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I had the pleasure of speaking with Payam Zamani the CEO of Reply.com the other day and was able to find out more about the new exchange. I first heard about Reply.com earlier this year and was able to hear Payam’s presentation at LeadsCon, but other then the presentation did not know much of anything about the exchange.
I think it is worth sharing with you what I learned about the company. I think the first question that came to my mind was can another exchange come into the market and take market share away from LeadPoint and the niche exchanges like the Detroit Trading Exchange. I have heard the word lead exchange or exchange in general used a ton lately and yes I absolutely think it is efficient way to buy and sell leads, but is there room and does it make sense to have more then a couple exchanges?
Before I tell you about Payam’s point of view on that question let me tell you about Reply.com and their differentiating factors. Payam’s history is solidified in the lead generation space. He has 14 years experience and comes from Autoweb.com and has experienced the good and bad times of the industry evolution. He has experienced the lack of innovation and the deterioration of quality in the space. He believes that times are changing and the advent of the exchange gives ability to have an efficient exchange of leads based on quality and price.
With that said Reply has all the typical features of an exchange. The ability to place bids on specific filters, stop and start lead delivery and a friendly user interface. Beside the claim to be the largest lead marketplace with more leads traded then LeadPoint and the Root Exchange and having a few patents pending their key differentiator is the the lead scoring and lead verification they employ. Data is verified by 30 distinct rules and also scored based on historical and social generated data. Along with scoring and data validation buyers will soon have the ability to choose what type of leads they would like to buy. If they want to buy leads generated through email, search or display only they can and pay a price that is in line with the quality.
With so many leads available and the ability to bid on quality Reply.com is definitely worth a second look. With this “Blue Lithium” approach where data is the driving focus Reply may have the key factors to become the number one exchange in the market. Only time will tell.
Back to my initial concern. Is there room for more than one or even two lead exchanges? Payam’s answer was not black or white. He foresees exchanges partnering together in some instances to fulfill the shortcomings of others. This, in my opinion, would eventually lead to acquisitions and/or consolidations and eventually one or only two exchanges. On the other hand Payam believe there is plenty of room for more then one or two lead exchanges. Which is it? What do you think?
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2 Comments
The problem with the exchanges, if there are going to be many of them, is that there is no shared standard for exchanging data between them. This is beyond a technology problem, although that’s not to say someone won’t solve it. Suppose that someone proposed a common data format and all exchanges agreed to use it, call it LXML. Lets suppose the exchanges even agreed to be bound by it, so that the bid ask spread for a given set of filters was the same for all exchanges at the same time. There are 2 issues. The first is that, even on a single exchange, buyers rarely buy on the open market, they typically buy only from a subset of sellers. If they aren’t buying on the open market from one exchange, why buy on the open market from multiple. The sellers (the good ones) typically profit from this lack of liquidity – they sell where the prices for their product are highest, so they aren’t going to help the lead buyer pay less for their product. Second, suppose that lead exchange A is very scrupulous about vetting its buyers, but exchange B is not, and there are recyclers signing up at exchange B. Now B buyers have access to A leads, and A sellers start complaining about their lead providers saying there is recycling going on. Unfortunately, there’s not much A can do about it since the offenders are on B’s exchange.
Ultimately, the fungibility issue is still out there – leads are not securities, they are not even commodities (although they are more like commodities with a very short shelf life). In the commodities markets there are regulators doing tests on grain to determine what quality it is, etc. This kind of regulation (third party, scientific) would be required to clean up the lead exchange markets. Unfortunately, the intent of a person filling out a lead gen form is not as easy to measure as the quality of a ton of corn.
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I just don’t see room for several exchanges. I buy from Leadpoint and Root. Leadpoint has good quality and provides some decent volume. Root does neither at the moment for us. I am not comparing Root to Reply but are there enough quality sellers to be able to support 3 exchanges? I doubt it. Selfishly as a buyer I sure hope that the volume and the quality are there. If so I will buy from all 3 but to date I just don’t see it.
GOod luck to Reply.com and if it works I will be a buyer on your network.
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[...] it. Ultimately, there have only ever been a few lead exchanges in existence. There is one relatively new attempt. The first lead exchange remains solvent, but has required numerous rounds of funding to do so. The [...]
[...] is one relatively new attempt. The first lead exchange remains solvent, but has required numerous rounds of funding to do so. The [...]