Have you ever wanted to sit down with the CEO of your lead aggregator or provider and ask a few questions? Recently, I had this opportunity with Payam Zamani of Reply!.
I am sure you will enjoy our discussion. It is both interesting and full of insight. The market is certainly changing and I asked Mr. Zamani where he thinks it is heading and what lead buyers should be considering:
Q: Most Lead readers are familiar with Reply!, but you have had a few twists and turns since inception as Next Phase Media. Can you give us a brief history of the evolution of Reply! Inc.?
A: Reply.com was founded in late 2001, and has been a pioneer in performance-based marketing. Reply! is a major provider of CPL, or cost-per-lead, marketing solutions to the real estate, automotive and financial services industries. After I co-founded Autoweb.com, successfully took it public (now Autobytel), and left the company, I realized that it is critical to the health and vitality of a lead generation business to grow cross verticals. If the auto industry stumbled, real estate could pick up the revenue short fall. If the mortgage industry stumbled, the auto finance business could stabilize the company’s profits and so on. Additionally, I believe a multi-category lead gen business would inherently have superior growth and profit potential, due to its ability to cross sell different offerings and provide consumers with a reason for repeat visits.
So when I started Reply!, I launched the business as a cross-vertical lead generator. For our first few years, we thought it was important to operate a major consumer destination that monetized its traffic on a CPL basis. In 2006, we invested heavily in the relaunch of our consumer site. Think of it as a Zillow-meets-Edmunds. The idea was to provide valuable payoff to consumers after they would submit their leads. Then, the real estate industry progressed, Zillow gained traction, and Yahoo offered a cross-provider solution for home valuations. It became clear that custom home valuations had been commoditized, and we could provide even better pay off to our consumers by providing valuations from multiple sources. Additionally those in lead gen understand that consumer destinations and content sites are rarely good choices for converting traffic to leads. We are, and always have been, a lead generation company. So, based on the above, we decided to focus offering access to the online consumer on a per-lead basis, which led to our lead exchange concept.
Q: What was the driving force behind the recent adoption of the Lead Exchange model and moving from clicks to leads?
A: In early 2007, we experienced the impact of a challenging real estate market on our business firsthand. We saw this as a chance to reexamine the traditional CPL models. We felt that there was a significant opportunity to change the way leads are generated and sold, and do so in a much more scalable manner. We were interested in aggregating maximum distribution and maximum volume through our exchange. We also wanted to provide lead buying segmentation and market pricing to our advertisers. We believe that the ability to segment lead buys by itself will lift usage and the size of budgets committed to lead gen companies.
In April 2008, after over a year’s investment, we launched the Reply.com lead marketplace. Our goal was very clear. We wanted to achieve maximum distribution, maximum volume, maximum segmentation, and market-driven pricing. In other words, we wanted to make the process of buying leads as easy as buying clicks from Google.
Q: Several public disclosures from Experian/LowerMyBills, IACI/LendingTree, and most recently Bankrate.com are showing potential broad weakness in the online lead generation market. How is Reply! reacting to these indicators?
A: No question, the lead generation industry has been significantly impacted by the downturn in the economy and tightening of consumer credit. In fact, in ‘07 and ‘08, several large lead generation companies, including RealEstate.com, House.com, Loanweb, and Loanpage, went out of business or stopped generating leads. Reply! is actually doing very well. During this very difficult economic time, Reply! has achieved positive earnings. We expect significant growth during the second half of ’08, and certainly in ’09. We attribute that success to our cross-vertical strategy, and, of course, to the launch of our new Lead Exchange.
Q: What are a couple of trends, ideas, or themes in the online lead generation marketplace that get you excited about future opportunity?
A: Performance-based marketing represents the promise of the Internet. Cost-per-lead marketing certainly is much more performance-based than CPM or CPC. However its share of the market is small in comparison to its two bigger rivals. I believe that a lead marketplace should offer full control and market-driven pricing. It should allow lead buyers to segment their buys, enable them to buy more of what works while eliminating wasted ad spending, and act as a catalyst in bringing more local ad revenues to the Internet. Additionally, our scalable platform can be viewed as a superior method of reaching the online consumer than CPC or CPM models. As a result, CPC or CPM buyers can move to a platform that requires significantly less expertise and infrastructure, while eliminating the risk of conversion from a click to a lead, or I should say a raw lead.
With our Lead Exchange model, Reply.com will experience significant revenue growth. We will earn revenue from every lead sold, grow exchange capabilities for us and our publishers, and rapidly expand into new categories, both domestically and internationally.
We believe the industry will rapidly expand by allowing existing publishers find new ways to increase revenue through cross selling complementary services and the best part is that they won’t have to build retail or wholesale networks, just plug into the marketplace. If publishers are not already lead generators, we will provide them access to landing pages so they have an alternative to AdSense for maximizing their yield per page view.
But most exciting is the ability to grow the online marketing segment. We will benefit from the millions of local businesses that, to date, have not had a viable option for online marketing. As these businesses move their offline ad budgets online, Reply! is positioned to capture a significant share of these new ad dollars.
Q: What will change in online lead generation over the next three years?
A: Lead Gen 1.0 will die or become irrelevant and be replaced by models that offer significant control, communicate quality, offer segmentation and provide market-driven pricing. We believe the opportunity for growth in the cost-per-lead market is massive. Dollars are already rapidly shifting from offline to online models. Online performance based marketing will continue to make significant gains at the expense of traditional media.
Q: What is your vision for Reply! in three years? How will it leverage these changes?
A: Reply! will be the largest lead exchange. We believe our lead marketplace represents the natural evolution of online marketing. It will impact the cost-per-click model, dominated by Google, with a system that is easier, and more efficient, for most service businesses. We have the vision, roadmap and the expertise. Now it is all about execution.
Q: Your life, both personal and business, has been quite an adventure. What have your challenges and triumphs taught you?
A: I was born in Iran in 1971. I’m a member of the Baha’i faith. Growing up in Iran as a Baha’i was not easy. About ninety-eight percent of Iran’s population was Muslim, and, when the fundamentalist Muslims took power in 1979, they made life for the followers of the Baha’i faith very difficult. The main reason behind their actions had to do with their radical interpretation of the Islamic beliefs. For the same reasons that people like Osama Bin Ladin have been able to justify killing innocent people, the government of Iran justified the discrimination against the followers of the Baha’i faith. We were treated worse than the way minorities were treated in South Africa during the Apartheid era.
In the 1980’s hundreds of Baha’is, as young as 16 and as old as 98, were killed. Thousands more were imprisoned. The Baha’is were expelled from government jobs and universities. In a most unusual act, the government also invalidated our passports and blocked us from leaving Iran.
In 1987, at the age of 16, I escaped Iran, with the help of smugglers, and made it to Pakistan. This was a dangerous journey that took many days. I joined my brother and sister, who had arrived there a year earlier, and I ended up spending almost a year in Pakistan. Ultimately, my brother and I were able to come to the U.S. on June 20, 1988 as political refugees. We entered the country with no more than $75 in our pockets, but soon found that through hard work and perseverance there are unlimited opportunities here, amongst Americans, whom I believe to be some of the most supportive people in the world.
It has been a life-shaping journey, and I’m very grateful for the opportunity the United States has offered me.
My background and my life journey have both taught me to be an optimist. I think optimism and passion drives entrepreneurs to take on new risks and challenges. We at Reply.com are certainly not shy in taking on challenges.
Q: What is the one thing people should remember about Reply.com?
A: We believe it is time that businesses Go Beyond The Click™ and profitably embrace ROI-driven cost-per-lead online marketing models.
Do you have more questions for Payam or Reply!? Please comment below.
Is there a lead provider you would like to know more about or questions you would like lead generation market leaders to answer? Comment or send me an email bill [.] rice [@] kaleidico [.] com.
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