Found on eBay - Turn-Key Mortgage Lead Gen Business Opportunity. Unfortunately, the listing no longer exists on eBay but it touches upon one of the more fascinating trends going on in the lead generation space – owning traffic. Macro trends in both search and display have more companies competing for the same if not fewer impressions. Companies like AdRelevance have taken corporate intelligence to a new level, providing insight into not just where a competitor runs and which creatives they display. The increased level of transparency along with competitiveness for traffic sources has driven more and more aggregators to try and own their own traffic.
Owning traffic can come in many forms. In direct marketing online, owning traffic used to mean having a large email list. In many cases, that is still the case. But, thanks to two factors, another option exists. The first factor deals with time. Online advertising is no longer new, having gone through an expansion, contraction, and subsequent expansion. This means that many people who work in the industry have already had several lives. The smarter and more entrepreneurial of them have taken some of the learnings and branched out on their own.
In 1999, very few people focused on search, organic or paid. The search economy drove a fraction of the commerce it does today, which means that while some people did really well, the industry didn’t support as many different companies, people, and models as it does today. One of the models that emerged as search engines started to handle more and more traffic and advertisers became more sophisticated and making money from that traffic are the commando search engine marketers. These marketers make their money the new fashion way, of course, through arbitrage – taking offers from affiliate networks or working directly with advertisers if they become large. Flush with cash from several boom years and in many cases from taking in some funding, these small search marketers have become key targets for the networks as they look to own their own traffic.
Most of the small, affiliate-backed, search firms specialize in paid search. Every once in a while, these companies obtain their traffic organically, making all traffic profit. Both paid search and organic search have their downfalls. Paid search costs money, but provides immediate results on profitability. Organic traffic has no costs associated with it, but at any moment the search engine could modify its algorithms and eliminate a site’s traffic. In that sense, it feels like walking on egg shells when trying to make changes or even sell it. The site on eBay falls into that category. It receives all of its traffic from organic traffic, which brings into question whether when it changes hands, if simply modifying the servers it sits on will wipe out its history with the engines. Putting that risk aside, the site provides great insight into the world of mortgage lead generation.
One thing that makes this site so remarkable is that the person behind has no internet experience; unlike a few other sales of this type, this person did not get their internet start at a Quinstreet. This person built a website that collects mortgage leads because the woman is a mortgage broker. Most lead generation sites collect leads to sell to mortgage brokers but those leads generally pass through multiple parties before doing so. A peak under the hood, yields us the following:
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All of the traffic she receives come from organic search – a point already beat to death earlier
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70% of the leads are from California – this makes the site automatically more valuable. John Demayo explains why here
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The site receives about 100,000 visitors per year – not a super amount, but enough to make an impact
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Those visitors translate into about 2000 to 2500 leads per year – an insightful and helpful metric, as those doing direct media buys will see anything from 1% to 20% depending on the traffic source, with those sites being built solely to convert leads, whereas with this one, everyone lands on the home page for the most part.
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For leads outside of California, she sends them a sorry note as opposed to selling the data – did we say not an online marketer? First thing on my mind was selling those leads
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She only handles New Purchase leads – not one to compete with the prevailing trends; this broker serves the less competitive market
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A lead gen company could overnight switch the lead form to send leads to their banks, earning a modest $100k to $150k per year...all profit… all without doing a thing. Get a few of these, and talk about fun.
Really good affiliates can earn about $50 per lead, assuming the leads are mainly refinance. That number was used when calculating the potential earnings available from this site. Her earnings, posted on the eBay listing, help shed light on what the ultimate buyers of the leads can make. Here is what we came up with:
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She earned a reported $200k in commissions off loans last year servicing a maximum of 20% of the leads. That equals $200k on 400 leads or $500 per lead. Were lead generators able to legally sell straight to loan officers and get paid per commission they could generate substantially greater returns. A 30/70 revenue share would yield the lead generator $150 per lead.
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Commissions of $200k spread across the entire 2500 lead pool still equals more than $80 per lead. It’s a wonder that no lead generation has decided to employ its own mortgage brokers.
Finally, what made this auction so appealing is not the metrics, but that it exposed the world of site purchases. This person, rather than just accept the offer, decided to list it in order to gauge the market price, and as a result has indirectly shed light on what one player is doing. Without the web, without eBay, it wouldn’t be possible. Instead of having only one suitor holding firm with one price, there exists the chance for multiple suitors. And, there should be. It's a hot market. What's more, lead gen firms have enough money where they would purchase it just to insure the competition doesn't.
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