Right buyer, right now

Data buyers want the best leads at the best price and fast. Some data owners are happy to oblige. But as David Reed finds out, low price tends to drive out high quality. So how will the lead generation industry deal with the problem?

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Quality, recency, price. It is acxiomatic that when buying data, if the first two of those are high, so will be the third. Yet for cashstrapped marketers, the drive has been to try and achieve two out of three.

Lead generation initially seemed to achieve the impossible by delivering good quality leads that are hot, using low cost collection methods. As demand grew, however, so did price. At the front end, demand also started to exceed supply which led to a decline in quality.

The result has been a market expanding in all directions at once without maintaining standards across all dimensions. Tales abound of high-pressure telemarketing operations promoting hot leads of uncertain origin. Using the techniques of a failed travel sales promotion to amp up the volume of available data is another questionable tactic.

So concerned have data owners become about the problems affecting their market that they have formed a lead generation taskforce within the aegis of the Interactive Advertising Bureau. Educating both sides – buyers and suppliers – about what best practice should look like in this sector is a key objective.

Ross Barnes: ResponseOne
Ross Barnes: ResponseOne

As Ross Barnes, head of digital media at Response One, puts it: “Online lead generation is very murky with different suppliers offering the same leads at polar opposites of price. So the question is, does price indicate quality at the top end?”

He notes that a financial services provider may be faced with the option of buying apparently identical data at 65p or £50 per lead. “How do we know at the beginning of a campaign which will be the most performant? You might assume the most expensive will be,” says Barnes.

Using price alone as the benchmark is not reliable, however. For data buyers, it is not possible just to take a client’s brief, buy-in a database of leads and assume the job is done. The diversity of sources and different quality levels demands a much more handson approach.

“We look at the method of collection, the data fields filled out by the lead and when they are asked for contact details,” says Barnes. Each of these steps can be critical to the way data will perform when it is passed to a call centre for outbound contact. Some lead generation programmes request a phone number as part of the overall consumer data collection, while others specifically align a named brand to the request for a number.

To make matters even more complicated, there is a lot of lead broking between data owners. “If you go to one to buy 10,000 leads, you could think they were all generated by that company, when they may have been generated by three or four other data owners,” he says.

Response One has built a system that allows it to track leads through to sale and conversion and back to source. This means it can build a supplier base which reflects actual campaign performance, rather than relying on a single supplier who may be aggregating data behind the scenes.

Aware of the growing pressure coming from clients and data buyers, the lead generation sector is trying to work out what best practice should be, without inhibiting the dramatic growth it has enjoyed. This is not always an easy decision to make – for example, the more specific a survey is about a consumer’s interest in buying named products or services, the lower the volume of completed surveys it will receive.

Marketers have become used to the concept of the tipping point as an event that works in their favour, usually by changing a business model to give them all three of those desired qualities. But for lead generation, volume is in inverse proportion to both price and quality.

That means the tipping point for lead data could lead to some sources falling off the platform. Kevin Rice, newly-appointed managing director at Clash-Media, points out that data quality has always been an issue in the offline data world, too. But he notes: “The taskforce is a necessary step with a new channel. People are asking questions, perhaps more through lack of knowledge than lack of confidence.”

Lead generation activity is better than people give it credit for

Even so, he accepts that, “in the early days, there were less scrupulous operators”, before arguing that the current problem is one of image, rather than continued bad practice. “Lead generation activity is better than people give it credit for,” says Rice.

Clash-Media has built a Quality Module to test data variables at the point of capture. Email addresses are immediately sent a thank you message, with bouncebacks scrubbed from the file. PAF validation is applied to address data, while telephone numbers are “sniff tested” to ensure they are valid. “We find a 90 per cent positive rate – the other 10 per cent may be mobiles that are switched off,” he says.

Rice also suggests that some of the data quality issues being blamed by advertisers on their data supplier may be nothing of the sort. “The client may get fully correct data which does not convert – that is often seen as a data failure,” he says. Instead, it could reflect a brief that did not narrow the target profile enough or a proposition which is uncompetitive. Educating data users about the way both sides should be using lead generation is a very worth objective and one the IAB taskforce should be able to achieve quickly. With a more informed client base, however, will come more questions that will force lead generation businesses to become more transparent. This is where some will struggle to meet the new need for openness.

The first issue will be to deal with intersupplier broking. Data buyers are trying to break open the supply chain so they can see where each lead has come from, something many suppliers would prefer to resist. Revenue generation is critical to many suppliers in this phase of market growth – without broking, they would struggle to continue to generate leads.

LeadPoint was established precisely to provide a clearing house for data owners. Its initial success was driven by financial services providers keen for the freshest contact data. Now its footprint extends further into other sectors looking for cost-effective marketing. The more brand owners get involved in the sector, the more questions will get asked.

“That has a snowball effect. We are not at the tipping point, but it is starting to move,” says Justin Rees, head of marketing for LeadPoint UK about the effect this is having on data quality. He argues that there is as much secrecy about the use of lead generation data among advertisers as there is about its origins among suppliers. “It is the best kept secret of a lot of companies. Big clients are buying 50,000 to 100,000 leads per month and they don’t want to shout about it,” he says.

Justin Rees, LeadPoint
Justin Rees, LeadPoint

Rees also argues that clients need to ensure they have the right process to use that volume of leads before either embarking on high-volume buying or claiming that the data is at fault for flawed results. “A lead is just an individual who has filled in a form. A 2 per cent response from most leads would be poor. Equally, some people think 50 per cent will convert. Different clients will have different results,” he says.

LeadPoint operates as an exchange, or “an eBay for leads,” as Rees puts it. “The two sides have different issues. Lead generation companies are looking for volume, buyers are looking for low price. Our platform is designed to reconcile that and ensure lead generators get paid what their data is worth and the buyer gets quality leads,” he says.

A newly-launched service by the company, which it expects to introduce to the UK in the Autumn, runs a variety of quality control checks and assigns a confidence score of between 0 and 1,000 to each record. Buyers can then choose to take Premium, Value or Validated leads according to their budget and needs.

This implicitly recognises that there can never be a single standard for lead data. Just as there are companies who want to generate high volumes using promotional techniques, so there are clients who believe they can make the lowest price files pay back.

The second issue is the role of affiliate networks in generating leads. Most of the major players have self-operated sites which produce most of the data volume. They also work with a wide network of affiliates to try and get every last record they can. It is often these affiliates which generate the more niche leads and which may therefore command a premium.

Craig Carr, director of Lifestyles Online, says all of the controversy is working in favour of his company. “All of our data is 100 per cent opt-in – that is the basis of our model. Most data collectors use opt-in to get extra entries for a prize draw, cashback, vouchers or virtual points. If they can get 40p for an opted-in record, they give 5p back to the consumer as a reward,” he says.

“That has turned on its head. Clients are coming back to us and want our pure lead generation data. We also take a moral view that we will never resell telephone numbers,” says Craig. Phone numbers are only ever acquired against a specific request for this data by brand owner.

Setting a standard like this provides other suppliers with proof that it is possible to operate best practice and still stay in business. The key issues is how to deal with operators who are in a hurry to achieve volume and revenue fast. For the lead generation industry, just as for data buyers, you can have quality, recency or price, but not all three.

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