Pick an aggregator that gives you the tools and reporting that enable you to understand exactly what is happening. You need to measure your ROI and adjust your marketing plans accordingly. To do that, you need real-time, 24X7 reporting tools, that give you insight into what is really going on.
- Pick a partner that can help you leverage your strengths across multiple verticals. If you are good at Paid Search in Mortgage, why not use those same skills in the Autos or Student Loan Consolidation verticals? You’ll make more money plus you will diversify your risk if one of the verticals you’re in suffers from seasonality or enters a soft period.
- Pick a partner that helps leverage your customer. Every lead generator should be cross selling other relevant products to their customers after they have submitted a request for a quote on your site. If a consumer requests a quote for refinancing their mortgage, maybe they also need help with credit card debt or student loan consolidation? Build and nurture your database of these consumers. It’s an asset. Send a consumer an email promoting extended auto warranties 3 months after they submit an auto purchase lead. Pick a partner where you keep the consumer data and the consumer is not forced to leave your site after hitting “submit”.
- Pick a partner with low transaction costs. You are generating almost all the value. Some aggregators take anywhere from a 40% to 70% cut of the total lead value. In a world of ever increasing media costs, that kind of tax makes it tough to be competitive. There are lower cost options out there; try and leverage them.
With the emergence of “Lead Gen 2.0″, lead gen has improved for everyone. Buyers are getting more of what they want for the price they want. Sellers are getting better insight into what is happening and are selling leads at prices traditionally only lead generators with their own direct networks of buyers were getting. Just like Youtube is rocking the world of traditional video, “Lead Gen 2.0″ is rocking the world of Lead Gen providing significant profit opportunities.
Excerpt: LeadPoint answers the question of “how to protect customers from fraud” by taking the unheard of action of indemnifying buyers against potential exposure from leads purchased through our market.