Leading the Way

November/December 2006 Issue: Page 82

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Online lead generation is exploding but still has egg on its face from scammers pushing illegitimate offers.

Online lead generation gets no respect. Online lead generation affiliates less so. While the sector is growing by leaps and bounds - 290 percent over 2005, according to the Internet Advertising Bureau - people like Peter Martin and Robert Jewell just seem to drag its reputation through the mud. These guys had the honor of being sued by New York State Attorney General Eliot Spitzer in March for selling the private details of up to 7 million customers to marketers when they said they wouldn't. Spitzer called it the "largest deliberate breach of privacy in Internet history."

"There are people that don't do things on the up and up," Dan Felter, chairman of the recently formed Online Lead Generation Association (OLGA), says. "Online lead generation, when done properly, can be done well," says Felter, who is also CEO of Opt-Intelligence, a lead generation firm.

High-profile busts like Spitzer's only give a black eye to an industry trying to police itself and keep undue regulation at the door. Last year the online lead generation machine brought in $753 million, according to the Internet Advertising Bureau (IAB), which predicts over $1 billion for the lead gen space in 2006.

Revenue for online lead gen made a healthy gain to reach 6 percent of all Internet advertising spending during the first half of 2005, according to the IAB. That's $347 million. Go back to 2002 and it was only 2 percent of Internet advertising spending in the first half of that year, or $114 million. But that is a year-to-year increase of 204 percent, IAB figures show.

DEFINING THE SPACE

Just the phrase "lead generation" also means different things depending on who you're talking to.

When an advertiser needs new potential customers to sell to, one method of getting names and ways to contact these people is to buy a list. This list of people is called the leads. Generally these people have already expressed an interest in the product - be it iPods, real estate, cars, mortgages or other retail goods - and have agreed to be contacted by the advertiser. This is also known as permission-based marketing and in some cases it is called co-registration.

The most popular online lead gen technique is the "opt in." This is where a customer registers online to join a free newsletter or newspaper or social network and sees a page where he can request to receive additional newsletters or marketing from third-party companies. Generally, you check a box to say it's okay. Interaction with that page is sometimes required to complete your registration.

Some companies also practice "double opt in," where you check a box but also must follow a link in an email as a way to confirm your email address but also, in essence, asking you twice that you really meant to opt in. Popular opt-in trends include an effort not to ruin your surfing experience by serving you multiple pages of opt-in options and by allowing you to bypass offer pages.

Suspect practices that used to be commonplace but are now considered intolerable are "opt out," where you are automatically signed up for other offers and you must uncheck the boxes to refuse; pages where offers outweigh content; offers of free products for forwarding the offer to others; free offers that still involve a fee; offers that require the downloading of adware or spyware; and, of course, offers that do not explicitly say they will not sell or give your private information to other advertisers.

Since there is a commission for every lead generated, it becomes attractive to enter a pay-per-lead or pay-per-sale contract with an advertiser. And with that model being very much like the affiliate marketing model, affiliates have flocked to lead gen. The flood of lead gen affiliates in the online world - like anything - breeds bad eggs and good.

POLICING LEAD GEN

Enter OLGA. Chairman Felter helped start the trade group when he realized what a stench surrounded the word co-registration, or co-reg. When describing what his company, Opt-Intelligence, does he tries to avoid the word co-reg. "If you could see the people's faces at conferences when they finally got what I did," he recalls.

OLGA currently has more than 25 lead gen companies as members and considers its mission to define best practices and champion transparency in the industry. Felter boasts that lead gen could become "almost as valuable as search." However, he adds, "barriers to enter the market are pretty low." Hence, the surge in online lead gen affiliates operating in a sometimesethical vacuum. "It's the cutting corners that give lead gen affiliates a bad name."

Felter says, early on, when opt-out was more common ,"advertisers all got burned by co-reg."

The offers would end up on disreputable sites - such as porn - and the advertiser would essentially receive a "data dump": raw lead information with no indication if the leads were from optin or opt-out and no way to measure the quality of the lead. That's why Felter hates using the word co-reg, but also why the industry is poised to explode as burned advertisers come back to the well.

And as they return, now is the opportunity to prove that this time around advertisers, publishers and lead gen companies can all get along and share the wealth. "There is something called common sense," Shai Pritz, CEO of Unique Leads, says. "If somebody is doing shortcuts, it will come back to bite them."

Jim Vines, CEO of LeaderMarkets.com, agrees that it isn't really very hard to figure out when someone on your network is doing wrong. "Having been an affiliate myself, I know the way traffic should look." He claims to know when something doesn't look right. Usually it is too many leads over a short period of time coming from a single affiliate. Vines says he goes the extra yard by talking to all their affiliates on the phone before sending any offers. "I have to personally see if they know what they are talking about before I send them anything."

It might stand to reason that an industry that requires so much policing is inherently ineffective. "There is nothing wrong with the tool but how you use the tool," Vines says. He adds that policing just comes with the territory. At least to Vines, the fun of it all is the personalization. "Leads are just the icing on the cake," he says. "Whenever an affiliate calls, we know them. Our job is to help our affiliates find the campaign that is working the best for them. We can help them figure out what list is best for them."

GOOD LEADS

Matt Hill, CEO of eForce Media, says they apply technology and science to matching leads to clients. Continued on Page 2...

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Tags: lead gen, lead generation, opt in, co-reg, co-registration,

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