I recently came across a thread at Wicked Fire about an affiliate who was denied by Market Leverage. We also had some speculation about our sellers from the Lead Critic. These two posts got me thinking about affiliate managers and affiliate applicants and the whole approval process and in particular how LeadPoint approves or denies a seller. I also wanted to provide some insight as to how LeadPoint’s application process works as well as some tips for potential and current applicants that will assist you in the application process so that you can start submitting leads into our exchange.

One of the first things we look at when a seller applies is their e-mail address and the website provided on the application. It is annoying when sellers submit an application and do not supply a website or apply with sites where they have yet to take down the Go Daddy parked site page. For this part of the application it is fine to use any site you own, however, take 30 seconds and put something up that explains what you do and how you do it. For example, in explaining how you generate leads write “I use pay per click to drive my traffic and don’t use BHOs.”

When you apply to become a seller, do so with the expectation that we are going to ask you lots of questions about your marketing methods, experience in affiliate marketing and lead generation. We are not asking these questions to steal your business – LeadPoint employees are contractually prohibited from doing any lead generation on our own – but to see if there is a fit. You should also know that LeadPoint has never spent a single dime on media to generate a lead. So yes, these questions may seem personal but we only ask them because we don’t want you to spend hours of your time integrating with us and your leads are not accepted because they are generated via co-registration and are incentivized, which are two types of leads we do not accept. In return for your candor and highest performing leads, we promise two things: some of the highest payouts anywhere and a promise that we aren’t blabbing about your keywords to your competitors.

Once you’ve filled out the form and clicked submit, we will send you an automated e-mail asking you to validate your email address by clicking on a link or going to a URL that you paste into your browser. At this point, the LeadPoint system knows you as an applicant but we humans can not do anything for you until you click on that link. If you do not get an e-mail from us within a couple of minutes, check your junk folder. If it’s not there, give us a call.

Now that you have validated your e-mail address, you’ve become a “validated applicant”. At this juncture, we will make three attempts to contact you. We will email you within two business days looking for information about your traffic and to set up a time to chat. If we don’t hear from you after that first e-mail, we will then call you to follow up. The last attempt to reach out to you is made via e-mail. If we don’t hear from you after our third attempt, we will close your account. However, if we do connect, the account manager will ask you about your lead generation methods and your site. If everything checks out and your lead generation methods are appropriate, you’ll be passed to the integration folks and an account manager who specializes in launching new sellers and dealing with any technical questions you may have.

With that final step – it really doesn’t take that long – we will activate you and help you begin the integration. Post integration, we are continually monitoring your lead performance. There are a number of ways to do this but the number one way we track your lead performance is by talking to our buyers. Our buyers are continually entering feedback about your leads which goes to your account manager. If we see poor performance, we will talk to you and take a variety of steps to improve performance with the most extreme of these being removal and deactivation. Long story short, we are always monitoring your lead performance and working to ensure that our customers – buyers and sellers alike – have an optimal relationship where everyone profits (look for a post in the future about lead performance).

Ultimately, LeadPoint is about relationships and communication. Your success is our success and we are here to help you achieve it. Sign up today if you haven’t already. If you currently have an account, remember your account manager is there to help.

It would be a significant understatement to say that the mortgage industry has undergone some changes in the last few months. Everyone within the industry saw the potential peril associated with questionable lending practices when interest rates were at all-time lows, but few could have predicted the significant impact that it would have on the mortgage origination industry as a whole. The Internet lead industry certainly has not been immune to the effects.

Since the lead generation business’ relative inception, the market has been a key catalyst to the growth of an industry that is approaching $1 billion annually (2005 statistics from PricewaterhouseCoopers valued the Internet Lead Industry at $753 million). Originators, especially through the refi boom, were able to charge higher points and fees on sub-prime loans thereby enabling them to pay higher lead costs on sub-prime leads. This additional revenue is what has allowed the top-tier Internet lead providers to become significant players in on-line media spending, many falling in the top 5 in monthly spend on a consistent basis.

However the industry has seen a steep downward trend as significant sub-prime buyers of Internet leads have dramatically decreased their lead purchasing, or ceased purchasing leads altogether. Unfortunately now, the lead generation industry, not unlike the mortgage origination industry, is one replete with news stories of contracting margins, revenue-losing quarters, layoffs and companies going out of business altogether.

While margin contraction, lay-offs and closing doors are never a happy topic, it can mean that a market correction is underway. In a great post by Jonathan Miller to the Matrix blog (read it here), the author talks about how market, “Bubbles,” are good. The concept that he discuss via a book called, Pop! Why Bubbles are Great for the Economy, by Daniel Gross is that, “the frenzy of irrational economic enthusiasm lays the groundwork for sober-minded opportunities, growth, and innovation.” I think that the story of LeadPoint is a perfect example of such an opportunity.

Despite the downturn, I don’t think anyone can question the viability of Internet leads as it relates to the mortgage industry. There is no doubt that the lead-gen market is contracting along with the origination market in general, but while the figures vary somewhat based on the survey, general consensus is that between 45% and 75% of home buyers begin their process on the Internet. So, if you are not including Internet marketing in your marketing portfolio, then you are potentially excluding over 50% of your potential market. It is inconceivable that the genie is getting back in the bottle with respect to Internet leads, the only question is, is there a business model better suited for the current times? The answer to that question is a resounding, “yes” and the validation of this has been provided by the two biggest names in Internet advertising. Both Google and Yahoo recently made some very significant acquisitions that may potentially provide an illustration of what is to follow in the lead-gen industry.

DoubleClick was bought by Google recently for $3.1 billion dollars after it, “recently launched a Nasdaq-style exchange for buying and selling display ads.”

Yahoo purchased the remaining 80% that they did not already own of Right Media for $680 million. Right Media operates the “Right Media Exchange,” which, “gives advertisers, publishers and ad networks open access to each other and a constant, immediate supply of ads and inventory.”

What do these companies have in common with LeadPoint? We are all exchanges. Their business model is our business model. They do for media what it is that we do for leads. I feel that this is further validation that our business model is ideal for the current market conditions. A recent article in BtoB Magazine (here) took an in-depth look into the recent exchange acquisitions by Google and Yahoo. What was significant about this article — which included quotes from Eric Schmidt, Google’s CEO — is that they also chose to interview our CEO and ask how our “exchange,” business model benefits us in our industry.

“Marc Diana, CEO of LeadPoint, which operates an online exchange for the marketing lead generation industry, said: “The value I see in exchanges over brute sales forces is that it creates a tremendous level of efficiency, especially when you are able to assemble a `disaggregated’ critical mass of buying or selling power. The nirvana of that is when you are able to weave both ends together. That is a true exchange and is the most efficient mechanism to price and trade.””

The secret is this. The traditional lead-gen company is only as effective as their advertising spend. The revenue that they make from selling leads is in direct proportion to the presence and quality of their advertising. But contracting revenues will logically have a deleterious effect on their ability to acquire consumers. It is a grand dilemma; either increase prices to make up for a diminishing add buying power, buy fewer media placements or a poorer quality of media, or divert funds from other sources (like a reduced payroll) in order to maintain your marketing spend. LeadPoint, however, will never be faced with this dilemma.

LeadPoint, like the companies purchased recently by Google and Yahoo, is not saddled with a marketing spend. LeadPoint makes its money off of the transaction of lead buyers purchasing leads from lead generators. This is why LeadPoint has continued to grow at a time when the overall market is contracting. By providing the world-class marketplace that attracts both the very best in lead generators and lead buyers we provide the more efficient platform for lead acquisition. This model provides:

- A better model for growth

- More price stability

- A better quality lead

Growth. For us to continue the growth that we have experienced to date, we are not saddled with the burden of generating revenue for an advertising budget. We simply need to continue to screen and add the best-in-class lead generators to our already very significant marketplace.

Pricing. On an exchange, the market, (read: you, the lead buyer) sets the pricing for the leads. Pricing is influenced entirely by supply and demand and not buy our need to acquire consumers so there is never any question as to whether or not you are getting a fair price. You set your pricing.

Quality. Our quality is not influenced by contracting revenues that we rely upon for advertising because we have no advertising spend. We only allow the top-tier lead generators on our sales channel and we constantly screen and monitor the quality of our channel based on the feedback that we get from you, the lead buyer.

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:

1. 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.
2. 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.
3. 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”.
4. 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.