Lead Generation Grows Up

By David RodnitzkyJune 23, 2014

Forgive me for sounding like the old man that I am, but when I started working in online lead gen, life was easy for lead sellers. You could go out and buy the word “University of Phoenix” on Google and get paid $40 when someone submitted a lead to . . . the University of Phoenix; you could “blend” high-quality traffic with low-quality traffic and lead buyers would still pay you a premium if you increased the volume of traffic you were delivering; you could call up big lead buyers and sign a contract in days; and you didn’t have to worry much about government or industry regulations. It was the wild, wild west. Fun, unregulated, unprofessional, and dynamic.

Those days are long gone. Lead gen today is no longer the realm of 20-somethings in Boca Raton working out of their basements and minting cash. Today, lead gen requires technology, expertise, long-term relationships, and quality leads. Here are some of the most prominent changes I’ve observed over the last decade:

  • From cost per lead to revenue share: In the early days of lead gen, buyers were just happy to be paying a cost per acquisition (CPA) instead of a CPM or CPC. Today, buyers only want leads that convert into actual revenue, be that an enrollment (education) or funded loan (mortgage) or something else. In the EDU space, buyers are starting to even go beyond cost per enrollment and measure cost per “employed student” to comply with gainful employment regulations.
  • From no regulation to heavy regulation: Speaking of gainful employment . . . in the early days, you could sell mortgage leads without being licensed in a state, and you could run a lot of incentivization, negative billing, and continuity programs without fear of government scrutiny. Not so today; the DOJ, DOE, FTC, and a host of state and industry regulators watch lead generators closely. Failure to follow the rules often results in fines, revoked accreditation, and even criminal prosecution!
  • From quantity to quality: Lead buyers just wanted lots of volume back in the day. That’s still true to an extent (most lead buyers would rather get a lot of leads from a few sellers than a few leads from a lot of sellers), but quality is definitely king. Lead buyers don’t have the time to sift through crap leads anymore; they want the “Glengarry Leads”.
  • From no technology to lots of technology: I remember the first LeadsCon show where there were maybe 15 vendors in the exhibit hall. Today, there are probably 200 or more and a lot of these are technologies specifically designed to help lead generators. Neustar, PerformLine, DoublePositive, eBureau, Datalot – most of these companies are less than five years old and are now mainstays of the lead gen industry.
  • From mom and pop to professional: Anyone could set up a lead gen shop 10 years ago and probably make some decent money. Today the upfront costs are usually too high for individuals to go it alone. Tech costs, regulatory compliance, increased online marketing expenses – all of these make it much harder to be successful in lead gen and hence harder to break in.

That’s what I’ve seen in lead gen in the last 10 years. What did I miss, and what do you disagree with?

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