Lead Gen Questions (Part 1): What Am I Paying For?

Jennie Scholick Nov 5, 2014

A few weeks ago we wrapped up our Resellers blog series--a group of posts that exposed some of the potential downsides of working with resellers. While, for many branded companies, working with resellers is a requisite and fruitful part of their business strategy, the act of relinquishing total control over marketing and sales can negatively impact both the bottom line and the brand’s reputation. Again and again that series of posts stressed the need to know exactly who is selling your brand, how they are selling your brand, and where they are selling your brand. Only through a combination of working with trusted partners, careful monitoring, and clear agreements with resellers can both sides truly benefit.

This next series of blog posts will look at another type of partnership that also requires a combination of trust, oversight, and cooperation in order to ensure positive outcomes: lead generation publishers. In contrast to resellers, however, lead gen sites rarely have direct or long-term agreements with brands. There is generally less oversight and transparency into how they produce leads.

These posts will cover some of the ways that lead gen sites work, how they’re driving traffic, and attempt to trace what happens between the time a customer enters a keyword into a search engine and the moment when the lead gen site sells that information to a brand. As we’ve noted many times before, when working with partners--be they resellers, affiliates, or lead gen sites--what you don’t know can hurt you. From the bottom line to legal compliance to brand dilution, when your brand, trademarks, and logos are in someone else’s hands there’s at least as good of a chance for harm as for mutual benefit.

So, what are Lead Gen Sites?

The Internet Advertising Bureau’s annual Advertising Revenue Report defines the process of lead generation as follows:

Fees paid by advertisers to online companies that refer qualified potential customers (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts in to being contacted by a marketer (email, postal, telephone, fax).

In short, lead gen sites collect information from customers, usually via an online form, and then sell that consumer information to companies. The IAB considers any site that collects information (rather than simply a click) to count as lead gen, opening the category not only to applications, such as for auto insurance or a mortgage, but also to surveys and contests. In the same document, the IAB asserts that lead gen revenues comprised 4% of FY 2013 advertising revenues--or about $1.75 billion. That’s $1.75 billion paid last year by brands to these sites.

So, what are you paying for?

Let’s start by looking at the most basic example. I’m looking for car insurance so I go type “car insurance” into Google. Here’s my results page:

car insurance SERP

You see lots of branded sites both in the organic and paid results, but also, in the right-hand column of search ads, you see a lead generation site: US Auto Insurance Now.

Clicking through the ad leads us to the following landing page that asks for some information about whether you’re already insured and your zip code.

US Auto Insurance Now Landing Page

Filling in that information (or entering your zip code in the original ad) will lead you to this form, asking for information regarding your car.

US Auto Form

Following pages will ask for personal information about the driver--name, age, marital status, past accidents, anything relevant to their insurability--as well as their email address, street address, and phone number. That information will then be available for sale to partnered insurance companies. How those rates work depend on the publisher network. Increasingly, networks are offering varied types of dynamic pricing and bidding on leads.

Once that information is obtained, many—even most—of these publishers will then show a page of affiliate links:

US Auto Aff Links

Clicking through those links will take the user to a brand’s page through an affiliate link. Their zip code will often already be entered, but they will need to reenter all of their personal identifying information.

In this site’s case, I also received a page of affiliate links immediately after entering my zip code. The webform appeared in a new browser tab and a page identical to the one above appeared in the original tab. The site ensures that even if you don’t make it all the way through their info form, you will at the very least be served a page of affiliate links.

Upon filling out the form, I immediately received three email offers from PEMCO, State Farm, and Geico.

So, what’s the big deal?

In this case, US Auto Insurance Now is doing exactly what one expects a lead gen publisher to do: pull in customers who know they need car insurance but don’t know exactly what provider they plan to go with, collect that customer’s information, and then sell that information to insurance brands who want it.

That said, there are a couple red flags that arise right away: how much is a lead really worth when that customer has been inundated with affiliate links before your email hits her inbox? How much is it worth when your closest competitors receive the same information at the same time?

A question also comes up about the relationship of local agents to national insurance brands. In the case of US Auto Insurance, they are a publisher within the AdHarmonics network. AdHarmonics markets itself as providing targeted leads to local agents—but they also provide affiliate links to national brands’ sites. Is there a way to be sure customers aren’t receiving mixed messages: one from a local agent and one from the national brand?

The situation gets even more complicated once brand bidding and a variety of other less scrupulous marketing techniques come into play. We’ll start looking at those next week. In the meantime: any questions about how lead gen works? Do you work with any of these kinds of sites? We’d love your thoughts on the worth and the quality of leads brought in through these channels. Leave a comment below or contact us!

Topics: paid search

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