• Archive for the ‘General Thoughts’ Category

  • The New In-house Guru? A Lead Quality Officer

    March 2nd, 2010
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    Needle

    Today, at almost every organization large and small who spends money online, you will find if not an entire team dedicated to search, then certainly at least one in-house expert focusing on it. For those working in the online space, that wasn’t necessarily the case three years ago, and it certainly wasn’t common five or more years ago. That such a role has developed and become both commonplace and essential is one of the many neat developments that have transpired as the internet has evolved. The same holds true for social media experts. More and more companies need them, but there isn’t a

    In online lead generation space, a new such role is starting to exist – that of a lead quality expert. We haven’t quite hit the point yet where companies will think of having a Chief Lead Office, but it wouldn’t come as a surprise if one came to exist in the near future, especially at companies whose main source of revenue comes from either the generation or purchase of leads. Until then, we are starting to see the seeds of its predecessor, a role that for lack of a better title could go by Lead Quality Expert, Lead Quality Guru, or what I suspect will take shape, Lead Quality Manager.

    David Rodnitzky wrote about the need for a Lead Revenue Officer in his Quick Hits piece on LeadsCon, saying, “‘Lead quality’ is just a metaphor for ‘revenue from leads.’” I think David’s correct, but perhaps his view is a little too advanced. The majority of people understand the need for quality, but they cannot separate out in practical sense the notion of quantity from revenue. When you talk about making more money, the knee-jerk reaction is still to look at that from a volume perspective. If viewed more holistically, though, making more money off leads would span not just quantity metrics but quality as well.

    A talk of quality is nothing new, but that doesn’t mean organizations have truly aligned themselves towards acting on it. Actions of quality mean having treated lead quality just like any important function in the business with a combination of technology, expertise, and process implementation. That can’t happen until someone at the company lives and bread lead quality. To date, it is generally someone who takes on lead quality as an ancillary function to their current job, or  a developer handed Targus Info or eBureau technical documentation and expected to make it happen. You wouldn’t find that at a company who spends meaningfully (to them) on search has their search spend handled by someone whose job function encompasses more than search. And, so it should become the same with online lead generation.

    There is too much money to be made, and there is already too much money being spent, for companies who aren’t currently aligned to maximize lead quality and thus revenue not to. In slightly easier to read English, if a company spends more than a full-time person’s salary buying or selling leads, it such consider having a full-time resource dedicated to maximizing quality. This is especially true for companies who spend hundreds of thousands of dollars and millions of dollars per year in online lead generation.

    For those with an analytical mind and a technical enough bent, this is a great chance to craft a role that doesn’t have any prerequisites. You get to be a pioneer and becoming an expert in this will pave the way for countless opportunities that we can’t imagine today. Not to mention, you”ll help make the industry that much better.

    General Thoughts, Lead Quality
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  • TweetBait – Not Watching Your Brand? Someone Else Is.

    September 29th, 2009
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    Like many, I  have multiple Twitter accounts,  one for my person / personal brand @jayweintraub and one for LeadsCon, @leadscon.  Because I manage two users, in effect two brands, you can’t do it through the Twitter.com (easily). So, at the recommendation of a friend, I’ve been using Splitweet, which for the most part does exactly what I need – a way to view my accounts together. One of the keys in doing so means tracking my brands’ mentions, without having to perform a search or subscribe to #LeasdCon, for example, since not everyone tags their LeadsCon posts as such.

    LeadsCon has a small number of followers, and not surprisingly, it generates almost all of its activity, around the time of the event.  Going through those tweets, though, a few started to stand out. Happy as I was to see the additional volume, they just didn’t make enough sense. Here is one such tweet:

    tweetspam-solo

    It wasn’t until a few started appearing that I began to get curious.  Here’s a snapshot of them in context.

    tweetspam-multi

    You most likely noticed two from different users with the exact same text but without the re-tweet. Again, for those not familiar with the event, it would seem a normal thing to say.  Except as the brand owner, I know it isn’t. That comment was four months too late, but it’s not the tardiness of the context that is the real problem. The link being promoted is. Having been in the performance marketing, online customer acquisition space for quite some time, I am used to seeing crafty affiliate tactics. This ranks up there. A click on the link takes you to a business, just not one relevant to the conference goer, unless we are talking about what a conference goer does on their personal time. Yes, you guessed it. The link goes to an adult dating site – XXXBlackbook.

    tweetspam-friends-hover

    Like a webmail account, signing up for a Twitter account is a frictionless process. That’ makes deciding the real users from the fake that much harder. A click on one of the profiles above doesn’t go to a blank page with no friends/followers and zero tweets. It goes to a page resembling an active user at first glance. And, while it might seem like a manual process, those doing this type of spam have it all automated, from the signups to the followers to the tweets. And, while you can rid the system of spam, you can’t rid it of human nature. Hard to say if this will become a chronic problem, something akin to Google developing Quality Score, or simply a passing fad. Having finally made Twitter a part of my business, and increasingly valuable part, I hope they can squash this sooner than later. With the upcoming $100 million investment and increasing omnipresence, something tells me they will.

    General Thoughts, Marketing Strategies
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  • The Affiliate Conundrum – Partner vs. Pilferer

    September 8th, 2009
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    Connundrum

    There is a topic for which I am unusually passionate. It is a distinction that to many even inside the world of internet advertising means little, yet it explains the difference between so much of what we see online today – that of affiliate vs. arbitrager.  As I wrote previously, “At its most essential, the affiliate has an audience they try to which they cater, where as the arbitrager has only traffic. The true affiliate has their own site, their own brand in which they’ve invested time, money, and ego. They have something to lose if they mess-up. They can’t just fold-up shop and start again. The arbitrager on the other hand is the day trader who at the extreme is ephemeral, defined by his appearing and then disappearing act.” The fake blog fiasco which has culminated in lawsuits against 500 individuals and companies and will result in countless more when the FTC investigations become public has seen its fair share of blame thrown at affiliates, but the true culprit is the arbitrage.  When people take financial risk and make decisions purely based on the need to recover costs and then some, that leads to behavioral detrimental to advertisers and the marketers.

    Arbitrage isn’t all bad and those who perform arbitrage, from a small search affiliate up to the venture-back technology powerhouse Adchemy, can do it such a way that it adds value throughout the entire value chain – from end user to end buyer of the lead. Arbitrage in lead generation is such a tricky topic, though, that the turning on the affiliate tap must happen with great care.  While it should be the traffic driver’s responsibility to ensure that the advertiser’s best interest are kept in mind, what we continue to see is that self-interest takes precedence and that means the advertiser must do the same. The buyer must be an informed buyer and understand the traffic side of the equation.

    Let’s look at particularly interesting example that highlights:

    1. The affiliate challenge – how do you find third-parties that will drive quality consumers. How do you find a partner that understands your business objectives and do not just what they say they will but in good judgment.
    2. The need for informed buyers – one who enters with an understanding of what they will and won’t accept along with a target cost per acquisition. It also means a buyer that has in place the means to follow-up with leads, the ability to track the performance of leads, and communicates back to the affiliate the performance on as granular level as possible.
    3. The difference between those a partner and liability – everyone in the value chain wants to make money, but when it gets of alignment, no one wins; unlike a car, where it’s easy to tell when alignment isn’t there, it’s not always as easy when profit is involved.

    This example comes from a recent post from famed affiliate-marketing rabble-rouser Jeremy “Shoemoney” Shoemaker, titled “Cashing in on Cash For Clunker With MySpace.” The reader of his very well trafficked blog (and quasi-online community)  readers contain a large number of those hoping to glean the secrets to making money online. It’s a very different audience than one would find at LeadCon, for instance. This example caught my attention because it dealt 100% with lead generation. In short, Jeremy knew a local Omaha Nebraska Chevrolet dealer who already had a sales team handling internet leads and crafted an agreement to sell them leads at $10 a piece.  As he writes, “I told them I would charge them $10 per internet lead (a small fraction of what they are currently paying) but with the condition I could publish a lot of the data on my case study (what your reading). I also told them I wanted to exclusively use MySpace for this test because in past ones we mainly focused on Facebook for driving social network traffic. ”

    (more…)

    General Thoughts, Lead Gen 101

  • Google, Lending Tree, and Mortech: The Past, Present and Future of Online Lead Generation

    August 31st, 2009
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    tree_of_life_darwin1232931496

    Last week,  on the evening of August 26th, 2009, the New York Times Blog asked, “Is Google Entering the Mortgage Quote Business?” An hour later, a story appeared in the Wall Street Journal titled, “LendingTree Suit Claims Google is Getting into Mortgages.” By the next morning, the floodgates had opened with stories like the one on Yahoo asking, “Is Google Launching a Leding Tree Killer?” The answer is in the statement made by Google representatives, where they said (according to the Times piece), “We’re constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.”

    Search Engine Land, who first broke the news about a similar test done in the UK last year, Google Merchant Search, correctly summarizes the issue (the indirect battle between LendingTree and Google via a suit against Mortech) by saying, “The focus on mortgage search or quotes is a bit of a red herring…” and that “The UK test was really about developing a model to deliver leads on a CPA or pay-per-call basis.” John Batelle adds, “There’s a lot of demand out there for leads. Google smells an opportunity to cut out a middle man, and increase margins.” LeadCritic wonders very aptly “What will stop Google from running their own lead generation strategies in any other vertical?”

    Putting it all together here is what we have:

    • LendingTree vs. Mortech – someone was looking out for LendingTree. They received informaiton that Google would almost never want them to have which allowed them to delay (for a bit) a significant entry into the mortgage lead generation business by Google.  The technology that Mortech provides adds significant value as it enables mortgage brokers to offer conditional loan offers. Only LendingTree currently offers those who complete its form actual offers.
    • Google vs. LendingTree – we don’t know that many people at Google, but we know that Google doesn’t really spend a lot of time focusing on other companies. They are competitive but not in the traditional sense. That they entered into mortgages has nothing to do with LendingTree. It only has to do with the scale and complexity of the mortgage market, with scale and complexity being two key ingredients that Google looks for when deciding on new initiatives.
    • Google and Lead Generation – this is where it gets very interesting, and where an entire chapter the length of some books could be written. A) Given what we know of Google, i.e., they are a platform play, while they will be entering into mortgages at some point in time, they designed the product (AdLeads?) to work with any number of buyers. We don’t know whether buyers pay on a per lead or per call basis, but I suspect per lead is the easiest. B) Google doesn’t just disintermediate because they can. They aren’t getting into leads, mortgage leads in particular, because they felt too much money was going to the aggregators. The only reason they would enter is because they felt not enough value was coming from them. Not monetary value but customer value, and that’s the key.

    We wrote recently about doing right by the customer and still making money. The focus on money is what often leads to a poor user experience, or said differently, the need to cover costs has companies make decisions they might not make were money not an issue. Any lead company in a vertical selling multiple / shared leads goes through this. People like choice, it’s why Google shows more than one ad on its search results pages, and why the average person clicking on a paid ad clicks on more than one. But what is the right number? Clicks aren’t like leads. There is very little friction to an incremental click. There is a higher threshold from a user’s standpoint to becoming a lead. Because there is no right answer without testing at a high potential loss, we as an industry have allowed someone else to potentially answer it for us. And, it could result in an answer some don’t like.

    The “low-hanging fruit” predictions regarding Google’s lead generation product:

    1. Google will not collect user data, i.e. unlike today’s approach, the user will not have to fill out any contact details before being connected to buyers
    2. Google will err on the side of unhappy advertisers not users; they have such a funnel of traffic that the role will be reversed from a traditional aggregator
    3. Users will click to connect on a listing, which is when they can decide whether to share their information, and at the point of true transparency (seeing the actual broker for instance), the advertiser is charged.
    4. The onus will also be on the user to follow-up, i.e., they will according to prediction 3 get to see the advertiser’s info without the reverse happening. Were Google to allow users to connect with eight advertisers at the click of button and lead to eight calls right away, users will blame Google, so they should in theory disable this at first.

    Before panic sets in to those in online lead generation, Google’s entry is no sure thing. True, switching to a lead model is a Pandora’s Box and once that option becomes available, it’s not easy to close it off. But, their predicted conservative approach means that it might not be a financial windfall off the bat. While Google has what the rest of us only dream about – tons of traffic at their disposal – if the lead based approach doesn’t produce close enough to the returns that the click based approach does, no matter how not evil the new approach is, it won’t last. Finally, there is always a role for a middle man, but it needs to be a value-added middle man. Marketing services firms can always fill a void. To me, it’s just like the designer clothing market.  Some people will shop retail, others discount chains. The two aren’t mutually exclusive. This move while seemingly scary, will in the end just lift the tide for all and equally important validate much of the hard work done by others.

    General Thoughts

  • When Leads Don’t Outperform Clicks for Publishers

    June 29th, 2009
    Comments

    I was speaking to a well regarded SEO expert and publisher who, as part of his media holdings, owns several well trafficked mortgage domains. Interestingly, he has seen a shift in the monetization of his names. Historically, when the market was strong, he funneled users towards lead forms, either hosted by him or by aggregators that purchased the leads. As the market the market has softened he finds that he makes more money from clicks on Google’s AdSense ads than he can off lead dollars. As he said to me in an email exchange recently, ” the lead market has fallen through the floor recently to where contextual ads outperform from a monetization perspective.” So what contextual ads were doing better? Ads for refinance.

    It certainly didn’t make sense to me that ads for refinance running contextually outperformed the lead based ads. As an AdSense publisher, he has two factors working against him. The first is the revenue share. He is paid a percentage of what Google receives, at best 50%. The second factor that should hinder contextual’s performance is that ultimately the vast majority of refinance advertisers base their click spend with Google on leads. In other words, if they pay $5 a click to Google, they base that bid off the percentage of clicks that turn into a lead. If their average lead price climbs too high, they will lower the price per click. A publisher being paid on a lead basis means receiving the full allowable for a lead (as opposed to a blended click price based on an average desired cost per lead target). Or does mean that?

    In trying to understand how a publisher could make less money on a per lead basis than being paid on a per click basis (and just a fraction of the total click revenue), three hypotheses come to mind.

    1. Traffic Quality Issues – one thing about the lead ecosystem is that when executed properly, it allows buyers to place an accurate value of traffic. How to do this properly gets into a more complex issue, but assuming that as a buyer whether through an aggregator or through direct buys, you view all leads as granularly as possible. You then measure the conversion rate of the leads by source to figure out what you want to pay for that source. It was possible that these sites run by the publisher did not convert well and as a result, he was paid less per lead. With Google, advertisers cannot as easily determine value by lead source.

    2. Google Effect – another possible hypothesis deals with what some have called the Google effect.  I recall talking to a lead buyer that spent on Google but looked to increase the number of sources of traffic. When asked what he would pay for a lead (assuming the desired lead to sale conversion rate), he answered $35. When asked what he effectively pays per lead with Google, the answer came in at $75 / lead. Most people don’t have such severe examples, but many advertisers pay more than they want for traffic from Google, not because it converts better, but because they don’t feel they have a choice. They want the traffic.

    3. Brand Value – Given that many of the refinance advertisers showing up on this publishers site don’t lead to aggregator’s pages but to sites run by big banks, a third hypothesis for how he receives greater payment via Google contextual ads than lead directly deals with the not always easy to quantify value of the brand. My first reaction to hearing of his making more was to jump to the inefficiency of the Google Effect, but it is possible too that the big banks, unlike the more typical lead buyer, don’t have a performance goal in mind. Or, if they do have a performance goal, they have increased their allowable because of some perceived brand value. Then again, the true skeptic would probably just mention that big brands tend to overpay, and they work with search agencies paid on the spend, so it’s in that parties best interest to play up non-measurable factors such as brand.

    General Thoughts
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  • Challenges of Being A Small Lead Buyer

    May 14th, 2009
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    Our recent conversation with AllSeniorHomes, reminded me of another recent interaction, not with a lead generator but a lead buyer.  I was having breakfast with a friend and one of their friends. The friend of a friend turned out to own a boutique moving company specializing in moves from New York City to South Florida. For those familiar with their East Coast geography and the migratory behavior of a certain demographic, focusing on that particular route isn’t accidental. Anything but arbitrary, it’s a specialized product that attracts a very specific demographic. What surprised me though was learning that this small company supplements its referral business with the purchase of online leads – surprising because we often think of those fulfilling the higher end of the service spectrum as being unwilling to embrace lead generation. What I found more fascinating than the purchase of leads are the challenges they face in the ecosystem.

    Catch 22

    Just as the small to mid-size businesses make up a great percentage of the employers, they also make up a healthy percentage of the lead buyers. Certain areas of online lead generation, like online education, will have a disproportionate percentage of the leads going to a handful of buyers, but that isn’t the case in all verticals, not in auto insurance lead generation (for aggregators with a strong buyer network) and not in moving. The small lead buyers, just like any smaller quantity advertiser, can be a Catch-22. It takes a lot of small lead buyers to make up the volume of a larger lead buyer, and the smaller lead buyers tend to have two other disadvantages – a) they are harder to deal with because they are more sensitive to fluctuations in lead performance/behavior, and b) they tend to have less sophisticated systems for following-up with leads.

    It’s one thing to be a small lead buyer in a market full of just small lead buyers. It’s another to be a small lead buyer in a market where they receive the same lead as a larger, more institutionalized player. For that smaller player, a lag time of a day to get to a lead doesn’t necessarily seem like a bad thing. For a large buyer though, they often – either as a result of in-house efficiency or working with companies like Lead Qual or Double Positive – will have the phone ringing minutes after receipt of the lead. Were we speaking of just hot transfers, it would be different; instead we are focusing on just data leads. Here, the buyer is responsible for follow-up and management, and there is both challenge and opportunity. The challenge isn’t just competing to get to the lead quickly, it’s not having the staff. Unlike a large lead buyer, the small lead buyer doesn’t have a dedicated team to call on the leads. In the moving leads example, the owner of this highly lucrative company is the one who is getting on the phone and sending out emails. That’s not necessarily the best use of his time.

    I see opportunity in this, because the total number of small lead buyers is already significant, and more importantly, it’s just the tip of the iceberg compared to where will be in two, five, or even ten years. While we might have specialized software for certain industries, e.g. mortgage, to manage the leads they receive, there isn’t this robust platform for all types of lead buyers. Many moving lead buyers , for instance, license an industry specific CRM system. This system allows them to fire off automatic emails to the leads they purchase repeating much of what was captured – the date of the move, size, location. And, if the agent gets a lead on the phone, they can update that information centrally, and send out a revised email that can act closer to a contract. But, it’s a clunky system with much to be desired for the lead buyer and consumer.

    We will hopefully come to a point in time where there is an integrated system – lead management and analytics with modules that buyers can enable such as verification, scoring, and tapping an outside firm to translate data leads into hot transfers.  These are all things that the large buyers, but they have it only because they have had to built it or they have the savvy to integrate multiple different services. Just as Salesforce has transformed the way many sales people and sales organizations deal with their clients and prospects, so to will there come a time when a similar product can exist for those buying leads online. And, I can’t wait as strides are made because it will lower the barrier for buying leads and create a virtuous cycle of companies of all sizes using online lead generation.

    General Thoughts
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  • Recent Comments:

    • Mike: Very timely post Jay. I was just having a similar conversation about this idea. I think, in most cases, that...
    • Jay Weintraub: Thanks, Avi. Those are great points.
    • avifischer: Jay, great post. Your point about the importance of lead quality should not be taken lightly for any...
    • calmoneygal: I think what you will find is that everyone will offer the same rate and it will come down to a few $200...
    • transfs: Hi Jay,I ran a Facebook vs. LinkedIn advertising experiment and came up with the same results you have...