Posts Tagged ‘lead exchange’

Importance of Diversifying Your Lead Sources

Thursday, September 9th, 2010

Experienced investors recognize the importance of having diversity in one’s portfolio.  Invest in just a few stocks and run the risk that the poor performance of one company could have a disastrous impact on the performance of one’s entire portfolio.

Similarly, in business it makes sense to diversify with one’s vendors. For example, auto manufacturers nearly always have a couple component suppliers.  If one supplier has issues, the auto manufacturer doesn’t have their manufacturing come grinding to a halt.  Additionally, by using multiple suppliers it provides the manufacturer with greater flexibility in picking up volume from another supplier should one of his suppliers go down.

The importance of lead diversification has received a great deal of attention over the last few years.  Online advertising is constantly changing with advertisers regularly applying new strategies to reach customers.  Offers are continually being tweaked to improve consumer response and the performance of leads.  Recently government compliance issues have come into play, dictating what marketing tactics are appropriate.  Current events also play a role.  For example, changes in interest rates or swings in the economy impact both the quality and volume of leads that advertisers generate.

Given this state of flux, it intuitively makes sense to use a variety of vendors (which you should carefully track) to ensure that you receive both the volume and quality you need.  When a given source regularly provides better quality, you can increase supply from this supplier and decrease supply from lower performing sources.  This provides freedom to shift volume in order to capitalize on quality changes while also protecting yourself from unexpected volume declines.

The stock market with its liquidity is a perfect example of a sector where companies purchase and sell stocks based on their relative expected performance at any given moment in time.  A key reason for the liquidity of the US stock market is the low cost of buying and selling stocks.

With its revolutionary lead gen trading platform, LeadPoint provides liquidity in the buying and selling of leads.  One way it accomplishes this is through the low cost and ease of adding and removing lead vendors.  Traditionally, when adding lead vendors, buyers have to deal with a variety of costs.  For one, there are contracts that need to be signed with each vendor.  Second, there are integration issues requiring engineering work.  The list goes on.  When all these costs are totaled, they often eliminate any benefit of bringing on a new vendor.

The hindrance of being able to add new vendors has a hidden cost of also negatively impacting market innovation.  If buyers become less inclined to test new vendors, existing sellers have a tendency to become complacent.  The less fluidity in the market, the less pressure lead vendors feel to compete, thus the less inclined to innovate and improve the quality of their leads. There is also less downward pressure on price.  In a fluid market, competition drives prices down and quality up through competition for a buyers business.

By creating a fluid market for leads and lead vendors, LeadPoint helps both buyers and sellers.  Buyers are rewarded by being able to purchase directly from specific top lead sources and diversity their vendor portfolio.  By tracking the performance of sources they are able to allocate budget to the sources that perform best for them at a given point in time.  Top performing lead sellers are rewarded as they have greater access to a larger numbers of buyers who can more easily shift their purchasing to them.

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The benefits of leveraging a lead platform in the UK

Tuesday, June 8th, 2010

Justin Reese, Director of Marketing for LeadPoint UK, writes in an article for iMedia Connection on the benefits of using a lead platform along with other lead gen trends within the UK.

The upcoming publication of the IAB’s Online Lead Generation Buyers Guide is a watershed moment for the fledgling UK online lead generation industry and will give advertisers a handy reference guide to help get their lead generation campaigns off the ground. The guide covers everything a prospective lead buyer needs to know right now, but what does the future hold for online lead generation in the UK?  The market is growing and evolving at breakneck speed with new developments occurring on an almost monthly basis.  The following are a few of the central trends.

The platform play

You buy leads, you supply leads but how do you manage multiple campaigns across multiple verticals simultaneously? Easy — you need an online lead generation platform.

Whether you are a lead buyer, a lead seller or an agency, the increasing need for transparency, efficiency and tracking are making the lead generation platform an increasingly attractive proposition. From digital insertion orders, real-time reporting or just the ability to manage multiple suppliers and buyers in one place, a platform can add real value to all the stakeholders in the lead generation value chain.

By making the whole lead generation process more efficient a platform has the potential to deliver huge cost savings. Imagine a life insurance company buying 1,000 leads per week for £40 per lead from 20 suppliers. With these volumes there will always be an element of duplication as consumers fill in multiple forms online. Most advertisers end up paying for everything, which means paying for the same lead more than once. Even with a duplication rate as low as 5 per cent that’s still over £2,000 wasted per week, which is over £100,000 per year. Loading these 20 suppliers into a platform that can de-dupe in real-time can be very cost effective so it’s no wonder that many advertisers see these types of platforms as the future of online lead generation.

The Americans are coming

They invented it, they perfected it and they even have LeadsCon, an annual conference in Las Vegas dedicated to it, but up until now American involvement in the UK online lead generation industry has been limited. In many verticals, they have been more casual observers rather than major players. But over the last year or so, there has been an increasing interest from the American lead gen companies in bringing their knowledge and experience over to the UK market and showing us a few tricks. From increasingly sophisticated methods that generate leads from social media sites to the use of online video to help improve form conversions, expect to see more of these types of developments make their way across the Atlantic along with a few of the companies that perfected them.

If you thought data leads were good…

For high value verticals like financial services, many advertisers buy leads to put into a call centre to try to convert into a sale over the phone. Even if you work with the best suppliers in the world with the best technology, there will always be some degree of wastage — perhaps the consumer just doesn’t pick up the phone or they didn’t read clearly enough that somebody would call them if they submitted their details so were just looking for an online quote.

Either way, it can cost a significant sum to process these types of leads. For many of these high value lead products there is an increasing demand to buy voice leads as well as or instead of data leads where you pay a premium but have a guaranteed contact.

Up until now, this market has been filled by call centres cold calling old data and then hot-keying interested consumers through to the advertiser’s own call centre. The downside is that often the consumers are pushed through without really having much interest in the product and the end results are more contacts but also more wastage. And finally, the next big thing in terms of voice leads is where the consumer is initiating the contact — i.e., they are responding to marketing and instead of filling in a form to be contacted, they dial a number and their call is then routed to the relevant advertiser with each valid call paid for on a cost per call basis. Again, this is big business in the US — expect to see this execution making waves on this side of the pond over the coming months.

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Google Entering Lead Gen – QuinStreet IPO

Wednesday, December 2nd, 2009

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.

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