Push vs. Pull in Lead Generation

If you follow the public companies within the Internet advertising space, you should have some familiarity with the rise and fall of Valueclick. The stock went from around $13 in the middle of 2006, doubled within five months before the start of this year, and then added roughly 30% more by late May. And, it managed to do this despite much press surrounding its lead generation practices and even an inquiry by the FTC. In that wonderful period between July 20th and August 3rd, though, it lost more than 30%, a backlash against the company lowering its estimates slightly due to expected changes as a result of the government inquiry. Always ready to pounce, this drop has even prompted one law firm, the corporate version of the ambulance chaser, to file a class action lawsuit against Valueclick alleging that the company’s lead-generation practices violated the Securities Exchange Act of 1934 and Federal Trade Commission Guidelines. Now comes word that some mortgage ads might have violated FTC guidelines. You can almost understand why when you consider that one of the largest mortgage lead generation firms advertises to consumers for them to calculate their new payment; although, they only receive a form upon clicking and phone calls upon submitting. Says Lydia Parnes, director of the FTC’s Bureau of Consumer Protection "Many mortgage advertisers are making potentially deceptive claims about incredibly low rates and payments, without telling consumers the whole story." Whether that burden falls on the advertiser (usually the lead generator) or the one actually servicing the lead remains open. Regardless, much like some of the upcoming issues in mobile, we see more evidence of an environment where marketers feel they must push the envelope to make money.

That Valueclick has received attention for its lead generation practices hurts more than just Valueclick. It has the potential to cast doubt on all of lead generation. Look again at what the shareholder lawsuit alleges, i.e. "the company’s lead-generation practices violated the Securities Exchange Act of 1934 and Federal Trade Commission Guidelines." If you were not intimately familiar with Valueclick, and especially if you did not currently operate in the online direct marketing space, what would you think? What you see is a billion dollar company, one mentioned as a potential acquisition target in the same breath as names you trust like Microsoft and Yahoo. Additionally, what would you think when reading that mortgage ads may have violated FTC guidelines? Even a company with online experience, even some lead generation experience might shy away – turning down vendors, less open to new ideas, etc. All of which is misinterpretation of the issue at hand. Both the Valueclick questions and the mortgage ads stem from the same issue – pushing leads rather than the pulling of leads. It’s about whether consumers filled out the form for the right reasons and the ultimate benefit to the buyer of the lead.

Valueclick makes a lot of money in the selling of leads. They also operate one of the largest incentive promotion businesses. Consumers who come to their incentive promotion sites do so given an interest in seemingly free or substantially subsidized product of value to them, which can range from $50 to several thousand. The consumer earns their item using their data as currency – by signing up for credit cards and other offers, some of which require money. That in itself presents a problem for the FTC – the use of the word free when often the user cannot obtain the item without incurring a cost. But, that has nothing to do with lead generation. Lead generation comes into play as users, in their quest for the product, typically see a series of offers before interacting with those offers that count towards the acquisition of the product. If you analyze the intent of the users that fill out these offers which are almost always lead generation offers, you end up with a ratio of want the service to want some other product factors below what an average advertiser buying leads would expect. Even advertisers understand this dynamic, i.e. that they will receive an abundance of non-targeted leads, it doesn’t excuse someone like Valueclick in the FTC’s eyes as users on the whole do not understand. In mortgage too, the question is not about the buyers of the leads or the practice of buying leads but about the intent and comprehension of the user. This is where a major shift is occurring.

In the current model of lead generation, even those not as extreme or questionable as the inclusion of these offers in incentive promotion, it’s all about getting the advertiser leads. It’s the old saying of when you have a hammer everything looks like a nail or perhaps the round peg in a square hole. The peg might fit, but that doesn’t make it right. This is the push approach. Pushing leads focuses on funneling as many leads to advertisers as possible, filling lead caps, and squeezing every dollar out of the marketing mix as possible, without too much concern for whether the user will receive what they want. Think of the push approach like a search engine with only paid listings, one that purports to offer relevant results. This engine never discloses the paying nature of the listings nor do they help the consumer understand that while they could qualify for the offers listed, they might not make the most sense. The pitch to the consumer is that this site will match you to the right buyers, but it’s the right buyers for them to make money not for the user. It’s a model that makes and has made a lot of companies incredible amounts of money, but it’s a flawed model for the long-term, and we’re seeing it now. The future is about pull marketing. The future is about not forcing leads to buyers just because they might qualify. The future is about providing leads to end buyers that make the most sense for both the buyer and seller. It’s about lead buyers being able to say what they really want, about better feedback channels, and greater transparency in the lead generation process. It’s about educating consumers, making them smarter before the process begins. It’s about doing the same business, if not more, on fewer leads. This is pull marketing, where lead generators collect and add value, and the lead buyer takes those that make sense to them. It’s not easy, and it will take effort on both parties if it is to work, but if it isn’t done, the damage to both parties is far greater.