• by Zephrin Lasker , April 9, 2008

Federal Reserve Chairman Ben Bernanke has struck many an assuring note in 2008, but none reassuring enough. The imminent slow-down in the economy is not particularly surprising - we all knew for some time that the credit well had been poisoned. What's taken marketers by surprise is that the antidote doesn't seem to be working.

2008 was supposed to be different from the last economic slow-down in 2001. Those were more uncertain times, dominated by wildly fluctuating markets and cost-per-thousand impressions (CPM) banners. Advertisers didn't even know whether anyone saw their banner advertisements.

But this time around, online marketers reasoned that they could rely on search engine cost-per-click (CPC) marketing. By paying only for clicks, online marketers felt reassured that the brave, new world focused on a high return on investment (ROI) would deliver on its many promises.

Sadly, these promises have been broken.

For many search engine marketers, the competition for clicks on campaign critical keywords has been intense, resulting in campaigns performing at high CPC metrics. What's more, click fraud has been on the increase over the last year. A recent study by Click Forensics estimates that the industry click-fraud rate in Q4 2007 was at an unprecedented 16.6%.

It's too early to say, but these factors contributing to falling ROI could well be behind "The Mystery of Google and the Falling Clicks." The search engine giant that had seen clicks grow by an impressive 31% quarter to quarter in October 2007 had to settle for progressively lower growth rates in November (27%), December (12%) and January (0%).

Online marketers are not jumping from the search engine marketing ship just yet - but the data definitely suggests that some of them are gradually walking way.

But just where are they walking to?

An International Data Corporation report suggests that many marketers might be climbing one step higher on the ROI ladder and embracing cost-per-lead (CPL) campaigns. The numbers certainly bear this out. Online lead generation has been growing at 71% year to year and is expected to cross $2 billion this year.

It is easy to see why marketers are attracted to CPL campaigns. Impressions and clicks are like vacation spots you have never been to and seen only in brochures. Their promise is uncertain. What looks like a setting sun on the brochure might in reality be a discarded orange.

On the contrary, marketers only pay for conversions in a CPL campaign. To continue with the vacation analogy, with CPL advertising, we are already at the beach, watching the sun with the knowledge that all is well. Pop open another Corona.

If only it were that simple. All is not perfect in the CPL world. As we know, the online lead generation has often been in the news for the wrong reasons.

The primary factor contributing to the problems in the lead generation industry is the lack of transparency, which has robbed advertisers of valuable campaign insight on many levels.

Take the function of media planning. Unlike CPM and CPC marketers, CPL advertisers have no planning resources that allow them to access a listing of lead generation publishers and networks.

What's more, because advertisers have no insight into where their offers are running, they cannot map leads to their respective sources, and make informed optimization decisions. It's no surprise that many advertisers, particularly from the larger brands, are skeptical of CPL campaigns.

But things are changing.

Advertiser demand for transparency is driving reform in online lead generation. In recent months, industry organizations like the Internet Advertising Bureau and the Online Lead Generation Association have been working hard to make sure that transparency is at the forefront of industry discussions. Media planners can now access industry directories like the Pontiflex GENList publisher directory and connect directly with publishers. Many industry networks are revealing their member sites and making the giant leap to transparency.

These are all developments that bode well for the future of online lead generation - and indeed online advertising. Online marketers can now leverage the transparency of the CPM/CPC worlds and the inherently superior ROI of CPL campaigns. They can have the best of both worlds.

And these are reassuring words. Even Mr. Bernanke would agree.