Dear Root,
Here are my suggestions to improve your model:
1. You must pick a side. To gain publishers/providers you are allowing them to send partial fills through the exchange. This simply is not working. Lead providers are sending much of their unsold volume through the exchange and quality is suffering because of it. Lead providers need to be committed to the exchange and you must force them to sell each lead exclusively through you. I hear all the time that buyers are willing to take a smaller volume of quality leads over a larger volume of mediocre leads. Just a quick reminder of what lead buyers feel is most important: Quality, price and then volume.
2. Take a stand for something. Simply offering a marketplace to buy and sell leads will not keep you around for long. I read everyday about people being burned by lead providers and loosing faith in lead generation services. They are crying out for a solution. Now is your time to capitalize on this need. (Trust me, if you don’t someone will) With your resources and data you are one of the few that can give them a solution. Your acquisition of LeadROI was a good move, now you have to take action and utilize that resource. Your main focus should be the regulation of the lead market and selling quality leads. Your current agenda is to create an open exchange of leads and by default a transparent market place, which is excellent, but needs more attention. Rejuvenate your PR/creative marketing team and start a movement!
3. Broaden your focus to smaller providers and affiliates. Yes, to insure quality you will need to increase management on your end, but by creating tight regulations and rules for your publishers you will be able to add these smaller affiliates to the exchange and at the same time give them more opportunities to better monetize their leads.
4. Create online profiles of every lead provider on the exchange. Allow buyers to make educated decisions. I wouldn’t buy a stock only because it was available on the NYSE. To make an educated buy I would have to research the company and look at historical data.
5. Create added benefits for the buyer and seller. Open your data base to all your users and start revealing return rates, duplicate rates and sold rates. Create an easy and efficient way for buyers to send their data to the exchange. This should even include data that was not purchased on the exchange. Use the data to grade providers and disclose the information to the public.
In closing, I don’t think any of these proposed changes would be difficult. However they are changes and all changes take dedication and decisive action to be effective. Focus on transparency and quality leads and you will gain market share.
Morinsight,
I do not necessarily share your pessimism for the general concept of a lead marketplace or exchange as a stand alone value proposition. I think it is a young model and to pick a side would be compromising the innovation.
However, I definitely think you have hit on an important potential role or benefit of an exchange–metrics. One of the key values of any exchange is the efficiency it provides in generating value for both the buyer and seller. This efficiency is generally created through a standardization of the metrics you use to evaluate choices in the market.
I think your idea of creating profiles of lead providers based on historical, standardized metrics would be a powerful value proposition to buyers–alleviating a lot of confusion and missed expectations. Likewise, this information would increase the liquidity of inventory and understanding of demand for the seller.
My guess, unfortunately, is that the data is not captured to fuel the innovation.
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What a shame is that no one from Root so far has responded to this, they don’t seem to be able to understand to see how important it is for them to participate in this conversation.
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I agree Paul. I see two “real” potential tipping point scenarios for lead exchanges: 1) Lenders get tired of, and begin to refuse to, interfacing, tracking, and adjusting the numerous lead provider relationships, non-standardized feedback loops (i.e., returns), and agreements; 2) These smaller, niche, and often organic lead providers begin to perform as well as the major media buying players and the exchange(s) aggregation is able to sole-source satisfy the volume requirements of large lenders.
Lead exchanges with a little value added “stock market-like research” service could drive this tipping point–IMHO.
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Great comments! Unfortunately this group does not yet understand the importance of your points. Hopefully the new companies entering this space will take these ideas and improve upon the first generation of this strategy for lead exchange.
There are many companies (lenders, lead gen companies, lead mgmt companies, etc) that can help “evolve” this industry and make it more productive and beneficial for both consumers and lenders.
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