Commentary

Water Seeking Its Level: Economic Impact For Online Lead Generation

For those that have been around me for a while (unfortunate suckers) they've heard me say time and time again: "Water seeks its level" -- we're big on analogies at our company, whether it's nature, sports or some random comedy that we reference on a regular basis ("Anchorman," "Along Came Polly" and "Blades of Glory" are some of the most commonly used, in case you were wondering). What we are usually referring to is our business philosophy in the marketplace.

Over the last several years we have witnessed a very interesting evolution in the online lead generation space. Internally, we insisted that all of the incentive-based paths, the pre-checked boxes (also called opt-outs, regardless of what the lead-gen provider wants to call them) and other "non-user friendly" methods of generating leads couldn't last. I will be the first to admit, it had/has lasted a lot longer than I expected, albeit not as widespread as it was.

At first, I thought, there is no way the quality of the leads would be high enough for advertisers to keep spending the money. We were right for the most part, but two things happened: first, advertisers liked the additional direct marketing opportunity, so they simply paid less per lead -- and, second, something I underestimated, was the ability of "online lead generation" companies to continue to sign new advertisers, acquire new budgets and continually burn more and newer advertisers until their leads were so bad the advertisers cancelled. This left companies that were trying very hard to deliver the highest quality leads, stuck with being guilty by association and/or dealing with price reduction/cancellation issues because of these problems.

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As another Performance Insider columnist commonly says, "We are left picking up the pieces of their mess." We have a saying around here: "There is no such thing as a 'bad deal,' if you are dealing directly with an advertiser." The offer may need to be priced more accordingly, but if the advertiser is utilizing what online lead generation has to offer -- I spend $1 on X amount of leads and it = $x revenue, then in theory almost no advertiser ever would go away. Another reason I didn't think the aforementioned paths would last is because I figured there's absolutely no way that companies that have spent billions on their brand's good name and recognition, would allow their offer to be placed in an incentive-based path or even on a page with opt-outs, whether they were one of the opt-outs or not. What I drastically underestimated were the "online lead generation" companies that would blatantly lie or not tell advertisers that their offers were running in these paths. This arrogant attitude of our fellow companies has done, in some cases, irreparable damage to our specific industry.

The point is that we find ourselves in the midst of a real-deal recession. Whether the immediate effects have rippled through yet or not -- it's coming. I've read a lot recently about how the online lead generation space is primed to make a big run during this period (I'm leaving search out on purpose, that is a beast in itself that advertisers will obviously maximize during these times -- in my opinion, anyway).

I believe it is true that online lead generation has an opportunity to really explode to the next level. But the beauty of it is this: the water is really going to seek its level on this one. Advertisers will not tolerate anything shy of measuring metrics to the best of their ability -- demanding full exposure and transparency, robust targeting capabilities to help operate campaigns more efficiently, and monitoring direct response and ROI conversions. And when I refer to these latter phrases -- I am not talking about the buzzwords; I'm talking about an advertiser looking at how much revenue they generate or how much short-term revenue potential exists in this medium. It is no longer going to work for companies that claim to be ROI-focused (seems like all you have to do is call yourself an online lead-gen company, and you get some aristocratic right to claim you are ROI-focused).

We are entering times where the "path of least resistance" led many to the short-term buck, to the water seeking its true level. For those companies that have invested heavily in technology to help Web sites extract the extraordinarily high eCPMS that opt-ins/lead gen provides (without cannibalizing the user experience), invested time and energy, and are legitimately focused on conversions for their advertisers -- these companies will be the water for the 20-foot Maverick waves in Cali, not the toxic water I see every time I head to Newark Airport.

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