Lead quality always drops, reviewing the classic UofP – Quinstreet issue
Update: John DeMayo, formerly of Advertising.com, has a good point in the comment section here….to which I’ve added a counterpoint. Thanks John
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The post on lead verification is focusing my thoughts on lead generation today.
I’m not going to use the Quinstreet-University of Phoenix analogy here.
Actually, it tells a great story and its rather short. So I’ll use it. I think it was in 2005.
In bulletpointed fashion:
– Quinstreet drives leads to University of Phoenix to the tune of half of Quinstreet’s revenue.
– This is done through mostly affiliate search which bring quality leads to University of Phoenix at a respectable price.
– Quinstreet can’t figure out how to grow more profit with University of Phoenix so they acquire lower quality leads at a lower price from the distributors and blend these into University of Phoenix.
– Quinstreet grows the University of Phoenix relationship.
– University of Phoenix gets frustrated sends out RFP for new company to manage their lead distribution. That company becomes Advertising.com.
The problem with the lead gen world is one of real time profit and companies without secret sauce.
Lesson if you are using a new lead provider quality will always, always, always, be better in the beginning. Know your distributions; pay attention to their business goals and the challenges with their business. The only way a new lead gen company can really get the attention of a major advertiser or client is to drive them high quality leads.
Back to the metrics again, performance marketing is a relationship or index amongst the following factors: price, volume, quality, and volatility.
A new lead provider to a client (whether new or legacy) will be able to grow a relationship focusing, typically, on quality first. Why, let’s examine:
– Price: No way a leveraged lead buyer will pay top dollar for a new lead provider so that’s out
– Volume: Either the new lead provider is just growing their business (small volume) or needs to take the volume away from another partner, either way this typically does not happen in a day, week, or even month’s time.
Quality: Nothing like high quality leads. High quality leads are the safe harbor in any market. They convert and that keeps the business going, especially in a recession.
Volatility: What converts for one advertiser typically needs some massaging before converting for another. There always tweaks. Expect some volatility.
By the way, forward ahead to Q3 2007, University of Phoenix buys Aptimus to take their lead quality inhouse.
Internet Marketing Observations 
I have to disagree on this one. At adcom we had a number of clients that came in negotiating lower then market rates, and we would offer them lower then average quality leads explicitly. We had companies that bought $10 leads, and got $10 leads…..who we later repriced to $40 leads, and got much higher quality leads then.
I think price and quality can go both both up and down as a client/vendor relationship matures.
“Lesson if you are using a new lead provider quality will always, always, always, be better in the beginning. Know your distributions; pay attention to their business goals and the challenges with their business. The only way a new lead gen company can really get the attention of a major advertiser or client is to drive them high quality leads.”
That’s a great point John — I’m going to amend the post on this.
My counterpoint on this is that advertising.com had achieved leverage through owning vast amounts of display inventory and because of their timing in display they had the luxury of always being able to get more inventory.
Would love to here your feedback on that.