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Lesson from LeadsCon: Leads Are Dying

Published: April 6, 2008

Author: David Rodnitzky

I just got back from a whirlwind trip to Las Vegas for the inaugural LeadsCon conference – the first conference created entirely for the online lead generation industry. If conference attendance is an indicator of the health of the lead gen industry, lead gen is doing quite well.
To wit, conference creator Jay Weintraub had hoped to get 300 attendees and he ended up turning people away after more than 600 registrants invaded the Palms ballroom (indeed, I also heard that some people at the investment banking conference down the hall were trying to sneak into LeadsCon as well).
So now that lead gen had its own conference and over-subscribed interest, you might deduce that “the lead” as a form of online marketing has finally arrived. After listening to the speakers on stage at LeadsCon and the chatter in the hallways, I’d argue that the lead is dying.
If there was one overarching theme of LeadCon, it was “lead quality.” For example, a major sponsor of the conference was eBureau. What does eBureau do, you ask? Real time scoring of lead quality (sort of like a credit check). This enables lead buyers and sellers to quickly determine the likelihood that a lead will turn into an actual sale, rather than waiting 30 to 90 days to reconcile their data. A similar service is offered by TargusInfo.
There was an entire session on “hot transfers”, which is basically when a lead seller talks to a person who submitted an online lead on the phone to verify that a) the person actually exists; b) that the contact info is correct; and c) that the person is truly interested in the service or product for which they submitted a form. Once the lead is verified, the seller can obtain a premium price from the buyer.
And in my many discussions with lead sellers at the show, the number one answer I received to the question “how are you different from other lead sellers” was “our ability to scrub leads and only deliver qualified leads to our buyers.” Indeed, as one speaker aptly put it: in 2002, buyers just wanted quantity at all costs, today they only want leads if they are quality.
Think about the evolution of online advertising – in 1996, there were page sponsorships (no guarantee of impressions, clicks, leads, or sales); by 1999, CPMs were king (cost per thousand, a guarantee of impressions). Overture and Google made CPC hot in 2002 (cost per click, a guarantee of a click). Affiliate marketing and lead generation (Commission Junction, LowerMyBills, Quinstreet, etc) created a massive industry for lead-based marketing over the last several years (guaranteed lead). Any way you slice it, publishers (in this case, lead sellers) are taking more and more of the risk, in exchange for a greater percentage of the return on the sale from the lead buyers.
The emphasis on lead quality is indicative of a further shift toward greater risk for the publisher and greater share of the return – revenue share marketing. Let’s face it, when a lead buyer expects his sellers to use a credit rating type system like eBureau, develop their own internal filters, and then hot transfer the lead, the lead buyer is really saying that he doesn’t want leads, he wants sales!
Lead sellers are no longer able to grow their businesses by opening up their offers to thousands of anonymous affiliates and dumping thousands of questionable leads at the door of a lead buyer. “Direct post” relationships – where a lead buyer lets a partner host his lead form on the partner Web site – are also becoming rarer, again as a way of protecting lead quality.
Just as many merchants are now wary of affiliate marketers, many lead buyers – burned one too many times – now prefer to deal with a few dependable lead sources rather than taking their chances at more volume with more partners. A few years ago, The University of Phoenix – one of the largest lead buyers in the world – did exactly that, reducing their direct relationships from hundreds to just a few.
I think all of this is good for the lead gen, er, rev share gen industry. Focusing on the leads that drive sales rewards honest and innovative publishers as well as rewarding buyers who have perfected their inbound sales processes. Any fly-by-night operators who once made a killing sending old, misled, or outright fraudulent leads to buyers will soon find themselves out of business.
So thanks Jay for the conference – it was enlightening and I’m excited to attend the next one – but you might want to register the domain name RevShareCon.com for the future…

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