2 Responses to “Great article about lead exchanges”

1. Alan says:

   May 25, 2007 at 8:02 am

   It’s an interesting (if slightly self-serving) piece, but it does seem to miss one important point.

   While LeadPoint (and exchanges in general) don’t share in the economics of marketing, their supply side does, so to think that they will be unaffected by increaing costs to provide leads strikes me as either naive or disingenuous.

   Fewer sellers offering fewer leads to sell is going to have a negative impact on any marketplace’s revenues, and their ability to keep buyers happy, which will feed back to additional lost revenues, driving more suppliers into education leads, etc.

   Anything that affects EITHER the supply or demand side in an exchange hurts both sides.

   [Reply]
2. John Challis says:

   May 25, 2007 at 9:37 am

   Alan:

   I appreciate the analysis and I think your observation is indeed an important one. What I would offer is this. There has been much discussion on this blog and many others of the increasing importance of the smaller lead generator whose volume, while smaller than the large lead aggregators, can tend to be more valuable because the quality is more consistent (please note, I am just paraphrasing opinions expressed on this blog and related ones, not trying to state fact). It has been expressed that the larger companies can potentially fall victim to their own success in that they have grown their demand such that they may need to “pad,” their quality lead volumes with a lesser quality of lead so that they can meet the volume needs of their customers.

   Many lead buyers on this bog have expressed their fear that the contracting market will also require the smaller lead providers to also sacrifice quality for quantity in this contracting market. What I would offer is this: the lead exchange could provide a buffer against this. Please know that for every quality, smaller lead generator that you are presently having success with, we have about 20+ more on our network right now. Our model allows these “boutique,” lead generators (not affiliates!) to concentrate on what it is that they do best — lead generation — and leave the distribution channel to us. This way, they are not subject to the demands of a sales channel and they can concentrate on generating a quality lead. The better the lead that is generated, the higher the price it will fetch in the market in a lead exchange. Thus the higher the payout that the lead generator will receive because we take a set commission percentage on the transaction, not a set dollar amount. This benefits you, the buyer, because the market demands a higher quality lead.

   I do know that I expressly stated how, “The Internet lead industry certainly has not been immune to the effects [of the contracting market.” LeadPoint certainly has been affected, be we continue to grow in the face of it, which was one of the points I was trying to illustrate. What I was suggesting, and I stand by it 100%, is that our model positions us better in this market than the traditional model. It doesn’t make us impervious, it just positions us more uniquely which benefits you the lead buyer because we will neither have to raise prices or buy poorer quality marketing in order to maintain demand levels.

   I hope this clarifies my point a little and I would be happy to continue the conversation if you wanted. I appreciate the insight (and am glad someone actually read my piece!). john.challis at leatpoint.com

   [Reply]

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