LEADCRITICThe Exchange Model, Dead. Root Up To New Tricks
Filed Under: LeadPoint, featured, Root Exchange
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Is the exchange model dead? No, then why is LeadPoint making flat rate deals outside of the exchange? Is there a reason why they have to attract buyers by not making them bid on leads?
Another ad from Root Exchange popped up on my radar the other day. Why is a lead exchange trying to generate leads? I have wrote about their efforts in the past here and criticized the creative. I hate to do this, but it is the truth. They claimed early in their life that they were not a lead generator and that they were a neutral third party.
Then they say they are going to partner with the major portals and only help them facilitate the generation and the selling of the leads. Now they are running “Run Of Site” campaigns through Right Media. This is a far cry from their early claims. this is aside from doing nothing with LeadROI after they claimed to have extravagant plans for the LMS. I really don’t care either way, but it makes me wonder why they would want to start generating their own leads when it was never really intended to be apart of their model, as far as I know, which isn’t a whole lot.
Here is the beautiful ad they are running. yikes!
So any thoughts on what the deal is with the two exchanges in the market these days?
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xRoot | Mar 6, 2008 | Reply
It’s not unusual for an exchange to set up its own trading arm initially to help create liquidity. RightMedia itself did this on the display advertising side by creating Remix… but they (said that they) made sure there was a Chinese wall between these operations to make sure there were no shenanigans. Root initially set up something similarly to generate organic supply for the exchange. It seems, however, that they have had to prop things up for longer than perhaps initially anticipated. Part of it might be due to the high turnover they suffered by shifting strategies and getting rid of all the most experienced team they had who really understood online lead generation. Those guys would never have been caught dead putting up an ad like the one above.
LeadDiddy | Mar 6, 2008 | Reply
LeadDiddy guesseth:
1. It is very hard for the exchanges to balance supply and demand for any given 24-hour day when they do not control the marketing supply and clients can adjust filters and caps at will.
As a result, affiliates see their payouts flip-flop like a presidential candidate. Most affiliates work on this (10% margins). When you are an affiliate arbitraging CPC and CPM to CPA on 10% margins but your CPA from the lead exchange varies 30% day to day, that can capsize your profitability. Given that most affiliates are thinly capitalized mom and pop shops, a bad month means you miss lease payments on the Beemer. I think by now many mortgage affiliates are looking to diversify away from mortgage to more stable industries (good luck finding them)
The securerights affiliates seem to be less active these days, I think they are spending less time on mortgage and being more conservative with bidding to avoid losses.
2. The management of the exchanges is uneven. Leadpoint has affiliate world street smarts but their executive team is junior and not strategic; Rootmarkets has senior and strategic leadership but no affiliate world street smarts — or as far as I can tell, any internet experience whatsoever.
As a result, both of those companies are underdelivering on their promises of “changing the way mortgage leads are bought and sold”
3. The lead exchanges are not solely focused on mortgage the way that most of the aggregators are. I know in the case of Leadpoint that their best people have been moved off of mortgage to other categories in hopes of getting a diversified business going, as NOBODY wants to invest in a mortgage lead exchange that loses $250,000 per month
As a result, again you are not getting the innovation and investment that is required to “change the way mortgage leads are bought and sold”
xRoot #2 | Mar 6, 2008 | Reply
Amen!
Lead Critic | Mar 7, 2008 | Reply
Diddy,
Great insight and very true.
Lee | Mar 7, 2008 | Reply
Diddy’s #3 point is the most accurate of all. With the mortgage focus on this blog it’s easy to forget that LeadPoint does more than one product. We currently trade leads in more than 15 different products and will be trading many, many more in the coming months. We know the exchange model works - the continued success of our buyers and sellers is our the best testament.
Joe | Mar 7, 2008 | Reply
Well it looks like Root is rockin the mic on the Lead MarketWatch widget. They must be good right? Then again, LeadPoint is at the bottom of the widget, so that means they must be bad right?
Lead MarketWatch is the beacon of accuracy. No seriously, Ric Flair told me so.. Whoooo! http://www.ricflairfinance.com/
Noel Collins | Mar 7, 2008 | Reply
The widget is a joke, question the integrity of any person claiming to be an advocate of the consumer advocating you buy Juicy Leads for over a year. What’s next NR Leads? On the but that’s another story. On the exchange side, wow… right on insight. Can’t wait to be part of the changing market…
Lead Critic | Mar 8, 2008 | Reply
Wow, Noel, it finally comes out. I really don’t want to get involved in this little tiff but I think you are really reaching here with regards to questioning the integrity of a person. Especially a person that has been blogging and advocating leads for quite sometime. I am also positive that juicy leads is “recommended Lead partner” currently on your site.
I agree the with the comments about the widget, I said many times before, but to make a personal attack and a lame one for that matter seems a little unprofessional and pointless.
just my opinion.
My 2 Cents | Mar 8, 2008 | Reply
I would envision an LMS is like being a bartender. When I was a bartender in college, people might ask me what my specialty was and I could make a reccomendation. But occasionally, a dude walked up and ordered a Zima. He should know better, but its not necessarily my place to say, I just serve him the drink. As an LMS, you act like a bartender of leads. One thing I would NEVER do, however, is talk crap about another bar.
Noel Collins | Mar 9, 2008 | Reply
I’m not here defending a website of any company or preferred vendors, Zip Search is on there as well, yet low on the Gadget totem pole. I do however question the claim of anyone saying they are an advocate for consumers but intentionally misleading buyers of leads. I speak with vendors high on the totem pole and they are reticent to “Bad mouth” the gadgets and widgets of this industry, particularly when it favors them with calls from “Newbies” who claim “Hey I hear your the best leads in the market place”. That is misleading, how dare you claim you have consumers best interests at heart, nothing but a sales gimmick and you know it. Funny how private conversations do not translate into public ones. I do not use my posts as spam and solicitations for my company …I remember some persons complaining about the single post I wrote mentioning the company I work for, I removed any mention of it. Yet LMS and Sales post after post lately on this site is sales spam and junk . I thought this site was neutral, perhaps not.
Daren Ross | Mar 9, 2008 | Reply
LeadCritic – I compliment you on choosing a very interesting subject. As always, I enjoy reading your blog. However, I thought the point of a blog was to express opinion.
Personally, I appreciate Noel’s honesty with his comments. I don’t necessarily agree with his statements, but it’s a nice change from normal industry double talk behind closed doors. Your response to Noel’s comment can be construed as a personal attack. Isn’t it a bit hypocritical to say that its unprofessional to make a negative comment about a company; when the subject matter of this post are closed ended questions that lead readers to respond negatively about the lead exchanges?
Overall, I actually like the idea of the widget. It may be inaccurate but it’s an attempt to hold lead companies accountable for the quality they produce.
My2cents – HA…you worked at a college bar that sold Zima. That must have been a Cornell bar.
To keep this conversation from going sideways, I think the lead exchanges probably did not anticipate the intricacies of the industry. The lead exchanges are producing leads, working on media partnerships and negotiating lead prices to compensate for a flawed business model and a difficult environment. I would not want to be in their shoes explaining the situation to their investors.
Lead Critic | Mar 9, 2008 | Reply
Daren,
You absolutely right. This is an opinion based blog and that is why NO comments are censored. Anyone is free to, pretty much say what they want too.
I guess in a way I agree that my response to Noels comment could be seen as personal attack and I apologize if it was taken that way and I honestly regret making it.
On your point about be hypocritical; It is my opinion that being critical towards a company is far far different then making a personal attack. Who knows, maybe I am wrong.
Anyway, if we want to discuss the widget or exchanges I am all ears.
Noel Collins | Mar 9, 2008 | Reply
Ok, so my posts and comments are controversial, I thought that was the point, a lot of “What the heck?”. The comments and posts are to setup candid conversation, commentary and opinion. It appears that not everyone wants the candid “Opinion”. lol Either way I am not here to speak for any organization, I came to this blog as an independent and I hold true to my beliefs, that we are here to help the consumer, call out the bad practices in the industry and hold anyone accountable for their statements, products and opinions. I expect the same from my peers with regards to my beliefs, products and opinions. I hope this helps and finds all of my friends, peers and friendly competitors well.
owen raun | Mar 9, 2008 | Reply
hey Darren good to see your name.. are we thru this yet? good comments all - lets figure out this 900 pound gorilla
Morelli | Mar 10, 2008 | Reply
I have to agree with Noel about the spam and sales posts. I remember when he mentioned our product once and got slammed left and right, and he amended the post 5 minutes later and took out that info. Lately though, other organizations have been putting up sales posts left and right touting their product. Hrm.
My 2 Cents | Mar 10, 2008 | Reply
I guess the part that I was uncomfortable with has to do with the fact that it seems to me that Mr. Collins includes ad hominem attacks as “candid opinions.” I think everyone on this blog has read it for candid opinions, but what made me uncomfortable was the personal attack waged against someone rather than pointing out potential flaws – of which there are many – with the widget that has been discussed. I guess I feel like there are more constructive ways to differentiate your product from your competition than fronting a personal attack at someone. I know you say you made the comments on your own, Mr. Collins, but you need to know you are inextricably linked to your employer by the very nature of your position with them. And I can tell you, in MY candid opinion, as a result of your comments which I feel to be wholly unprofessional, if I were in the market for an LMS, I would never be a consumer of your company’s products so long as you are associated with them. I guess that’s my candid opinion.
Bill Rice | Mar 10, 2008 | Reply
Wow! I guess you are significant in the market when you have haters.
I am a bit offended by the integrity comment. I have been called a lot of things, but I don’t think you will find too many (if any) that question my integrity.
The Lead Marketwatch is a simple mathematical equation calculated on a aggregate set of our networks’ statuses, fully disclosed–repeatedly.
Everyone is intelligent enough to formulate their own opinion.
Daren Ross | Mar 10, 2008 | Reply
Hi Owen – Thanks, I’m glad to hear from you.
Leadcritic/Noel/Bill – Noel’s statements can be interpreted a couple of different ways depending on your point of view. Personally, I enjoy how passionate everyone is about their companies and the industry in general. I’m sure this type of passion is a great asset to your companies. I wish all colleagues felt similar. This type of mentality would raise the bar across the industry and improve client performance.
The widget is a good attempt to hold lead vendors to a higher standard. It’s probably not the most accurate determination of quality but it’s a start. I commend Bill’s team for taking the initiative.
Bill – Is your team working on any updates to the widget?
Raj Parekh | Mar 10, 2008 | Reply
Noel stole my lunch money and stuffed me in a locker. He’s such a bully.
Look, the LeadMarket Watch widget is controversial amongst us industry people, but I think Noel was referring to posts that promote a company vs. pass on good info. I love Bill’s posts as they are very informative, and in his defense it’s hard to talk about what you know without bringing the passion in for your product and statements you have made in the past about the direction of this industry. I think that’s all Bill is trying to do, but it also has the effect of promoting his company.
Lead management advocates do promote lead buying because it is the oil that keeps our engines lubed. However, accuracy in reporting conversion metrics of lead providers is based on so many factors as I have stated in other posts. The one thing that LeadMarket Watch is guilty of is equalizing elements of conversion that cannot really be equalized, but I don’t think the widget is self promoting in anyway. Root Markets is at the top of the widget and putting it there exposes Bill to lose sales to LeadROI, so I think his intent is based on honesty.
What we should be discussing is how we can collectively shape this information to provide a real indication of lead conversions. I often see a broker buy the same leads as a regional bank, but the regional bank has much higher conversions. Why? Well there are a number of factors and those factors is what makes the widget inaccurate in my opinion.
Noel has a point, but I don’t read his comment as a knock on Bill’s or Kaliedico’s integrity. I see it as him exposing the inaccuracy of the information that is currently available without any caveat or disclaimer noting the potential causes of that inaccuracy.
If we all read Noel’s comment as that, we may not think of it as a personal attack, but more a exposure of the truth. Nevertheless, we should commend Bill on making an attempt to do what we (the 3 LMS’) are in the business to do.
Noel Collins | Mar 10, 2008 | Reply
I’ve always said any feedback is good feedback. Thank you for pointing out my inability late at night to use the correct flavor of words, etc. As for being significant in the market place thus the haters…how many times is 360 referenced in your materials and white papers located on your home page..seems like the hating began with company bashing elsewhere. Everyone should look under their own roof before throwing stones at me for my opinions and point of view. My 2 Cents - I understand your point, I think you make too big of an issue my association with my company and believe you may have associations with a companys as well…thus the harse association comments. Bill we can read into this any way we want, I will elaborate on the widget another time, Raj - Yes I stole your lunch money, but that was only because you tried to steal my wife…LOL
Noel Collins | Mar 10, 2008 | Reply
One more thing to all the “Critics” out there. At least I have disclosed who I am and do not hide behind monikers, etc. Critic is the one person who knows who everyone is based on emails provided. Criticize and hide at the same time? hmmmm