Where is the lead generation business going?  A fast-growing start-up called LeadPoint.com is aiming to shake things up.  How?  They’re giving just about anyone who can generate a business lead the opportunity to meet up with those needing leads in a seller-buyer exchange.  Think eBay for leads and you’ve got the gist.

What’s the promise?  A better, faster soup-to-nuts experience for everyone by creating a fluid environment where high quality leads are rewarded by the market.  In fact, all levels of lead quality are settled upon by buyers.  In the end this amounts to better pricing of various kinds and quality of business leads.

Per Petterson (left) is Chief Technology Officer and co-founder of LeadPoint.  Does that name sound familiar?  It should as Mr. Petterson served as senior vice president and chief technology officer of Commission Junction, a global online advertising company known as a pioneer in Web affiliate marketing. 

Marc Diana (right) is no stranger to the industry and brings business and corporate development experience from lead generation powerhouse LowerMyBills.com.  In forming LeadPoint he pioneered the patent-pending exchange platform that powers the company—allowing for the buying and selling of leads in a free market environment and, of in turn, ensuring fair-market pricing and fraud protection.  Mr. Diana is no stranger to start-ups either with years of experience in early stage investing at firms like Innovent Group and business development experience for interactive firm iXL.

Program Length: 18 minutes

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AUDIO TRANSCRIPT
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Announcer: The following program is brought to you by The Partner Maker, connecting affiliates and advertisers and taking the work out of affiliate marketing. To learn more, visit ThePartnerMaker.com.

Jeff Molander: Hello this is Jeff Molander and I am joined by LeadPoint.com’s Per Petterson who is chief technology officer at the company and also Marc Diana who is founder and CEO. Thanks gentlemen, for both being here and helping us understand where the world of lead generation is going. It seems as if everything related to the web is being commoditized for lack of a better word. Every time I turn around I see market places opening up, Google’s radio ads. This week a company called BidForSpots.com is running reverse auctions in the radio advertising space. Adbright just this week announced that it is auctioning off its network space. What’s going on here? Marc maybe you can speak to it first, you work with lead generation powerhouse LowerMyBills, prior founding Leadpoint. How did you end up seeing the need for a lead marketplace?

Marc Diana: Sure, thank you. Back when I was back at LowerMyBills, playing the sort of lead-gen world that we’re in, I saw a tremendous amount of inefficacy in the world of lead generation. And that true inefficiency I saw was that when you look at what’s taking place there’s a value chain. Kind of a lead value chain. At one end of a chain you have a company that’s looking to acquire a customer. At the other end you have a company that’s garnered that eyeball. And at times that eyeball can bounce through multiple companies before it lands in the hands of the company looking to acquire a customer. Now I saw that as being a tremendously inefficient process that was taking place. And I said how about if we try to connect those two dots of those companies that are doing the true heavy lifting of getting that consumer’s eyeball initially gazing at something and also converting a consumer into an actual customer. So we bought LeadPoint to market to connect those to entities through an efficient exchange, wherein those two disaggregate communities can trade data to each other, all under one roof through a self-managed data application. Enabling them to extract more value through the actual trade of the lead than the companies that can sit in the middle of converting that eyeball into a click, converting that click into a lead, taking that lead, selling that lead once, taking that lead and maybe selling it another three times. Why does there need to be fifteen companies in the middle of that exchange when there could be one hyper-efficient engine or supercomputer sitting in between those two entities doing all the work at a much more reduced rate is the opportunity I saw and had.

Per Petterson: Really you know the point is also the enablement of smaller buyers today in the world of lead-gen. It has been dominated very large companies who are set up to buy leads and their, the sales forces of the lead aggregators are not able to serve small buyers, similar to what you sell with the ad space where prior to overtures entering the pay for click model and search there was no ability for small buyers to effectively engage in the business of buying clicks.

We’re kind of revolutionizing lead-gen enabling anybody to self-serve themselves and buy the leads that they need to grow their business on a kind of self-serve platform.

Marc: And also one kind of interesting comment that you had offered was that a commodity. I f you want to look at, the leads formed through our engine are actually a commodity yes indeed but if you want to look at LeadPoint as a business, what we’ve done is you have the buyers that Per is speaking of small and large that can participate in purchasing leads. You also have the other end of the model which are media companies or publishers, companies that have traffic and that are generating leads. What very few companies had going back three, four years ago was a network of buying power lenders and the mortgage you had NextTag you had LendingTree, you had LowerMyBills. There were three lending networks out there. Those companies had a tremendous amount of operating leverage because of those networks they had assembled. What LeadPoint has done is we’ve assembled a similar if not larger network of lenders under our house, because we’re able to reach the small ones as para hit on because its a self-managed platform. And we’ve made that body of buying power be available to anyone under the roof who has garnered those eyeballs, who is generating leads. So we’re commoditized that buying network. So what are those three companies LendingTree, NextTag and LowerMyBills all they are is a network of lenders, buying power. And then a storefront, a brochure that’s converting puts based traffic into leads. So we’ve commoditized one end of their business. So now everyone out there has a network of lenders at a very efficient price point. So now everyone can go out and build there own storefronts to convert clicks into leads.

Jeff: Interesting, so you guys have probably come to market, I’ve done a little bit of research on you guys based on what I can see on the site. It looks like you’ve come to market with certain verticals first. And do you have plans to roll out. Maybe you can talk a little bit about how you are coming to market and the types of leads that you see the most demand for versus those that you will see more demand for in the future. In particular leads that would flow through this kind of a model well.

Per: Sure, I’ll field that question. As I said going to market strategy will say the consumer lending space where we fired up the mortgage product line consisting of refinance, home equity, home purchase, and debt consolidation. Did a very, very good job of injecting ourselves in a very, very competitive business. And are probably one of three top three players in that space, and making solid headway every month. Our business probably has, I don’t know, 500 to a thousand products lying on the platform in a couple of years. Our next month’s verticals are going to be auto. Obviously you’ve seen our acquisition of some of the chief talent autovital which means we are very aggressively perusing the autovital with our auto purchase and our auto finance product. Which is getting rolled out there by the end of the year. Very, very exciting, it’s a large vertical with a hundred thousand leads generated every day in the U.S. And probably two million dollars in trade value a day. It’s a very large vertical. So we are excited about getting into that. And then we are aggressively looking to expand our business-to-business leads generation platform and our product family next year. And continue to strengthen our credit services which includes debt repair and credit repair and debt settlement and a bunch of other products. And so a little bit opportunistic and we’re currently seeing where markets are trending and things. Our goal is to have a large, large and diversified set of lead products to provide to sellers that want to sell leads on our platform.

Jeff: In terms of quality of leads. Obliviously… you guys are in the business of matching up leads sellers with leads buyers. And you are probably in a position where you are going to say to me, yeah Jeff, we can provide a better quality lead. Otherwise you’re doing some dis-intermediation here perhaps. You know connecting the dots as Marc pointed out, which may reduce some cost but I’m also guessing that you are also focusing in on leads quality and I know that there hasn’t been a lot of attention historically paid to lead quality. And nowadays in the last twelve months or so, I’m talking to people who are on the buyer end who are indicating that they are really starting to focus in on that, they can’t afford to be paying for a lot of bad leads or poor quality leads. What is it about this model, and this of course reflects on the company, but what is it about the model that can help produce a better quality lead from the lead buyers perspective?

Marc: Sure I can… One key to hone in here on the beginning of that answer is that I’m not going to claim that LeadPoint has better leads. Although, to be frank, today we do. What LeadPoint is built to do is to make sure you pay of receive market rate for the quality of lead you pull out or push into the exchange. So every lead is worth something, be it 50 cents or be it 100 dollars. Our goal here at LeadPoint is to make sure that our engine understands the value of that lead as it flows through it so it’s an equitable exchange that’s taking place.

Now, that said, our go to market strategy here at LeadPoint has been to target very high quality lead sellers out of the gate so only have those premium leads flow through the engine which is something we’ve been extremely successful at doing from day one. So the LeadPoint marketplace today is an extremely high quality marketplace at a very equitable price point for both participants in that exchange.

What we’re going to begin to do in 2007 is to open up the market so that all different quality types of leads can flow through it. So that low quality leads will also flow through our exchange but you’ll pay market rate - if you want to purchase that type of lead at all. You don’t have to purchase low quality leads per se, you cannot purchase that type of lead at all.

Jeff: Interesting. So when you open that up to the low and mid quality leads what is the primary means for buyers - I’m guessing that the buyers provide some kind of feedback or a reputation ranking that they assign to the seller, much like you would see in eBay where the sellers are able to then be ranked and as a buyer you can judge the quality of their leads accordingly based on actual, real transactions. Am I right in guessing this?

Per: Yes, I think our vision is that all participants in our exchange are rating each other. So consumers are providing feedback on lead quality, buyers are providing feedback on lead quality, operators inside our business are providing very valuable feedback on lead quality and all this stuff is being used to build our algorithms to really predict the propensity to close per source, and the propensity to close per lead, which is all used in algorithms for finding and matching purposes.

Jeff: Interesting.

Per: Fraud is non-existent in our platform. You put the hammer down and you go to an activity out in exchange.

The nature of this is that some leads - email leads perform different than search leads, telemarketing leads perform different than TV leads. This different nature of how the lead’s acquired is impacted in economics. Our goal is to have the fair and efficient exchange of those leads, where every lead is priced at the right price point. And the buyers paying off leads for it - not only that but the buyer also have some level of targeting the quality to match their ability to convert.

Some buyers are set up to large volume of medium, maybe even low quality leads, that are not fraudulent leads they’re just lower quality leads. Some buyers don’t have those capabilities and they really are specializing, they may be even have their loan officers in the mortgage category call directly to the consumer and they really want very, very, very high intent, high quality leads.

So, that’s our mission.

Jeff: So if I’m a buyer of leads, and I’m looking at a company like Lowermybills as an example in the dot consolidation area, and then I’ve got a choice of an exchange type of scenario. How do I go about making the decision where to buy my leads?

Marc: Well you test… You’re not looking to buy leads, you’re looking to acquire customers. You test purchasing leads and you measure your cost of customer acquisition. Whatever the most efficient vehicle is to acquire customers is is the one you’ll continue to buy and grow within. And so what companies do is that they’ll test out a handful of sources of leads and look to then further increase their budgets with the ones that are more efficient vehicles of customer acquisition.

What LeadPoint does is within our engine itself, we’re segmenting and banding the leads based on the quality of those leads, and enabling the buyers to pay appropriate price points by those segments and bands.

So one day, our goal is that every lead flows through LeadPoint. Even Lowermybills-leads would come through a LeadPoint engine, in the future according to our vision, so that a buyer of a lead is purchasing - it could be a Lowermybill-lead, could be a Lendingtree-lead, it could be your lead, Jeff, that you generated. They don’t care - all they are looking to do is acquire a customer. If that lead is appropriately priced for both parties everyone is going to be happy in the end, and that’s what our engine is designed to do.

Jeff: Hmm. So how do you guys compare to a company like, or I should say a startup like Root Exchange? Are you finding that there are other companies moving in this direction as well to capitalize on this opportunity?

Marc: Yeah, I mean there are. I know the CEO of Root Exchange, or I think he might just have left the company actually, but I know the guys at RootExchange fairly well, they… LeadPoint’s got over a year lead on anyone who is looking to duplicate our model and it’s very complimentary when companies do attempt to duplicate our model.

However, there’s a lot of experience under the roof here. As you pointed out earlier, Per was the founder and built Commission Junction from the ground up, and myself I was one of the early operators in Lowermybills.com. That joint 10+ years of operating experience with technology and businesses within the lead gen world is invaluable and unparalleled. So when LeadPoint came to market two and half years ago we came to market with a bulls eye. I mean literally the arrow was right in the middle of the target.

So we haven’t had to waste any time going through changes to our business model, rewriting code, trying to understand our customers needs - we knew exactly what they needed, exactly what they wanted, we built it and brought it to the market.

Other companies that are trying to duplicate our model, such as Root Exchange, are finding it to be a little painful to bring their product to the market, because they haven’t hit the bulls eye. Therefore customers are finding it difficult to use their systems, difficult to extract value from their systems, and therefore they are finding it, being part of an early stage company, difficult to generate revenue and difficult to stay in business.

Jeff: Interesting. There is obviously a lot of history there in terms of understanding the industry from multiple forms of operations I suppose, from the lead business, the affiliate marketing business which is essentially the same thing as the lead business, but also from the ability to scale a solution as well which is something that Commission Junction obviously has been able to do very well.

I appreciate you guys taking the time out of your day to help educate us on the company and a little bit on looking at the future of lead generation. I hope you might be able to do it again sometime.

Marc: Perfect, Jeff. We’re looking forward to chatting again. Next time you ought to pick us up - if you have an offline discussion, or you could have, we have a very large voice initiative that’s on the way here at LeadPoint that we’d love to fill you in at a future date at your convenience.

Jeff: Wow, absolutely fascinating, I had no idea that you guys were… I mean that’s more in the future, is what you’re saying?

Marc: That has been brought to market.

Jeff: Oh, it has?

Marc: There are phone calls being traded right now on our platform.

Per: This is an immense business opportunity for a lot of people out there and I think it’s going to be even bigger than affiliate marketing as being the cottage industry of people out there that are finding innovative ways to generate phone calls. Ideally integrating online-offline, so there’s phone numbers and there’s microsites, potentially hosted by us so people don’t have to do anything, driving traffic to the urls, and instead they convert it to data leads there or they’re driving people to call the phone number and so they’re converted into leads by the final buyer of the call.

So it’s an immense opportunity for people and we’re very, very excited about it. All the technology is patented and we feel very strong that it’s going to be a very large part of Leadpoint’s future.

Jeff: And you guys make your money by taking a fee per transaction, is that right?

Per: Across the board, our goal is to take small slice of every transaction and we don’t take a principal position in the trading on the platform.

Jeff: Again, I appreciate your time.

Marc: Thanks Jeff. Happy to help out whenever we can. Bye.

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