Thursday, August 28, 2008

Performance Insider: Lead Generation Evolving As Advertisers Smarten Up

Lead Generation Evolving As Advertisers Smarten Up

I'VE BEEN WRITING COLUMNS FOR a number of years now on the state of the online lead generation space. One of the things that strikes me, in the nine years I've been in this space (now THAT is a frightening thought), is that not a whole lot has changed at the core. Sure, there have been outwardly facing changes -- we had "data collection," "data dumping," etc. --that just led to massive amounts of spamming. Now consumers have managed to manage their spam, and email is as strong as ever. Different, but stronger. And, of course, we had the explosion of incentive-based paths ("free" this, "free" that) that just destroyed users in the process of running them through offer after offer after offer. Although there seem to be some players still engaging in this practice, it's gotten watered down to almost the same level as companies that still just blanket spam, i.e. the lowest players on the food chain. I give these folks about another 12 months or so and at that point, for the most part, they will be extinct. Many consumers have had enough (or finally gotten wise) and advertisers that I know are just sick of it.

When I first started writing, I always talked about how advertisers needed to be careful because there were are a lot of shady players in the lead-gen space and you never knew what you were going to get. With search or other activities, advertisers had to figure it out and work with it for a while. But at least they knew they weren't getting straight-up ripped off: paying for something they believed to be search, at least a consumer clicking on a link they paid for.

This is not always the case for online lead generation. Advertisers continually bought -- and continue to buy --leads from what they think are legitimate "opt-in" registration paths, but the source is actually delivering these leads from some other registration path that is corrupt, or at least not visible to the advertiser (same thing in my opinion).

What I've seen transpire is not so much a lot of sources cleaning themselves up and changing their ways, but more that advertisers have been getting smarter, doing things like testing multiple sources and monitoring conversions based on sources. Sure, it's not the best way for a market that really should be much bigger than it currently is, but it's an excellent start. This has led to a drastic decrease in ad dollars being spent for sources that are not converting for advertisers, particularly in the current economic environment wherein ROI-focused advertisers are watching their dollars closer than ever. It's sort of an organic development, but water and competence will inevitably seek their level.

I read all the time how "lead generation is a must in every advertising campaign," "don't overlook lead generation," etc. and wonder how many times I can read the obvious being written. Of course lead-gen should not, nor is, being ignored by advertisers. It's just that the medium with which advertisers choose to generate these leads is where a huge challenge lies. If you look at search, what percentage of keywords drive a consumer to some type of form to fill out (aka a lead)? I don't know the exact number, but it's pretty high. If you look at banners, what percentage of those drive consumers to a lead form? Again, the number is high. We could say the same for email marketing and the manner in which it drives consumers to some sort of form.

I think what many people are referring to when they talk about "online lead generation" is when the lead is captured on a particular site during or right after a consumer's registration for some service, product or content. The problem here is that many sites were created solely for this purpose: to get consumers to select offer after offer after offer after signing up for some misperceived service or content-based site. Consumers and advertisers have gotten roasted with these.

Then an interesting thing started happening. Web sites started taking note of the exorbitant eCPMs that could be generated by showing offers to their users after registration. The only caveat about many of the providers of such a service is that they destroyed the user's experience, thus ending or at least significantly diminishing the users' trust of that site. I definitely don't have these metrics, but I'm willing to wager a lot that a user's lifetime value decreases with their lower level of trust.

In this current economic market, we've seen advertisers that are strictly ROI- focused keep up their budgets (and in many cases increase them) and Web sites are leaving no stone unturned with respect to extracting as much revenue from their user base as possible. This leads to showing third-party offers after a registration, which is great as long as the offers do not interrupt the reason the user visited the site to begin with.

Almost six years ago, while I was exploring the start-up of my company, I said that within a few years, every site would have some form of registration. It may not ring true to many people out there, but it was not nearly as common as it is today. Now all sites collect some level of a registration. I don't know exactly when, but almost every Web site publisher will end up showing some type of third-party offers in their registration paths. Done right, advertisers love it because it converts, and Web sites get to monetize their user base cleanly and transparently.

Dan Felter is Chairman of the Online Lead Generation Association and Chief Executive Officer of New York-based Opt-Inteligence, Inc. He can be reached at

Performance Insider for Thursday, August 28, 2008:

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