Melissa is right about the

Jere Doyle899335 — Tue, 01 Apr 2008 12:17:09 -0700

Melissa is right about the strength of the online lead generation industry. It's the fastest growing segment in the online marketing arena because it works for advertisers. And advertisers are getting much more sophisticated in their ability to track conversions by sources, so the market will weed out the bad apples. Still, if companies continue to ignore best practices, they'll not only lose clients, but will also further erode consumer trust in online marketing in general, which could harm not only lead generation providers, but the entire online marketing industry. Jere Doyle, www.prospectiv.com

I strongly disagree that

Chris Lien — Thu, 27 Mar 2008 11:26:58 -0700

I strongly disagree that using paid search for lead generation is a misguided tactic. As someone with significant lead generation experience across all online channels, paid search done properly drives the highest quality leads as it's the most targetted channel. One does need to exclude content-based paid search as that is a lower quality opportunity (users are not searching there for your offer but see it associated alongside of ideally relevant content). But to be clear -- paid search will drive the highest quality lead gen traffic vs. other channels and should be part of any significant online lead gen effort.

What the ValueClick settlement means to the future of lead generation

Melissa Chang — Thu, 27 Mar 2008 09:57:07 -0700

ValueClick recently paid $2.9 million to settle FTC charges that the company was making deceptive advertising claims -- specifically, that ValueClick didn't disclose the costs that consumers must incur to receive products it touts as "free" -- and that its e-mail messages were in violation of federal law and the CAN-SPAM act. ValueClick is widely known as a lead-generation company, and this settlement raised fears that mainstream lead generation companies may no longer be legitimate channels for companies that need to supply leads to their sales and marketing teams.

Despite ValueClick's troubles, online lead generation is here to stay. According to just-released numbers in BtoB Online's Interactive Marketing Guide 2008, lead generation was the second-fastest growing ad format in 2007 (after rich media/video) and will continue to grow at a rapid rate through 2011, when a projected $3.68 billion dollars will be spent on online lead generation in the U.S. Lead generation -- the practice of qualifying potential customers for a product or service by getting them to indicate their interest -- is growing in popularity because of its measurability. Like search advertising, lead generation lets marketers use simple metrics to determine the return on investment (ROI) of their advertising campaigns.

While the ValueClick settlement sent some ripples across the Internet, it will not put a dent in the growth of lead generation. What it does reinforce, however, is that companies that use the types of bait-and-switch tactics employed by ValueClick will not succeed. Such tactics typically involve granting rewards to consumers for providing their data with offers such as free gift cards or the chance to win a trip to a tropical location. The incentives seldom attract the quality leads that are needed by the company purchasing them. A tropical vacation might attract a good lead for a travel agency, for example, but would be a terrible lead for a financial services company that is looking for married couples over the age of 55 who are planning for retirement. Companies that use unrelated incentives to attract an audience will not be able to provide the volume of high-quality targeted leads that companies need.

Another misguided lead-generation tactic is using paid search advertising to drive traffic to lead gen offers. Companies that generate leads based solely on traffic gained from paid search advertising aren't going to provide the high-quality audience that's needed to generate high-quality leads. The search audience is broad -- and primarily unfiltered and untargeted -- so using search as the sole traffic-driver dilutes the quality of the leads that are captured.

There are several ways to carry out successful lead-generation campaigns, and companies are going to have to employ these tactics going forward in order to get the best returns from their lead-gen spends. First, companies need to rigorously tailor their offers to the audiences they are trying to reach. If a hardware company is trying to find IT managers to purchase its servers, a white paper, video, or webcast about those servers is good "bait" to get qualified leads. The offer needs to be something that the audience would want to receive only if they are a highly qualified potential lead -- in this instance, only someone who is interested in servers would bother to read a white paper or sit through a presentation about servers.

Second, if a company is using a third-party provider to generate leads for them, they should use a site that already has the audience that the company is trying to reach. For example, if an engineering company needs to generate engineering leads, it should start with a site like Global Spec, which offers lead generation programs and reaches a robust audience of engineers with its highly targeted search engine. If a wedding dress salon wants to find brides-to-be, they should look first at a wedding site like The Knot (www.theknot.com), which has a large and active audience of engaged women.

There are many industry-specific sites like these that offer lead generation packages. Using them to generate the type of leads that you need may cost significantly more per lead -- depending on the filters (job title, budget, country of origin, etc.) the cost per lead (CPL) could range anywhere from $50-$100 per lead in the B2B markets. But getting a highly qualified, high-quality name of a person who is interested in your product or service with the budget to buy will be gold, as those leads convert to sales at a very high rate. Your ROI metrics will show that in many markets, quality beats quantity in lead generation.

Disclosure: I previously worked at Ziff Davis Enterprise for its Web Buyer's Guide lead generation division, and I am currently doing consulting for their Demand Generation division.

Melissa Chang is the founder of Pure Incubation, an Internet incubator based in the Boston area. Her blog is at www.16thletter.com.

Related news, commentary, and predictions:

Prediction: Ad spending will shift from impression to performance-based marketing in 2008
Prediction: Google's stock price will be below $500 per share by end of Q1
Prediction: Google's stock price will be back above $700 per share by end of Q1
Prediction: Tivo to be acquired
Melissa Chang: Five reasons why a recession is a good time to start a company
News: Mobile advertising growing despite questions
News: Advertisers grapple with online video opportunity
News: Companies struggle to find widget advertising strategy, ROI

Note: Anonymous comments on The Industry Standard are disabled. To leave a comment and participate in the Standard's prediction market, please register first.

The Industry Standard - What the ValueClick settlement means to the future of lead generation - Comments

Melissa is right about the

I strongly disagree that

What the ValueClick settlement means to the future of lead generation