INTRODUCTION Today lead generation is looked at as a profitable market filler and key enabler to the keyword market dominated by google, yahoo and MSN. The reason the lead generation market exists today is that most companies don't want traffic (defined as anonymous clicks to there web site). Rather they want qualified leads, defined as a customer who is at the point of investigating the product or service and deciding which vendors to choose. The multitudes of niche, single vertical market, garage shop lead generation companies today are in fact the real power behind the keyword market, and they have risen up to fill a strong void in the market where internet consumer meets company marketer. The first industries to adopt the internet as a lead generation tool were the industries where there was a) already off-line direct marketing, b) a highly considered, usually high ticket, purchase and c) a well understood cost of customer acquisition figure. Automotive purchase and home finance have lead the way. Informational attributes of the internet have lead more people to realize that the web should be there first point of education for nearly any purchase. In the consumer realm this includes cruises, time shares, travel, classifies, real estate, insurance, investing, leisure, luxury, education, entertainment and consumer goods. There is growing traffic seeking information and education around business to business goods and services such as office equipment, VOIP services, office leases, consultancy, outsourcing, component sourcing, offsite functions, and hiring. The keyword market today is fully priced and each day more arbitrage is being wrung out of the process. This takes lead generation out of the hands of the amateurs, and will instead drive marketing budgets in seek of qualified customers to reach out to professional, scale providers. The choices today for an online marketer seeking to identify customers is to contract with a small, unsophisticated shop focused on their vertical. The key programming tool in most of these outfits is Excel. Constant problems arise around quality, quantity, reporting, flexibility and policy. Additionally, most "lead gen" today has been relatively unsophisticated, relying on email spam, promotional ads ("win an ipod nano by giving us your name") and other less sophisticated methods that rely solely on the low cost factor of the web. In short, very few have gone out as both the customer advocate ( a valuable service) and yet have the quality, professionalism, reporting and scale to service large marketing budgets. There are some examples. Zillow, the popular real estate voyeur site, is nothing more than a sophisticated customer identification engine which provides a valuable service to the consumer in hopes of passing them on while they are in the decision process. Lending Tree ("when lenders compete you win") also provides an application like workflow processing value to consumers. Lending Tree in particular points the way towards what customer identification in some verticals will look like in the next 36 months. Lowermybills.com (purchased by experian for $330MM in 2005) provides a similar value to consumers by asking them for their monthly bills and vendors and then tries to quote them a lower payment for similar services. LMB's main business is lead generation for mortgages, yet they provide and application like process to make your life better. On the marketer side, things are even tougher today. Most marketers are toying with lead gen shops that have little professionalism, minimal reporting, questionable scale, and lax policy management. The field is just starting to grow with larger entities Connexus, Quinstreet, ZIPSearch, Internet Brands and Public entities acquiring Lead Generation Businesses, (Experian, Think Partnership (AMEX:THK). Lead Generation Is Having Its Day Of course, the performance that matters most for advertisers is sales, so the greater the chance that a prospect will become a buyer, the more an advertiser is willing to pay to establish contact with that prospect. Companies that can give advertisers a contactable lead that has a high likelihood of producing a sale are finding success – both in selling those leads to advertisers and in selling themselves to investors. Advertisers who are most interested in acquiring leads rather than clickthroughs are typically those who don’t (or can’t) complete a sale online in a shopping cart environment. This universe is large, including, for example, businesses that
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• Don’t have a Web site (more than 14 million in the U.S. in 2005) • Offer complex, high-value products or services (real estate, legal, medical) • Have customers who do product research online but purchase offline (cars, appliances) • Operate franchise locations (fast food, automotive services). LendingTree.com exemplifies the model of a lead-generating firm. It attracts users to its site by promoting itself extensively online and offline as a way for people to find loans and real estate services. It offers content in the form of lender ratings, credit reports, educational materials and relevant tools (e.g., a mortgage calculator). It induces users to provide extensive information about their needs and relevant qualifications in exchange for giving them customized quotes from participating vendors that want to serve them. When the user selects a quote, Lending Tree puts the vendor and user together and collects a substantial fee from the vendor for providing a very qualified lead whose revenue can be precisely tracked and attributed to Lendingtree.com. The fundamentals of the LendingTree.com model are replicated by hundreds of lead-generating companies operating in scores of business- and consumer-oriented market niches. Recent Acquisitions show the aggressive valuations placed on some of these companies in the past year – another indication that lead generation is the hot spot in advertising today. Today it is difficult for an online marketer to contract with a vendor to affect a desired outcome. For example, few lead gen shops have the capability to switch their efforts from general mortgage leads to only credit scores of 600 or better in the Seattle area. Or to help them identify customers for Ford products in Phoenix. They have neither the scale nor reporting to affect such an outcome. Building the ability to become the most efficient monetizer of online customer interest would enable GEOSIGN to become a recognized leader. The greater opportunity is to work closer with Ad agencies, branding companies even other lead generation houses to contract with GEOSIGN to become a one-stop shop for traffic and leads and to help monetize their customers rather than do it themselves.
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Industry Revenue and Statistics
Many studies show that today's consumers increasingly are receptive to receiving the marketing messages they ask for while they're online, making the case for online lead generation Consumer comfort with online lead generation, where they are in control and can select who they want to hear from, will push the industry to a $1 billion business globally in 2007, according to a research report by investment banking analyst firm GP Bullhound, positioning it as one of the internet's fastest growing and most dynamic marketing categories.
Lead Generation/Referrals* – fees advertisers pay to online companies that refer qualified purchase inquiries (e.g., auto dealers which pay a fee in exchange for receiving a qualified purchase inquiry online) or provide consumer information (demographic, contact, behavioral) where the consumer opts into being contacted by a marketer (email, postal, telephone, fax). These processes are priced on a performance basis (e.g., cost-peraction, -lead or -inquiry), and can include user applications (e.g., for a credit card), surveys, contests (e.g., sweepstakes) or registrations.
A September 2005 IAB study, "IAB Advertising Revenue Report," notes that online lead generation spending grew by more than 200 percent between 2004 and 2005, while online advertising grew by a mere 24 percent in the same period. Online lead generation turns leads into sales both online and in bricks-and-mortar locations. A July 2006 study by BIGresearch indicates that 87 percent of respondents researched products online before buying in person or in a store. Online advertising revenues are expected to grow by 31 percent to $16.4 billion this year, according to a report by eMarketer, an Internet consultancy. That spending represents 6 percent of the overall advertising market. Revenues for 2007, eMarketer said, would most likely rise 19 percent, to $19.5 billion.
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3. Major Players and what they were sold for (Historical)
Presence-Aware Lead- Generating Services Enhance Online Advertising Borrell Associates Inc.
Sampling of Recent Acquisitions of Lead-Generating Firms
Lead Generating Firm Shopping.com Shopzilla LowerMyBills eLoans Homegain Automotive.com Loan Page Buyer eBay Scripps Experian Popular Classified Ventures Primedia House Values Deal Price ($ million) $620 $525 $330 $300 $100-$125 (est.) $73 $7
Source: Borrell Associates Inc., company reports
eBay paid 4.7 times 2005 revenue for Shopping.com, or 24.8 times 2005 EBITDA. Shopzilla went for 17 times earnings; LowerMyBills 18 times 2004 revenues – robust prices for young companies. Lending Tree IAC $730M
Innovation Ads http://www.innovationads.com was sold to Seaport Capital September 2006. 2005 Sales were $16.1M 30% Margin. Seaport stated that it was a 5X EBitda HouseValues, Inc. acquired TheLoanPage in October 2005 *Limos.com For sale approximately $4M Sales $2.7M Ebitda $1.4M ClientShop was acquired by Internet Brands in March 2006 $10M 5X ebitda
First American Federal, which already owned an interest in iLeads.com, teamed up with First Advantage Corporation (Nasdaq: FADV) and The First American Corporation (NYSE: FAF) today jointly announced that they have acquired a 75 percent ownership interest in LeadClick Media, Inc., a leading online lead-generation and marketing company, for $150 million. Nov 08, 2005 Aptimus acquires High Voltage Interactive $6,000,000 in cash, 10% or $600,000 of which has been retained in escrow subject to future indemnity claims, if any, and 200,000 shares of restricted Aptimus, Inc. common stock. Revenue $8,713,333 Ebitda $1,164754 Gross Margin 38%
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May 2005 Think Partnership buys iLeadMedia for $18Million or 5X Ebitda Online Home Business Opportunities Plus earnout payments of up to $18 million Warrants 135,000 at $2.75 Revenue $ 12,485,367 Ebitda 3,764,688 Gross Margin 69%
Major Players today and Categories Financial Services is the largest Internet advertising vertical constituting about 12% of overall online advertising. According to eMarketer, online ad spend by financial services firms is expected to grow at a compound annual growth rate of 18 percent through 2010 At $31 billion this year, automotive is the #2 advertising category. The online segment, currently at $2.8 billion, will hit $4 billion in three years and be the second largest in auto ad spending. The most disruption is at the local level, especially in used-car marketing. New-car devotes 5.6% of its ad budget to online media while used-car dealers spend 19.6% of ad budget. The online portion of automotive advertising will reach $2.8 billion this year – 7.6 percent of all automotive advertising – with a 13 percent CAGR. By 2010 online will hit $4 billion and become the second-largest medium for automotive advertisers, surpassing newspapers, cable, radio, direct mail – everything but broadcast TV. But of the qualified leads these dealerships received — 52.9 in 2006, up from 29.5 in 2005 — the conversion rate to sales dropped, from 26.4% in 2005 to 19.2% in 2006. Conversion rates among customers who arrived through third-party buying sites were far better — 29.6% in 2006.
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Category verticals effectively utilizing online lead generation currently include: Student Loan Mortgage Automotive Health or other insurances Travel Consumer package goods Retailers Education Pharmaceutical Technology (Electronics, Computing) Dating Online advertising, including lead generation is slowly replacing traditional forms of marketing. According to Borrell Associates’ July 2005 Report, the mortgage industry spent more than $2 billion advertising online in 2004 -- just 10% of the more than $21 billion spent annually on marketing overall. By 2009, Borrell expects online mortgage advertising will grow to $4.3 billion (a CAGR of 16%), more money than will be spent on direct mail, newspapers, or television. Borrell went on to report as of mid 2005 that while overall real estate advertising flattens, the online portion will grow 55% this year. Online is poised to overtake the longtime leader in this category -- newspapers -- by 2009. By year's end, online spending will hit $1.8 billion, garnering a 15.7% share of the $11.4 billion real estate advertising market. Lead generation and paid search have emerged as the leading forms of advertising, with agents and brokers paying an average of more than $1 per click and $10 per lead. Online lead generation works best for brands in the CPG, pharmaceutical, retail, travel, education or personal finance industries that are looking to build their in-house customer lists. In these markets, consumers are more likely to give permission for marketers to interact with them.
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Key Success Factors
It is still a requirement to sell lead gen into agencies as opposed to fielding requests from them. There's a lack of mindshare when it comes to agencies and lead gen. Advertisers already participating in lead gen include pharmaceuticals, higher education, and financial services, more traditional brand advertisers, like consumer packaged goods (CPG) and retailers testing the waters.
Forging strong relationships with agencies, insurance carriers educating them on how to implement technology and lead generation into their daily routines Sell thru rate is low because it is the end of the month and caps are hit.
PRICING EXAMPLES: Mortgage, refinance
A) FRESH AUTOMATED LEAD PRICING NON-EXCLUSIVE LEADS Filters include loan type, credit rating, property type and state. $25.00 per lead CUSTOM FILTERS (additional criteria) For each of the items listed above under additional criteria. To use this feature of eLeadz, log into your eLeadz account un
B) OVERSTOCK LOT LEAD PRICING (Custom Filters Free) 1 Business Day Old 3 Business Days Old 5 Business Days Old 7 Business Days Old 9 Business Days to 4 Weeks Old 5 Weeks to 6 Weeks Old 7 Weeks to 8 Weeks Old $28.00 2 Business Days Old $22.00 4 Business Days Old $18.00 6 Business Days Old $16.00 8 Business Days Old $12.00 4 Weeks to 5 Weeks Old $7.00 6 Weeks to 7 Weeks Old $5.00 8 Weeks to 14.2 Weeks Old $25.00 $19.00 $17.00 $15.00 $10.00 $6.00 $3.00
EdFed.com Offering $6.00 Per Lead
EdFed is devoted to assisting students and graduates in paying for college and managing their education loans. They help countless students and graduates save money paying down their education loans. EdFed provides consolidation options of federally guaranteed student loans originated under the Federal Family Education Loan Program (FFELP) and offers comprehensive financial solutions to meet the loanservicing needs of their clients. Limo Rides $1 -$2.00 a lead VOIP standard payout is $6 - $8 for the lead, we'll pay you $9 for unique leads, the cpa is $80 $100 you'll get $125. There is a 45 day cancellation/chargeback period on the cpa's,
ProspectZone Leads currently have introductory pricing of: $10 - Health, $10 - Senior and $6 - Uninsurable.
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Prospects and Problems [competitive landscape]
Residential Mortgage Lending. eLeads, Q Interactive, HouseValues, HomeGain, Homes.com, Homestore, ServiceMagic and IAC/InterActiveCorp and its LendingTree business, which includes Domania.com and RealEstate.com. Homestore, one of the largest Internet real estate sites, has announced its intent to enter into the lead generation business. http://www.totalmove.com/ Traditional media companies have also been acquiring online lead generation businesses due to the attractiveness of their robust cash flows. For example, Classified Ventures, a consortium of six newspaper companies (The Washington Post Company, Tribune Corporation, Knight Ridder Inc. The McClatchy Company, Gannett Company and Belo Corporation) recently acquired Cars.com, HomeGain and apartments.com. In addition, Primedia recently acquired Advertising.com. CPNE.ob THK.Amex Jungle Leads www.jungleleads.com MLM BizOp
The Mortgage Leads Network, Inc. 20,000 registered lenders and brokers, offers consumers at www.lenderscompete.com and lenders www.mortgageleads.net .Hot live
transfer purchase leads are only $59!
$7 Mortgage Leads No Long Term Committment Or Upfront Payment. Start Getting Leads Today! www.LoanBright.com
Health Insurance Leads Qualified leads for top agents. Pay per lead or pay per live call. www.vimo.com
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COMPETITIVE LANDSCAPE Company Profiles
In the following pages, there is a view of the LEAD-GEN competitive landscape profiling a number of public and private firms. 1) Adteractive 2) Continental Warranty 3) Detroit Trading 4) Double Positive 5) First Advantage (LeadClick Media) 6) Go Apply 7) HouseValues 8) Juicyleads 9) LeadPile 10) Leadpoint 11) LendingTree 12) LoanWeb 13) LowRate Source 14) Low.com 15) LowerMy Bills 16) MonetizeIT 17) MotiveAdvertising 18) NexTag 19) ProspectZone 20) Quinstreet 21) QuoteMatch (ZipSearch) 22) ZAG
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www.adteractive.com
Adteractive has been providing quality leads to mortgage lenders and brokers through our flagship financial portal, LowRateSource.com. These include some of the largest mortgage lenders in the U.S. such as Ameriquest, Countrywide, Aegis, and Quicken Loans, just to name a few. Continental Warranty is a wholesale , consumer direct source for auto warranties. Get your FREE
quote on Auto Warranty coverage, by completing an easy and SHORT quote form. We are offering $6 per lead generated.
Detroit Trading Company provides professional sales, acquisition and marketing services to companies that buy and sell Internet Leads and companies that generate Internet Leads 2006 Revenue $10M
www.doublepositive.com
Mortgage other financial Private: 2005 Sales: $1.5M DoublePositive provides LIVE Hot Transfer Leads directly into your organization for as little as $39 per Transfer.
http://www.fadv.com/leadgeneration_service/index.html
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www.goapply.com
Financial Lead Gen. Private Mortgage Broker
Licenses
S te c ro f t Ho ld i ng s , I nc
Aliso Viejo, CA 92656
www.housevalues.com
Mortgage U.S. and Canada Semi-exclusive - our leads are sold to no more than 4 lenders
www.juicyleads.com
Juicyleads.com is one of the top performing companies in the lead generation industry. Private: Business Opportunity
CEO : Andy Jacob Privatey held Volume : Over 3.5M annually Leadpile is, Centralized Online Exclusive Lead Marketplace. To buy and sell Exclusive Real Time Delivered Leads.
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www.leadpoint.com
VC Funded : RedPoint Ventures Los Angeles and London
Consumer Lending Refinance | Home Equity New Purchase Student Loan Consolidation Private Student Loans Spanish Language Leads
Consumer Credit Services Credit Card Debt | Tax Debt Relief Payday Loans Automotive Auto Warranty | Auto Purchase
Business Services P.O.S. | CC Terminals CC Processing
Coming Soon ! Auto Loans
www.lendingtree.com
LendingTree currently receives in excess of 140,000 completed qualification forms per month. GETSMART SELLS LEADS
www.loanweb.com
Mortgage leads in the way you want, at the time you want, and at an affordable cost. - Loan Type (Refi, Home Equity, New Purchase, Debt Consolidation, Sub-prime, New Home Construction, Land Purchase, Auto)
www.LowRateSource.com
Private Mortgage leads. San Francisco based.
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www.low.com
A Oversee.net company. About $10M annual Revnue Low.com is a leading consumer financial services portal committed to connecting our reputable mortgage lender network to highly motivated consumers interested in purchase, refinance, and home equity loans
www.lowermybills.com
#1 online mortgage advertiser attracting over 350,000 motivated borrowers each month. We provide Experian soft pull credit verification and 3rd party phone validation.
2005, Lake Capital made its initial investment in MediaWhiz. 2003 Sales: $7.8M In March 2006, MediaWhiz merged with Global Resource Systems, providing email and affiliate marketing. Next acquired was Text Link Ads, a leading provider of text link ads and related services, to broaden the company's display ad services division, and Monetizeit, one of the industry's largest vertically-focused lead generation companies, to deepen MediaWhiz's expertise in lead generation. Focus on financial, health, packaged goods,
travel, insurance, and education industries
Motive Advertising - Stateline, NV http://www.motiveadvertising.com EDu and Health Founder(s): Brendan Jevon Smith, Colin Johnson Nevada 2005 Sales: $4.5M
www.nextag.com
NexTag Mortgage Leads Fresh organic leads that are delivered in real-time and generated only from NexTag owned sites.
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POWERSPORTSTV.com https://www.powersportstv.com/ by the founder of CAR.com
Prospect Zone (www.prospectzone.com) operates a network of financial websites
designed to connect consumers with insurance and mortgage professionals (www.quotefinancial.com) (www.insurelane.com) is a comprehensive online source of insurance quotes and information, including health, life, group and auto.
www.quinstreet.com
pay-for-performance pricing model, you pay only for results, ensuring that our business interests are closely aligned with yours.
www.zipsearch.com
Insurance seekers to exceptionally credible businesses who are seeking new clients. As one of the most aggressive and established internet marketing firms in existence, we offer scalable solutions to fit most budget and volume requirements. QuoteMatch is licensed in 48 states
Zag - Santa Monica, CA http://www.zag.com Online automotive retailer Founder(s): Scott Painter, Tom Taira, Greg Brogger, Robert Buce, Oded Noy, Jim Nguyen, Nick Pernbald, Jim Berger, Galia Linn, Michelle Koch, Adam Fell Began: 2004 2005 Sales: $2.8M
Technology required
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Off The Shelf
http://www.wambatech.com/clients.php Lead Database Validation System Lifetime of Lead tracking. Integration and Posting capability Retry System Posting and Bidding for a lead System administration Detailed affiliate extranet for affiliate based reporting Systematic dispositioning of leads. Support for MySql Microsoft Sql Server databases Data Mapper for any industry How to deliver the leads-Sequential- Buyers are pinged sequentially, or in series. -Broadcast- Buyers are pinged asynchronously, or in parallel. View Tree of Buyers Manage Tree of Buyers Communication Report (Ping Analysis)- See how buyers are responding to your ping request and sort by specific date. There is such a huge discrepancy in price per markets. For example, (Up to $50 for a lead in Seattle, while $15 per lead in the Midwest markets). There dynamic pricing. This enables both the clients and publishers to generate and buy leads based on real time pricing. This stock market approach creates a real time market place for leads. The ability to allow clients (buyers) to control their lead flow by changing their price real time is not being done. They actually bid in Multiple Tiers 1) Scheduler / Cap Machine -- Clients that only want certain quantities of leads on certain days. You need to have daily, weekly, and total campaign caps. Sometimes caps will intersect and conflict. There are clients that want leads at certain times of the day. 2) Retry system – It is possible to earn thousands of dollars in a day simply by reposting leads from the previous 24 hours. It must be tied to the validation system (for example, you don't want to retry leads with profanity). In some cases there are unsolds from the
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previous days simply because of cap issues -- they just need to be pushed through again when client's caps roll over. 3) Client Lead disposition -- Clients who have the ability to return leads automatically. This functionality is good for three reasons: a) more accurate reporting b) you don't credit publishers with a sold lead if its been returned via lead disposition c) you can try to resell these leads when applicable to other buyers. Internal Lead disposition -- For leads that are posted to the system, internal lead disposition -- automatically send back bad leads to publishers Gets the liability for bad leads to the publisher automatically.
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