Lead Marketplace

Many thanks to Greg Yardley for the compliment on my Incentive Promotion 2.0 article (Read his great take at Free iPod spot market) and the version of this article that appeared recently in the DM Confidential.

Companies in the lead generation space are doing some innovative things, and it's these companies that  provided the inspiration for this piece...

The “interpreter of supply and demand,” that was a definition I came across when trying to figure out how to describe markets and marketplaces. When I hear the word, I think of the stock market, of people buying and selling in hopes of making money. I think too of the physical markets – the bazaars of the Middle East, the Chatuchak Market in Thailand, and of course, of the Internet product market, eBay. All are places where buyers and sellers come to get connected with one another.

Both the stock market and physical markets bring buyers and sellers together and facilitate transactions. What makes the stock market and eBay so unique, though, is their ability to, as the definition of marketplaces says, interpret supply and demand. Prices are not static. They constantly change based on the actions of the market participants. And while well-known, eBay and the stock exchange are just the tip of the iceberg. You can find these types of marketplaces making everything from golf club buying and selling more efficient to now, lead generation.

Whether golf clubs or mortgage leads, what each shares is a focus on offering buyers and sellers two things, a) true pricing and b) better access. With respect to lead generation, true pricing means leads get bought and sold for a closer reflection of their actual value. For example, with mortgage leads, rather than buyers and sellers interacting on one, flat CPA, i.e. $40 per refinance lead, the market would give buyers the ability to pay differential rates based on the characteristics of the lead. Leads from California would have a different value than those from West Virginia. Loans with one minimum loan amount could go for more or less than another loan amount.

Additionally, true pricing also implies that leads from one seller could differ from another seller based on the quality of their leads, i.e. the number of leads it takes, on average, to turn into a customer. Values for leads would go up or down not just based on their characteristics and conversion but also depending on the various economic factors influencing the mortgage banking industry.

The second piece to the marketplace concept, better access, states that buyers and sellers will find each other easier than they could on their own, and they could do so in a trusted, agnostic fashion. Just as eBay means that you no longer have to rely on the comic book shop down the street as the only option, in lead generation it means sellers have a larger pool of potential buyers, increasing the likelihood of their making more money. This access plus the ability to pay a price that suits them, makes for an interesting opportunity. The big question, can it work? The answer, like so many things is yes and no, at least for the current state of lead generation marketplaces, which is all of two companies servicing only a handful of verticals.

If you have a small site that collects leads, you will make more by going to the market than the equivalent of the local comic shop – an aggregator or affiliate network. The problem is that if you are a bigger player, you will make more money by disintermediating the current marketplaces rather than embracing them. Unlike the buying of keywords, the purchase of leads is not yet an efficient system. Leads themselves are complex, and as discussed above, making sense of them means analyzing them for content and performance. The majority of big lead buyers are not able or willing to do that. They need relationships, and in their eyes the marketplace is just another relationship, not a solution for them.

At some point in time, a lead marketplace will not only make a lot of sense but will become the most profitable solution for majority of the buyers and sellers. Currently, though, they are closer to bid management systems, that is, they work well enough for everyone but great for no one. They are the solution to turn to first but a competency to be built and managed in-house to achieve ultimate scale. This of course could change when the market becomes less fragmented and more efficient. In the meantime, those marketplace pioneers will just have to hang in there and not get too frustrated playing second fiddle. It’s not their fault; it’s the markets’.

Comments

[Joshua Reich]

One definition I like coming back to is not so much what makes a market, but what properties a market should have to serve the public good. This definition comes from the last chapter in a great book about market design, "Market Microstructure Theory", by Maureen O'Hara. She quotes from the Commodity Exchange Act of 1974, which "defines a market as meeting the public interest if it satisfies three requirements: reliable price discovery, broad-based price dissemination, and effective hedging against price risks."

While I think you touch on the first two points, the last point is important, and something we don't really see in current lead marketplaces. Namely, the ability for market participants to either hedge against or speculate efficiently on future risks. This feature is lacking for two reasons. Firstly, while leads are certainly traded for some 'price', the lack of a centralized pricing agency means that there is no assurance that the price is fair. Secondly, the ephemeral nature of leads is such that short-selling, or other means of taking risk from traditional equity markets, is difficult. However, we can look to other markets where the trade is in goods that don't retain their value whilst sitting in inventory and find that natural mechanisms have arisen to address the ability to create effective hedges.

This has been at the core of what we are doing at RootMarkets, and hopefully the products to support this will be GA soon.

[Andy Jacob]

Jay and josh! Salude. You are both on top of it with regard to the lead marketplace, and the commodity of them. Great input. Based on your comments, leadpile can do better. By way of introduction,Leadpile.com is the World’s first online leads marketplace, specializing in exclusive leads for Lead Buyers and Lead Sellers, with 2.7 Million Leads moving through our system. We are the largest online, centralized Exclusive Lead Marketplace in the world. Leadpile, the first company to ever offer a secure, online centralized location for Lead Buyers and Lead Sellers to engage in an efficient leads marketplace for exclusive leads, allows the actual Originators of Leads, and the Users of Leads, to decide what price they are each willing to sell, and buy, their leads at, and the way in which the lead delivery will take place.
The Leadpile marketplace is quickly becoming the favored alternative for Affiliates and Merchants who have been transacting business in “Old ‘Fashioned Affiliate Programs”. “Old Fashioned” Affiliate Program Merchants and Affiliates can finally transact business for exclusive leads in an efficient marketplace, and place themselves in the position to finally receive the benefit of a truer supply and demand curve, which leads to more efficiency in the exclusive leads marketplace”.
“The Internet Lead Space has been a bifurcated marketplace for too long. The Leadpile marketplace places Buyers and Sellers of Exclusive Leads in the most efficient marketplace possible. The Marketplace combined with our revolutionary I-SAVENOW Form, places Lead Buyers and Lead Sellers in the position to engage in an efficient leads marketplace.
"As paid search continues its steady growth, Affiliates and Merchants will be placed in the position to have to decide where they will place their online advertising dollars in order to further compete in the expanding online world. As online advertising continues to occupy a significant portion of many company’s overall advertising budget, both online ad agencies and Marketing executives will have to further focus on what approach and creative strategies will best increase their return on investment (ROI), and lower their acquisition costs. Bottom line, online players will have to pay much more attention to online lead generation and acquisition costs as online advertising gets more competitive each and every day. The online Lead marketplace for exclusive leads only makes sense, and that is why the response to the marketplace has been explosive.
“The online space will continue to get more and more competitive. Only those companies that can keep their acquisition costs low will bloom in the burgeoning online world. Today, many companies are not taking full advantage of the online opportunity, internationally, nationally and locally. Only those Companies that find the most direct route to their target consumer will win.” It is why the Leadpile online marketplace for exclusive leads is a win-win for both Affiliates and Merchants.”

[andy jacob]

Jay:
I have a "white paper-ish" type information essay on the Leadpile model. I would like to post it so I can get some feedback for your readers.....Is this ok??

Andy Jacob
leadpile

[andy jacob]

Great work! I would love some feedback from your readers on our recent offering for Bloggers. May I please get some feedback, or constructive criticism, on the traction you think we may receive from helping Bloggers earn money in this way? So far, it is working very well. However, I am looking to make improvements to the system.

Thank you:
Andrew Jacob
CEO
Leadpile.com
Leadpile, The World’s Largest Exclusive Lead Marketplace, who recently launched it much anticipated “Open Lead Market”, has opened its online doors to Bloggers to enable them to earn tremendous income by joining the burgeoning Online LeadGen Space.

For the first time in E-commerce History, Bloggers are now able to sell Leads produced from their Blogs directly into the Leadpile Marketplace.

With The Leadpile Lead marketplace (check it out here: http://www.leadpile.com/sell-leads.html), Bloggers can enjoy the tremendous income opportunity that selling leads will offer them. Bloggers can now simply copy and paste Leadpile’s revolutionary I-SAVENOW form on their very own Page. It is so simple, anyone can do it. Detailed information on Bloggers Advantages can be found here: http://www.leadpile.com/sell-leads.html

Many Bloggers have the desire to share their thoughts online, and at the same time, make money by doing so. Leadpile will help Bloggers every step of the way, and even assist to help Bloggers design their Blog with the I- SaveNow FORM. Bloggers simply post their thoughts online, place an I-SaveNow form on their page, and let the money roll in. When a person signs up for one of the many services offered through the I- SaveNow FORM, the Blogger will earn money when the lead is sold real-time, directly into the Leadpile Lead Marketplace. It is that easy.

Bloggers will have access to LeadPile advanced online platform that brings the Lead Sellers and Lead Buyers together. Bloggers are provided with an online account that will give them instant access to reports where they can see everything they want to know about their Blog performance.

It is our hope that the “The Leadpile Lead Marketplace” opens up an entirely new universe for Bloggers and for the whole Affiliate Marketing Industry. By using the I-SaveNow Form, a Blogger can sell Leads, produced from their own Blogs in various verticals, directly into the World’s Largest Exclusive Leads Marketplace. In addition, Bloggers can even decide their own minimum price point for each lead that is placed into the LeadPile Marketplace, sell their leads into our “Self Select” and “Batch Delivery” programs, and decide for how long they want to leave them available for later sales in our system. We hope the system helps Bloggers earn tremendous dollars in the burgeoning LeadGen space.

What do you think? Is this a viable opportunity for Bloggers to capture income? ACJ