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.

Based on Dr. James Oldroyd MIT study showing a precipitous drop in the likelihood of being able to contact and qualify a lead if not called within its first hour of origination, it would not seem to make sense to purchase aged leads (i.e., leads that are not sold in real-time).

However, from LeadPoint customer surveys (primarily within mortgage); we have found that one of our company’s most popular offerings are the aged leads from our Lead Store.  This is particularly true with individual mortgage loan officers.

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Our CEO, Marc Diana, participated in a discussion on the future of Lead Exchanges moderated by James Cham of Bessemer Venture Partners. Additional panelist included Anik Gagnuly, Board Member of Detroit Trading, Payam Zamani, CEO of Reply! Inc., and Keith Moore, Senior Vice President of Tree.com.

In starting off the panel, James asked each panelist to explain their company’s business model and the verticals they worked in. LendingTree replied that they were mostly mortgage but given the state of the mortgage industry they were branching out into areas such as loan modification. Reply and Detroit both said that they did the majority of their business in the auto sector. Marc explained that while LeadPoint began in mortgage, it has increasingly become a technology platform serving multiple verticals including Credit Card Debt, Education and Tax Debt. As a platform, the company is able to quickly support new emerging verticals.

Additional questions raised by the moderator included the following:

1. How do Lead Exchanges differ from Lead Aggregators?
2. What are the factors critical to the success of a Lead Exchange and what factors do you want to avoid?
3. What are the factors that may be preventing lead buyers from working with your exchange?
4. Is your exchange currently growing and what are your growth projections for 2009?

How do Lead Exchanges differ from Lead Aggregators?

In explaining LeadPoint’s business model, Marc explained that to succeed as a true exchange a company must earn the trust of both its buyers and sellers. To do this, it must act as an impartial intermediary between the buyer and seller, not favoring one over the other. It is important that both sides receive equal value for their efforts in a sales transaction. Reply CEO, Payam, added to this that exchanges provide dynamic pricing that enables every lead to sell. This liquidity ultimately helps provide sellers with greater overall payouts and provides buyers with greater value in pricing. Anik with Detroit Trading also noted that exchanges helped sellers by providing a single outlet for their leads and eliminated the hassles of having to collect monthly payments from numerous sources.

What are the factors critical to the success of a Lead Exchange and what factors do you want to avoid?

Marc discussed that quality and impartiality was critical to LeadPoint’s success. He discussed the company’s recent launch of the LeadClass Quality System which benefits buyers by enabling them to optimize their marketing spend by selecting the quality and price that best suits their operational needs and rewards top direct marketers with the true market value of their leads. The one thing Marc wanted to avoid was competing against sellers by having LeadPoint generate its own leads. Marc explained that if LeadPoint were to generate its own leads, it would no longer be a nonpartisan company and would go in direct competition with its sellers. Marc referenced his experience with LowerMyBills where he was one of the original employees who helped found the company. He explained that when a company generates its own leads it has an incentive to monetize the investment. This may lead to a preference of its leads over those of their sellers. Additionally, it may also adversely impact buyers as the company may push their internally generated leads on to buyers when it is not necessarily in their best interest.

Payam said that their success was derived from market liquidity and disagreed with Marc’s assertions (Reply generates their own leads). According to Payam, when a company generates its own leads within a vertical they have a more vested interest in the success of the vertical and are thus able to get it to a point of critical mass.

Keith with LendingTree said that their biggest success was building a brand with consumers. By delivering on the consumer expectation, consumers trust LendingTree and this enables them to deliver interested leads to their buyers. Keith stated that their biggest obstacle was predicting demand (Tree.com like Reply generates their own leads).

Anik with Detroit agreed with Marc that it was critical for an exchange to be a neutral third-party. As part of the duties of being a neutral party, Anik said it was critical for an exchange to provide transparency to both buyers and sellers.

What are the factors that may be preventing lead buyers from working with your exchange?

Keith said that non-Internet generated leads were their biggest competitor and that there was some understanding of how to work an Internet lead that prevented some customers from using their services. Overall, the strength of the LendingTree brand helped as many people are aware of how they generate leads.

Anik with Detroit said that sellers have the greatest reason to want to use exchanges as it allows them to reach many customers. More customers lead to greater demand and greater demand leads to higher overall prices for leads. Anik said that buyers have some skepticism of exchanges as they perceive they have less control in ruling out fraudulent leads. In fact, Anik says that fraud is something exchanges must pay close attention to as it has the potential to collapse a market. Overall, Anik feels that Lead Exchanges provide the greatest opportunity to provide buyers with exactly what they want as the diversity of sellers provides greater diversity in leads.

Payam commented that he agreed with Anik that an underlying buyer objection to Internet leads was that they did not trusting the quality of lead traffic.

Marc also agreed with Anik’s comment over buyers concern with quality and pointed out that this was the impetus for creating LeadClass. With a market blend of leads, buyers could not control the quality they received. However, with LeadClass now they are able to specifically purchase by quality. Marc also mentioned that there is confusion over the exchange term in lead generation. He believes that exchange by its very nature should mean an impartial entity. He does not believe a company can be impartial when it generates its own leads and thus should not be termed an exchange.

Are you currently growing and what are your growth projections for 2009?

Both Keith and Anik mentioned that the current market conditions were negatively affecting their companies. Lendingtree noted that the decline in the mortgage industry had impacted them and led to them branching out in other products such as loan modification. Anik said that Detroit Exchange (like the city it is named after) is suffering from the devastating slow down in automobile sales. He noted that business is cyclical and they are doing their best to weather a down cycle at the moment.

Marc, on the other hand, noted that LeadPoint is growing. LeadPoint’s growth is fueled by growth in Credit Card Debt, Tax Debt, Education, Voice products, and growth in their UK division. Payam noted that Reply was also growing but was less clear on what sectors were fueling this growth.

A difference of opinion occurred between Marc and Payam who both argued that each of their companies was the biggest leads exchange. Both companies are private companies and neither discloses their revenue figures. However, as LeadPoint is the top Lead Exchange in the mortgage business, the leading exchange in credit card, tax debt, education and voice it is hard to see how Reply is of equal or greater size than LeadPoint, especially given that by their own account their largest vertical is auto. However, arguing oversize is not of great importance, as size doesn’t really matter. What buyers and sellers care about is their return on investment. With the launch of LeadClass, LeadPoint has set itself apart from any other exchange for the foreseeable future in delivering value to both its buyers and sellers.