Economy Calls For Online Lead Generation

MediaPost Article 2/10/09

Economy Calls For Online Lead Generation by Christopher Petix, 1 hour ago

In the current climate, budgets are definitely a top priority for marketers.
As a result, marketers must make the most of their spend--and they must account for every penny. Any marketing method they choose needs to be extremely targeted, measurable and result in high conversion rates.

This is where online marketing really excels. With offline marketing efforts, marketers often rely on estimates and educated guesses--for example, "an outdoor billboard was seen by around 10,000 people walking by every day and we presume half of them were women" or "last night's marketing event really created a big hype." However, with online marketing, marketers get all the hard facts: How many people saw the ad, how many times each person saw it, whether they reacted--clicked through on it--or whether they signed up for the newsletter, for example.

As a result of this measurability, many online marketing solutions are offered on a performance-based pricing model, which ensures that marketers are getting what they pay for. A company wants their target group to read a specific message--so it pays per-click and redirects the customer to a landing page containing that specific message, without using expensive billboards that people may or may not see.

However, the ultimate goal for marketers is increasing sales--and it is here where Online Lead Generation is the fastest and most sustainable of online marketing efforts. With traditional data houses, clients will usually pay for a bundle of leads--say 10 or 20 thousand. However, with OLG, clients can opt to pay on a cost-per-lead basis for new and unique leads--and if they have already obtained the lead from another source, they can reject that lead in favor of a new one, be it a telemarketing lead, a newsletter sign-up or a trial subscription for a product.

The leads can also be sent immediately after sign-up--which is what many marketers need in a climate where they cannot afford anything less than maximum return on their marketing spend. This flexibility means that OLG is very cost-effective, as marketing managers are only paying for the leads that they use.

With OLG, marketers are guaranteed to be getting new, fresh data and they don't have to worry about its relevance--it is guaranteed to be up to date. As the data is brand-new and unique to them, it won't have been sitting in a database for years while the person could have moved their house, changed telephone numbers or even changed their name. And due to the rigorous data-cleansing processes of Online Lead Generation, every lead is guaranteed to be fully contactable--there are no "dead leads," and all the contact details are fully checked.

Because of the higher quality of the data provided, there is also less of a waste margin, so companies can ask for less leads initially. They may get the same number of conversions from 5,000 leads collected via OLG as they would from a 10,000 lead bundle from a traditional data house.

The highly measurable nature of an Online Lead Generation campaign and its ability to suit any budget is what makes it attractive--especially in the current climate--and it also fits easily into a larger, complete marketing campaign by complementing other methods such as television, print and other online methods that are already within a company's marketing mix.

Online Lead Gen Firm Go Internet Media Raises $10M

Go Internet Media has won a $10M Series A financing led by PE firm Kennet Partners. The startup has been bootstrapped since 2004 and sells leads to universities via sites like www.searchbydegree.com and www.freeeducationguide.com.

Santa Clara based Go Internet Media also runs RevenueLoop, a performance based ad network for leads. They have latched on to the buzzword 'crowdsourcing' to explain how they turn leads. The model is a bit odd for publishers where the charge you a fee, ranging from 25% to 15% if you make more than $10K per month.

Go Internet has plenty of other larger competitors and they are not very differentiated. The deal probably made sense to investors as performance is where its at in this down market and education leads have value as more laid-off worker head back to school.

JP Morgan Sees Long-Term Dominance For Performance-based Ads; Online Video Loses Luster

By David Kaplan - Mon 05 Jan 2009 12:52 PM PST

It’s not surprising that during a downturn, the clear metrics and ROI offered by performance based ads are looking more attractive. But in his wide-ranging ‘09 outlook, JP Morgan analyst Imran Khan expects marketers to treasure performance-based ads even when the larger economy begins to grow again. So the market share gains that performance ads have achieved over the CPM-based model look pretty durable and mean continued struggles for display ads.

The report, Nothing But Net: Outlook for Global Internet Stocks in 2009 (PDF), predicts that the mostly performance-based U.S. search ad market will rise 10 percent in 2009 to nearly $16 billion. In contrast, display ads, which includes both performance and branded advertising, will grow only 6.3 percent to $8.4 billion this year.

—Bearish online video: Khan expects the accelerated shift to performance ads having a dampening effect on the growth of online video ads. Even in a series of downward revisions, online video ad growth still seemed poised for healthy gains this year. For example, at the end of November, eMarketer forecast online video growth of 44.9 percent, which was still nearly half of the 81 percent growth rate the researcher predicted for 2008. Khan believes that online video is headed for a considerable slowdown because one, it’s still reliant on the CPM model, as opposed to performance-based measurements like cost-per-click or cost-per-action based display. And unlike television, which still can count on advertisers to respond to CPMs, online video can’t guarantee viewership for any specific video the way TV does in the upfront model. Plus, considering the unpredictability of popular videos, the uneven quality, and the continued battles over copyright, JP Morgan doesn’t expect online video to have great prospects for the next few years. However, Khan is intrigued by Google’s experiments with an e-commerce platform—i.e, performance-based model—for YouTube videos. For example, if a user watches a song featured in a music video, they can click on a link that lets them buy music directly Amazon (NSDQ: AMZN) and iTunes, with YouTube getting a cut of the revenue. More after the jump

—Social nets need new approach: Looking at the projected slump in online ad sales for sites like Facebook and MySpace, JP Morgan strongly advises that online communities look for sources other than display for revenue. In particular, the report offers a few possible routes to profitability, including greater use of cost-per-action ads, lead gen, sales of virtual items, connecting to classifieds or e-commerce sites, and charging for premium membership, as LinkedIn and Classmates do.

—Mobile looks good long-term: But as for the near-term, the long-awaited explosion for mobile ads will simply have to wait for a better economic environment—not to mention better phones and technology, Khan says. although mobile phone penetration is high at 84 percent in the U.S., the mobile search market is in the early adoption stage. In Q108, only 15.6 percent of wireless subs were using mobile web, according to Nielsen Mobile data. Even within this small subset of mobile internet users, usage drastically trails that on PCs. Nielsen Online says that a PC online user visits more than 100 domains per month, whereas mobile web users visit 6.4 individual sites per month, on average.

—M&As start slow, but gather steam in H209: With last year’s total deal count down by 20 percent, according to a report last week from DeSilva + Phillips (disclosure: one of our sponsors), JP Morgan anticipates continued coolness in the acquisitions area for at least the first six months of 2009. But things are likely to heat up in the second half of the year, assuming the economy begins to stabilize.