Lead generation companies represent some of the most prolific advertisers on both search and display. Despite their seemingly run of network approach and often incomprehensible reach, those at the top actually employ sophisticated targeting, tracking, and testing in order to spend profitably across such a diverse set of media. Yet, for all of their sophistication, even the best in lead generation leaves a lot of money on the table. This is because out of 100 people that visit a given landing page, less than 10% will sign up; and in many cases, this number hovers closer to 2 to 4 people out of 100, not ten. Thus, for every 100 people that might visit a given landing page, at least 90 will not turn into leads.
User drop off is certainly not a new problem, and companies have, for years, worked on improving their conversion rate. Finding ways to have more people who come to a site and complete the form is arguably the place where the single biggest gains exist. If you can increase your conversion rate from 2 out of every 100 to 3 out of every 100, you now convert 50% better than you did previously. And if, like many in the lead generation space, you happen to purchase your media on a different metric than you receive payment (an example being that you buy clicks but get paid on leads), this type of difference can mean the difference from losing money to making money. For example, if I pay $1 per click and I convert 2 people out of 100, I will have spent $100 in order to receive 2 leads. That makes my cost per lead $50.
If I get paid only $35 for every lead though, I am losing money. But, if I now have three conversions for every 100, that means I have $100/3 or an effective cost per lead of $33.33. All of the sudden I am making money, perhaps not a lot, but I am no longer losing $15 per lead. Increase the conversion rate to four per hundred and all of the sudden, the picture starts to look quite promising. As nice as it sounds to keep increasing the conversion rate, the ability to continue making improvements in conversion rate will diminish. Given that conversion rate is my biggest lever, what else can increase that besides just a new look and feel? Such a solution has started surface, and it is as fascinating as it is effective.
Much has been written about convergence, and as much, if not more, has been written about behavioral targeting. Both are methodologies which seem as though they would not have anything to offer lead generators, but a new targeting technique offered by at least 3 companies that I know of does just that. It leverages a form of behavioral targeting to achieve a form of convergence. All of this is really a fancy way of saying that a few companies saw a problem – high drop off on a landing page- as an opportunity. The companies in this space – Advertising.com, AlmondNet, and Revenue Science offer not simply targeting but retargeting. Let’s look at Advertising.com’s verion, Leadback as an example.
Leadback was originally created to help banner advertisers. It is a form of state-based behavioral targeting, in that the product (as I understand it) would track whether visitors who clicked converted, and if they did not, it would show either the same campaign again or a different one by the same advertiser to the user the next time they (the network) recognized them. If I click on a travel offer for example, but do not take any action, the next time I see an ad by the network, I will see the travel offer instead of what might be the best performing ad on that site at the time.
What companies such as Advertising.com and Revenue Science realized, AlmondNet being the first I believe, is that if you could do this for those in the banner to banner space, you should be able to offer this for search to banners. Instead of simply tracking clients that advertise on the web, by applying this same tracking and retargeting methodology, they could create new banner clients from search clients. Search to banner targeting says, simply place a tracking pixel on your site (if you are more sophisticated you can show the pixel only for those that do not convert as opposed to everyone). As a result of our immense reach, we see these customers who did not convert already; now that you have our pixel on your site, we will know when we see one, and instead of showing the ad that we might have shown (e.g., something contextual or statistically a good performer on this site), we will show your ad.
Most promising about search to banner is that the data suggests it is a win-win for all involved. The ad networks are able to charge a premium above their normal rates, and the performance clients that have used it see the increased conversion rates, which give them the healthy returns they seek, more than enough to cover the premium cost. Banner targeting has never been precise. Search to banner targeting doesn’t solve the problem of finding truly new clients, i.e. it requires that a visitor have already been to one of your pages, but it does take a step in the right direction by not only helping to connect search and display, but by making each spend more efficiently. I guess it will be only a matter of time before Google or MSN does the same for search to search, search to contextual ads, and then some; imagine what that could do.
For those interested in learning more, Advertising.com has created a soon to launch self-service product based on this concept. You can see the demo at www.leadback.com. I will supply contacts to the other firms as I obtain them.
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