Over the last two months, I’ve read many predictions for the online advertising industry in 2007. Discussions of the future of search, banners, video and social networks abound, but one segment of interactive marketing that’s conspicuously missing from these predictions is online lead generation.
Although not yet a household name, online lead generation was by far the fastest growing category of online ad spending in 2006, with a reported 71 percent year-over-year growth. Marketers are increasingly adopting this growing medium because it provides something search and the other more publicized vehicles do not: consumers’ explicit permission to be added to your database and contacted for future marketing purposes. This is a benefit that will only grow in importance as marketers try to cut through the ever-expanding glut of advertising and marketing out there and build true, one-to-one relationships with interested consumers.
That being said, below are five predictions for online lead generation in the year ahead.
1) Big brands adopt online lead generation. Online lead generation has traditionally been the domain of direct marketers, but that’s quickly changing. Big brands in CPG, pharmaceuticals and retail, among other categories, are increasingly recognizing that the explicit consumer permission afforded by online lead generation is the all-important first step in beginning a dialogue with consumers and building long-term brand relationships. In addition, the performance-based nature of online lead generation is far more cost-efficient than using other online vehicles to build your consumer database. Together these benefits will help spur brand marketers to make up a significantly larger percentage of the online lead generation category in 2007 than in previous years.
2) Category to grow beyond $2 billion. Big brands moving into this category mean big-brand dollars. Couple that with players who’ve already “seen the light” (direct marketers, magazine publishers, continuity clubs, financial service providers, etc. ) and this category will grow at an even faster rate than in 2006 and take a bigger piece of the online ad dollar pie as well. In fact, I predict the channel is going to double in size to more than $2 billion -- or just over 10% of the overall online spend projected for 2007.
3) Downsizing in the industry. It may seem counterintuitive to predict a shrinking pool of providers after predicting the category will double in size, but I believe we will see considerable downsizing in the industry in 2007, as advertiser demand for increasingly sophisticated services drives less advanced players out of the market. Further, many of the newest entrants into the market will close their doors as permission and privacy practices in online lead generation come under intense scrutiny, as indicated in predictions number four and five.
4) Conspicuous consent standards are adopted. A consumer’s clear and conspicuous consent is a crucial component to ensure quality leads. That means including straightforward language prominently displayed in the offer that informs consumers that they are consenting to share their information with the marketer and be contacted regarding the marketer’s offer, products or services. Burying consumer consent on another page in the offer’s terms and conditions -- a practice among less- scrupulous providers -- may produce a high volume of leads, but only results in uninformed (and potentially angry) consumers and low-quality leads. To ensure the long-term viability of the online lead generation channel, ethical industry players -- with guidance from industry associations like the Interactive Advertising Bureau -- will adopt clear conspicuous consent standards in 2007 to differentiate themselves from the bad players, retain marketers’ confidence in the category and avoid future government regulation.
5) The ax falls on data skimming. As ethical players continue to differentiate themselves from the less scrupulous in 2007, the practice of data skimming -- reselling your lead’s personally identifiable information -- will no longer be tolerated. Problem number one is that a lot of brands don’t know their lead generation provider is engaging in these practices. Data skimming compromises a brand’s trusted relationship with a consumer and essentially subsidizes the provider’s business with the fees you are paying. As with the new consent standards, the top providers and industry associations will serve as the stewards of this message to marketers, leaving the rest of the providers to conform to the new standards or lose business.
As a final prediction, I have no doubt that this December online lead generation will take its rightful place among the other top interactive vehicles in industry predictions for 2008.