• by Court Cunningham , January 3, 2008

Online lead generation is a booming but increasingly scrutinized industry.  While many of the older players are struggling to set standards of fairness and transparency to protect consumers and businesses alike, the local market is pioneering a new way forward that provides transparency for both advertisers and consumers.

Many lead generation companies operate by capturing a consumer indication of interest in a particular product or service and then selling that lead up to 10 times to multiple merchants in order to recoup the upfront marketing cost. This model has several flaws:

·         For businesses buying the leads, they are entering into a competitive, low probability of success sales scenario.  They must compete with up to 10 other merchants, and these leads chew up sales time given their low conversion rate into business

·         For consumers, they are bombarded by multiple merchants and in the case of incentivized lead gen, have to jump through several layers of hoops designed to increase "breakage" -- in other words, make it so hard to redeem your prize that you give up.

Clearly, this model has many challenges for both parties.

In the local market, some companies are pioneering a more transparent approach, by buying highly specific search terms, driving consumers to a landing page that is highly related to that search, and then closing the conversion gap by getting the consumer to pick up the phone and call the local business. The model works because:

·         The media buyer is only buying highly targeted inventory, which indicates a high level of consumer interest.

·         The consumer is directed to a content-rich page that helps them further refine their search.

·         Leads in the form of trackable phone calls flow into merchants on a daily basis and convert at very high rates

This model has 2 main benefits over traditional incentivized lead generation

·         Instead of competing with up to 10 other businesses, the merchant is getting leads looking for them exclusively.

·         The consumer, instead of filling out lots of forms and redemption certificates, is moving quickly and efficiently from intent to purchase.

·         Because consumers are being trained to expect more relevant landing pages, their searches are becoming more specific (now 4.5 terms per search query up from 2 terms per search query 18 months ago), which grows the inventory of hyper-targeted search terms for advertisers. 

Today, 63% of consumers  primarily search for local businesses online -- shifting search queries away from the Yellow Pages; this is up from 44% in 2005.  Changes in consumer search behavior have unleashed  a torrent of ad spend migration from offline yellow pages to online.  Simultaneously, we are witnessing a similar evolution in marketing and lead generation practices that benefit consumers and local merchants equally.