Why “Pay-per-Lead” Just Won’t Work in Some Markets and the Need for Pay-per-Sale

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Online marketers who work with non-eCommerce companies will be aware of “lead generation” as an online business model, and its shortcomings. The “lead generation” company will drive traffic through nefarious means, such as offering prizes, sweepstakes, gambling, or porn credits. The lower the quality of the traffic, the lower the price-per-lead. Since the quality of the leads cannot really be known until the leads are delivered, the Lead Generators thrive by finding new customers who trial batches of leads then move on to the next one in the hope of finding the next “sucker.” This drives down the price-per-lead to a level which generally does not reflect the quality of leads delivered through search engine marketing, particularly through Google.

Well, even with PPC search on Google, a similar dynamic exists: Here’s a quick example for www.Borro.com, the leading online pawnbroker in the UK. We recently were shortlisted for the A4U Awards in the Best Innovation category for Borro. Anyone who’s done marketing in the consumer finance industry knows that lead quality varies greatly, largely because customers who are most in need of credit generally cannot get it. We deliver to Borro.com email and telephone leads, generated through Google search ads. Their sales team in turn closes the leads and Borro.com pays us a commission when a loan is funded, and only then. Some leads are generated through terms such as “fast loan” while others are generated through terms such as “pawn my diamond ring.” It turns out the latter terms convert from LEAD to LOAN at a rate which is 75x greater than the former, meaning that our bids on Google should be 75x for the later than the former. Our system captures this information via a feedback loop so that Google bids are adjusted to the desired levels based on that last step of Lead-to-Sale conversion rates. Of course this requires accurate telephone call tracking.

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