FTC and Lead Generation

Last May, ValueClick can under scrutiny after it reported that the FTC had begun an investigation into a specific type of advertising conducted by the company, the highly lucrative but to many non-beneficial incentivized marketing; or, as the FTC was concerned, "websites which promise consumers a free gift of substantial value, and the manner in which the company drives traffic to such websites, in particular through email." After nine months of discussions and meetings with the FTC, last month, ValueClick reached a settlement. As reported in the release (see also the previous post), "ValueClick agreed to a settlement payment of $2.9 million without an admission of liability or conceding that the Company violated any laws. In addition, the Company and the FTC have agreed on the standards that will govern its lead generation business.The settlement is based solely on the past practices of the Company's Hi-Speed Media division and not WebClients or any other ValueClick subsidiary." While large, the fine represents a rather small percentage of the total profits earned, and that the settles focuses solely on ValueClick's smaller, Hi-Speed Media division and not their much more prolific WebClients division.

The settlements, specifically the word choice often used in the releases and articles, brings up a broader issue - how to properly describe the type of direct marketing activities in which companies like ValueClick's WebClients and The Useful (who settled with the Florida Attorney General for $1 million) engage. With respect to ValueClick, we see not incentive promotion but reference to lead generation, e.g., "has completed its previously-announced initiative to consolidate its lead generation activities into the Company's WebClients       division," or with an article covering The Useful investigation where it describes the company as "lead-generation firm World Avenue USA." Are these really lead generation firms? When someone says lead generation, LowerMyBills, Quinstreet, Reliable Remodler, LeadPoint, and countless others come to my mind before ValueClick and The Useful. The latter specialize in a type of marketing, leveraging a promotion to aid in customer acquisition, but does that mean they qualify as lead generation companies? In their quest to monetize a user who enters their paths, they do try and generate leads for a select number of companies, but their business offers leads only as a consequence as opposed to being the core marketing activity. Take Education Dynamics on the other hand, whose Recruitment and Prospecting division, and in much the same vein as Vantage Media, Quinstreet, and The CollegeBound Network, works on behalf of the higher education institutions to drive interested students. Their ads relate only to education, use no unrelated incentives (actually no incentives) at all, and they receive compensation for leads generated to the particular school the user selects. The same is true of any number of companies across the ever increasing spectrum of verticals.

Incentive promotion is a fire house of a marketing vehicle, a powerful tool for leveraging user intent for a good or service and leveraging ads to help the user fulfill the intent, but again, does that imply lead generation. Users who come to these sites do not have the same intent or interest that users going to an education lead gen site, student loan, car service, and so on, do. If users come to associate lead generation with incentive promotion, the real risk is billions of dollars of corporate value going out the door. Lead generation as a subset of customer acquisition has the ability to revolutionize the way companies and potential customers meet. It is one sense the yellow-pages with intelligence and accountability, offering merchants a pay for performance model to meet qualified customers and end users the chance to connect with companies that can fulfill their exact needs instead of just pointing at one and calling. Combined with other customer feedback data, mapping, and other internet only value-adds, it will continue along its path of being invaluable to both constituents. Incentive promotion can make a lot of money, but I'd argue that it does a disservice to lead generation if the two are used interchangeably.

Comments

[Lead Analyst]

Love it! Many rich with quality companies do exist, but understand that this market has a lot of hungry sharks that will generate spam leads just for a few nickels and cents. Doing your due diligence to research the company and ask a lot of question about the lead generation method will be a useful source that will assist you in finding the right company to buy real time, quality leads!

Well said

[Daniel]

Hi there,

Fantastic article!

Currently I am looking for information about Vantage Media and their Lead Generation process and method.

Could someone help me with some information?
I know that they have a lot of verticals, but is there a complete list available?
How are they driving traffic to their verticals?

Thanks a lot!

Daniel