Quiet Period

In “Quality over Quantity” we focus on the general trend in lead generation of both the buyers of leads and the suppliers of leads focusing on producing higher quality, more efficient leads as opposed to trying to simply maximize the volume of leads. In the past several years, those that have been able to make the transition from quantity to quality (while still maintaining good scale) have seen their businesses grow quite significantly. So, what are some of the things that companies have done to improve their quality? I’ll mention some of the companies during my presentation next week, but for now, we’ll take a look at some of the specific tactics that the successful companies have employed. These can be sliced and diced different ways. This is just one way of doing so.

• Media Shift – email and co-registration still account for a healthy amount of lead flow, but many companies that used to rely solely on those channels began to focus heavily on a more distributed approach to traffic generation; in addition they took a more aggressive approach to pruning questionable specific sources of traffic as the returns no longer outweighed the risk; for example, if a company had three affiliates, and one of them produced potentially questionable returns, rather than include their results, the company would stop working with that affiliate in order to reduce the likelihood of them not being paid for all three.
• Technology – saying that companies who chose to do email and co-registration started to do less of it makes it sound as though there is something inherently wrong with those channels, and that is not intended to be the case; the companies with a vested interest in the channels, saw the shift towards quality as a challenge to innovate. Companies began to look at each step of the lead generation process and hone in on areas where technology might aid them in becoming more efficient. This begins with traffic acquisition and extends all the way through data capture.
• Ownership of Traffic – it is my belief that one of the larger trends to occur during the shift from quantity to quality deals with control over the originating traffic. When quantity mattered most, i.e. there were volume commitments to fill, the focus, especially of people selling leads, was simply “How?” As the need for quality arises, companies find it riskier and riskier to completely outsource their traffic acquisition. As mentioned in the example above, if a company deals with affiliates, the tolerance level of buyers for mistakes even if it isn’t the parent company’s fault has hit a point where, some companies (networks) do not want to even risk dealing with outside traffic partners. All told, more and more companies are building in house teams to acquire traffic.
• Consolidation – this is something that appears to have only just begun, and it involves/assists in all of the above points. As we progress, I would expect to see more companies looking to own all aspects of the puzzle; companies will want to own more than one vertical; they will want to have distribution across multiple channels; and, they will want to have technology to help them gain a competitive edge in whichever market they serve. Additionally, lead generators now compete with more than just others in the lead generation space; that too will drive the need to form larger entities that can benefit from increased scale.

When looking back over the results of companies moving from quantity to quality, of them shifting from where they get their leads, to increased use of technology, greater ownership of traffic, and industry consolidation, an alternate title comes to mind – death of the broker. They will always have a role in a world where information asymmetry exists, where one party knows something the other doesn’t, knows people the others don’t. With respect to lead generation though, the broker has become an endangered species. Lead generation is at a point in its evolution where its part of the chain has to add value; someone that simply provides an introduction has value but not long lasting value. And, someone that adds opacity between the buyer and seller of the lead will find themselves out very fast. Today’s broker is Advertising.com and its role with Phoenix or LeadPoint and its with mortgage affiliates. In other words, the biggest tactic of all has been to cut out any piece that does not increase value, because the weakest link in lead generation will get cut.