Lead Generation
Lead generation (commonly abbreviated as lead-gen) is a marketing term that refers to the creation or generation of prospective consumer interest or inquiry into a business’ products or services. Leads can be generated for a variety of purposes - list building, e-newsletter list acquisition or for winning customers.
A lead is a sign-up for an advertiser offer that includes contact information and in some cases, demographic information. There are two types of leads in the lead generation market: sales leads and marketing leads.
Sales leads are generated on the basis of demographic criteria such as FICO score, income, age, HHI, etc. These leads are resold to multiple advertisers. Sales leads are typically followed up through phone calls by the sales force. Sales leads are commonly found in the mortgage, insurance and finance markets.
Marketing leads are brand-specific leads generated for a unique advertiser offer. In direct contrast to sales leads, marketing leads are sold only once. Because transparency is a necessary requisite for generating marketing leads, marketing lead campaigns can be optimized by mapping leads to their sources.
Types of lead generation
- Lead generation can take on various marketing methodologies:
- Broadcast Advertising
- Online lead generation
- Direct Mail
- Event or Trade Show marketing
- Seminar or Training
- Publicity and Public Relations
- Whitepapers or Product Literature
- Email marketing
- Web marketing (Search Engine Optimization or other Internet Media buying)
- Telemarketing
How lead generation works
The nature of lead generation depends entirely on the decision process of the buyer.
For complex products and services requiring a complex decision process, the keys are identifying the most likely prospects and then educating and qualifying them before deploying more expensive sales resources. The education benefits the buyer; qualification benefits the seller. This gradual lead cultivation process can go on for months and involve several individuals involved in evaluating a solution.
For commodity products, the rendezvous dilemma is one where two parties are seeking each other, but are obscured by time, distance, or attention. In essence there is a set of well-matched candidates for product purchase within a larger set of poorly matched candidates. Those well-matched candidates are what one is seeking to attract or identify in effective lead generation.
Although there are several methodologies and implementations, each involves one of two primary rendezvous strategies: Broadcast or Concentration.
Broadcast involves communicating to a broad set of candidates with the expectation of a statistical response back to the marketer. Advertising is a classic example of broadcast marketing rendezvous.
Concentration involves identifying and creating situations that concentrate well-matched candidates into a broadcast-effective set. Market segmentation and trade shows are classic examples of concentration-marketing rendezvous strategies.
Online lead generation
Since 2000, an increasing number of sales organizations have been shifting their direct marketing budgets into the online channel. The internet allows for the development of an extremely targeted lead generation campaign offering geographic, demographic, and contextual targeting services.
Although the online channel is growing extremely rapidly, with search marketing and pay per click (PPC) advertising commanding the bulk of advertisers’ online budgets, the demand for highly skilled search marketers remains high. Similarly, a number of software tools (such as bid management software) have emerged, allowing individual search marketers to more efficiently manage their paid search campaigns.
That said, in recent times the cost of keywords is getting increasingly more expensive. A 2007 Doubleclick Performics Search trends Report shows that there were nearly six times as many keywords with a cost per click (CPC) of more than $1 in January of 2007 than the prior year. The cost per keyword increased by 33% and the cost per click rose by as much as 55%. To compound matters, a substantial portion of the clicks were the direct result of fraud. According to Click Forensics, the overall click fraud rate for the pay-per-click (PPC) industry was up 15% over 2006 levels.
In recent times, there has been a rapid increase in online lead generation - banner and direct response advertising that works off a CPL pricing model. A GP Bullhound Research report states that the online lead generation is growing at 71% YTY - more than twice as fast as the online advertising market. The rapid growth is primarily driven by the advertiser demand for ROI focused marketing, a trend that is expected to accelerate during a recession.
The most common types of opt-in ad units are:
- AdUnitX Banners: AdUnit X banners allow advertisers to run display advertising on a cost-per-lead (CPL) pricing model. These banners eliminate the need for users to click-through a landing page. The user enters her/his information within the banner. Contact details are transmitted automatically from the publisher to the advertiser via the backend.
- Co-registration advertising: The advertiser receives some or all of the standard fields collected by a site during the site’s registration process.
- Custom co-registration: The advertiser receives the standard fields collected by a site as well as answers to few custom questions – e.g.- Have you traveled overseas in the last six months?
- Full Page Lead Generation: The advertiser’s offer appears as a full page ad in an HTML format with relevant text and graphics. The advertiser receives the standard fields and answers to as many as twenty custom questions that s/he defines.
CPL advertising and CPA advertising
For marketers that are looking to pay only for specific actions, there are two options: CPL advertising (or online lead generation) and CPA advertising (also referred to as affiliate marketing)
In CPL campaigns, advertisers pay for an interested lead - i.e. the contact information of a person interested in the advertiser’s product or service. CPL campaigns are suitable for brand marketers and direct response marketers looking to engage consumers at multiple touchpoints - by building a newsletter list, community site, reward program or member acquisition program.
In CPA campaigns, the advertiser typically pays for a completed sale involving a credit card transaction. CPA is all about ‘now’ — it focuses on driving consumers to buy at that exact moment. If a visitor to the website doesn’t buy anything, there’s no easy way to remarket to them.