LendingTree posts operating losses of $508.1 million for the forth quarter. This article does an excellent job displaying the revenue and cost analysis for IAC. They also break down how the numbers would appear after the spin off.
LENDINGTREE
Q4 2007 Q4 2006 Growth
Revenue $ in millions
Lending $42.8 $100.9 -58%
Real Estate 9.4 14.5 -35%
$52.1 $115.4 -55%
Operating Income Before
Amortization
Lending $(24.1) $17.2 NM
Real Estate (4.2) (5.4) 22%
$(28.3) $11.8 NM
Operating (Loss) Income
Lending $(502.7) $14.1 NM
Real Estate (5.4) (6.9) 22%
$(508.1) $7.2 NM
Along with posting losses for the fourth quarter Paul Knag also posts that they cut their affiliate program. Now the letter states that they are keeping a few choice affiliates and ditching the rest. This seems to be the appropriate way to handle a reduction in volume. Rather than reducing their payout, similar to what LowerMyBills did and increasing the risk of receiving poor quality leads they simply cut it off and hand picked strategic partners.
Paul questions what LendingTree is doing and if their quality is deteriorating. I am not sure the Lead MarketWatch widget is an accurate depiction of lead quality and performance, however it is strange that for the longest run they were number one and now seemed to have slipped towards the bottom. I would be curious to know what is going on to cause this decline. I have a feeling there has been some type of change with who is buying LendingTree leads on the Kaliedico. Maybe some of you that buy LendingTree leads can comment on quality and let us know if you have seen a degradation of quality.
None the less affiliates specializing in the mortgage vertical are finding that their options and margins are shrinking.
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The contraction in affiliates, payouts is good for the buyer/market. You will see a reduction in quality lead flow but it will flush out the non-producers. Anyone left will provide a better quality lead and in the end it benefit the buyers and consumer.
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I don’t think lendingtree has been serious about its CJ affiliate program in a while, and I think in part this is a ” sleeping at the wheel ” reaction. While LMB, Quinstreet, LP all managed the “rate cut” volume deluge with their publishers immediately to avoid massive losses related to leads generated/paid but never matched/sold – LendingTree was slower to react. Not sure if I agree Noel that anything will change “in the end”, just that we’ve had an especially volatile time for both lead generation values as well as for mortgage related marketing costs.
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Yawn. Why don’t. Affiliates just use leadpoint or rootmarkets anyway?
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