Online lead generation is still in its infancy, but I think it is still in for a major shift in business methodology and structure. Today, most of the lead generation market looks barely a step beyond cost per impression marketing, but we tack on a Web form to improve our traffic monetization. I think this presents some BIG opportunities for the future and disaster for those stuck in our current paradigm.
Before I jump into the actual ideas I think are money-makers, it is helpful to understand the assumptions and trends that drive my thinking. Here are the things I think will drive new outcomes in lead generation:
- Increased personal connectivity to the Internet and Web services
- Proliferation of social networks and services
- Inefficiency and risk in current lead generation model
- Volatility in supply versus demand within the online lead marketplace
- Natural trust and action model evolving on the Web
Community Building
This seems to be one of the leading trends and potentially one of the most complex to perfect. Many may discount its importance, citing early lackluster attempts like Geocities, but humans are social and we like to organize by common interests.
The challenge in online community building is that there are no physical boundaries to contain us. We tend to belong to many communities, at a variety of levels of participation. However, nowhere, like the neighborhood you live in, represents and influences your general perceptions and behaviors.
Community building is difficult on the Web, but if accomplished it has incredible lead generation power. Here are some examples of community-based lead generation:
FatWallet: I think this is one of the underestimated community sites on the Web. This is, in it’s most basic description, a forum of bargain hunters. However, it has drawn a powerful community of consumers that interact to explain and alert one another on new products and discounts. Trusted members of this community drive buyers.
Wesabe: This community is very similar to Fat Wallet, but seems to target more specifically banking and credit cards. With a stated community objective of outing “stupid fees from banks and credit cards” it has an edgey side. I also like how the CEO has personally engaged in the social side of things with a standing user open office time and published direct telephone number.
Zillow Mortgage Marketplace: This is a relatively new entry into the space. There has been significant debate on the positives and negatives of the marketplace. The most interesting part of the early experience is that they have been the first that has truly put the consumer in the drivers seat of the lead generation process.
SmartHippo: This is the first true lead generation company that has built a business model on the community concept. It is a clever blend of FatWallet and Zillow Mortgage Marketplace in that it allows community members to share their experiences and brag about their deals and to some extent drive and rate their transactions. (Full Disclosure: I serve on SmartHippo’s Advisory Board)
I think the principle challenge of community lead generation is that it takes a significant amount of work and contribution on the consumers part. And unlike forums and communities dedicate to professional associations or personal hobbies, most of these transactions (i.e., mortgage, education, auto, debt, services) are all fleeting needs, not passionate interests.
This is why I think content-based lead generation like MortgageLoan.com and Bankrate.com have been so successful. They have somewhat simulated the trusted community of advisors with expert content generated in a simple and understandable format.
Person to Person (P2P) Lending
This is one that I think has a lot of interesting potential in our emerging economic and lending environment. As lending institutions continue to struggle for survival they continue to get more restrictive in their lending. Meanwhile, consumer demand persists and may even be increasing.
Any investor will tell you the secret to managing risk is diversifying and distributing it. Our current mortgage meltdown has demostrated that concept only works if the distribution is broad and not incestuous.
A combination of fewer borrowing options, need for dramatic risk distribution (on a scale institutions can’t acheive), and a possiblity that even investors starved for higher returns may drive this model into high growth and acceptance.
Prosper: It seems, this was one of the earliest true P2P lending concepts, co-founded by Chris Larsen (former CEO of eLoan). This plaform uses an auction style format to lend and borrow between $50-$25,000. The lending portion of the equation seems to be the biggest challenge in the P2P model and Prosper seems to solve much of this with a private label solution from WebBank.
Virgin Money: Was a strategic acquisition of CircleLending and is powered by Richard Bransen’s larger than life personality. There stated vision is more a friends and family style of lending However, its platform seems less developed and potentially not a true P2P option, yet. For instance, I could not find a way to lend money, only to borrow.
Lending Club: This P2P lender seems to be very similar conceptually to Virgin Money, but is more transparent about its process to open up it’s lending portion of the network with this disclosure of SEC license filings. The interesting history of LendingClub is that is truly started social–as a Facebook app.
Zopa: This social lender began its operation in the UK and has brought its style of lending into a variety of international domains, like Italy and Japan. Its unique feature is that it uses consumer CDs as the lending or ‘investing” portion of the social equation. This seems to avoid some of the licensing challenges other may be encountering.
The ironic thing about each of these potential lead generation opportunities is that none of them seem to have done a very effective job of creating a robust community or monetizing the potential thousands of lending needs that fall beyond their relatively small lending limits.
Personal Finance Optimizer
This category is just plan fun and full of wow factor. It all started with Quicken desktop software and an early attempt by Yoodle, but these guys seem to have gotten it.
Mint: These guys really bolted ahead of earlier entrant with a combination of Web 2.0 glitz and simplicity no consumer privacy expert would ever think would fly–give me all of your bank and credit card passwords. Having blasted through this long constraining assumption of financial collaboration you now get the wo
w of instant financial advisor showing you how to save hundreds of dollars in seconds.
Quizzle: This group, a division of Quicken Loans, has a clever approach that has quickly drawn in over 30,000 users in 4 months. Talk about a quick audience of eager consumers that want an evaluation of their personal financial health. I see a lot of potential on this platform and with a Quicken Loans marketing team that has quickly learned the art of social marketing. (Full Disclosure: I was involved in some of the very early planning of this concept)
The obvious opportunity here is that these companies are creating a solid consumer base of people asking them to monitor the market for them. And for that they well give very specific financial and interest information so the recommendations are appropriate. The natural punch line is, “I have a customer that says they will buy if you give them a better deal.” Powerful!
Do It Yourself
This is one that I have begun to dig a little deeper into as more and more of Kaleidico’s lead management clients (my company) are starting to generate some if not all of their leads themselves. Generally, this does not seem to be the most efficient model, but as the DIY advertising space expands they may make it a close decision.
AdReady: I saw these folks at LeadsCon, and haven’t seen anything that quite touches it. AdWords is the default platform for simple PPC advertising and distribution, but what if you could layer in professional designer-like banner advertising. Instantly, for minimal investment per day you are not only getting clicks, but branding. And simplicity, a common them on these opportunities, AdReady nails.
Wholesale Lead Exchange
Empty space, big opportunity.
I have heard of a few working in this area, but I haven’t really seen anyone executing on a broad scale. I think it is a huge opportunity.
It is a closely guarded secret that lead aggregators are constantly wrestling with massive volatility in balancing supply and demand. Lead aggregators are constantly fighting media buy forecasting, market news, product shifts, inventory ebbs and flows, client turnover, unbalanced client sizes, etc. This volatility in the lead marketplace leads to thousands of leads aging or spoiling daily, lead buyers disappointed by unexpected surges or missed quotas, and consumers wonder why everyone calls or no one calls.
Today this problem is often dealt with by quite handshakes or temporary alliances to balance lead inventory–buying from one aggregator to another. This, of course, creates huge inefficiencies and generally doesn’t effectively solve the problem in a timely manner.
There are several lead exchanges focusing on the retail portion of the equation, but I think a maturity of this model would be intriguing.
What Do You Think?
There are certainly going to be changes. The economic change has been too dramatic to think otherwise. What are ideas or opportunities that you like in the online lead generation space?
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