LEAD GENERATION

WHAT PRICE PER LEAD?

I read with interest a recent US article http://www.clickz.com/3634831 - which suggested that average prices per lead had been calculated. I truly wondered if the research had any merit in the UK market, or if the buy side was still rather too blindfolded, and price setting was like trying to pin the tail on the donkey!

At a recent IAB “lead generation” taskforce meeting in the UK, the question arose as to whether the taskforce ought to suggest prices for leads in the white papers we produced. The final decision was to keep prices out of white papers - but ensure that the white papers explained why certain leads may cost more than others.

The debate in the room seemed fairly well set - there are brokers who can sell large volumes of leads at low prices and there are specialists who can sell low volumes of leads at higher prices.

At these opposing ends of a spectrum, it became unreasonable for the IAB or any white paper to suggest a “reasonable” or fair market price. Instead, it seemed more sensible to outline and define the factors that might reasonably affect the price of a lead.The X-Y axes of the graphs for pricing appear to be fairly well set also, but they become more varied, for example:

(i) If incentives are used by a supplier to generate a lead for an advertiser, the relevance of the offer will impact on the quality of the lead.

(ii) If incentives are used by a supplier to generate traffic to their site, but not actually to generate the lead, the relevance of the offer, plus the clarity of presentation, will impact on the quality of the lead.

(iii) If the advertiser wants to be the sole acquirer of the lead, then the quality of the lead will be higher than when the lead is also acquired by several competitors and so the multi-variants present themselves.

A rather simplistic and disingenuous argument would be that “every lead will find its own price” and so it is not for the industry to clarify the right price, but allow the market to find itself in due course. However, it is worth pondering just how much life insurance and pension miss-selling took place before the financial services market found itself - if indeed it has. In the early years of online lead generation, who would argue that tens of millions can be spent badly before the online lead generation marketplace finds the “right price per lead”.

And what is abundantly clear already is that the right price for a lead depends massively on the lead conversion process, CRM management, and fulfilment capabilities of the lead buyer. Put simply, the highest quality lead, sourced from the hottest hotbed of qualified leads in the world, is valueless the acquirer who does nothing with the lead for a year. As always, there’s more than one way to look at things. Keeping aside the vast expanses of the US and their “quantity and speed over quality and caution” mantra, let’s get back to the issue of pricing leads in the UK.

Worth pondering, in all this, is whether an advertiser can truly obtain “impartial” advice from a company that actually “sells”, or “buys and sells” or “generates” leads? In academia, a “conflict of interest” is generally volunteered when a conflict of interest might be present. For these reasons, I hope that the IAB taskforce, and the white papers we produce, will go some way to introducing a “best advice” philosophy, and an “utmost good faith” principle, ensuring that each company offering a lead price will explain - as well as it can - why that price is relevant to the particular methodology used in generating or selling a lead.

Until such time as the supply side is ready to volunteer itself to the transparency of definitions for each “lead generation processes” - which I believe it will do in double-time - the buyer should test, assess, revise, optimise, and assess a wide variety of lead suppliers.

After all, it is rather simplistic and plain wrong to believe every customer can be acquired for the same price as they are acquired through a Google PPC campaign, just as it is rather simplistic (and plain wrong) to believe every customer can be acquired for the same price as they are acquired through a billboard campaign.

At the same time as all these factors are known, the growing band of companies involved with the IAB taskforce, it is clear that “online lead management” and lead generation are areas of online marketing that rank highly in the thoughts of most marketers. The recession has done much to inspire a search for increased efficiency in many areas of advertising and marketing.

© 2009 GOALLOVER.