Why Consider a Lead Exchange v Lead Provider?

Most of the readers of this blog are buyers of Internet leads, and more specifically mortgage leads. However, you may not all be familiar with the concept of a Lead Exchange. John Challis (full disclosure: I used to buy LowerMyBills leads from him when he was at LowerMyBills and I was at Quicken Loans) of LeadPoint talks about why you might want to consider Lead Exchanges in this changing mortgage market.

Here are a few that made me think this was important to Better Closer readers:

Despite the downturn, I don’t think anyone can question the viability of the internet leads as it relates to the mortgage industry.There is no doubt that the lead-gen market is contracting along with the origination market in general, but while the figures vary somewhat based on the survey, general consensus is that between 45% and 75% of homebuyers begin their process on the Internet.So, if you are not including Internet marketing in your marketing portfolio, then you are potentially excluding over 50% of your potential market.

You have to start here. You can not ignore this fundamental emerging fact in mortgage lending. Home buyers and refinance borrowers are going to the Internet first. Now, you just have to figure out the best way to capture their attention and intentions. That is why you have to read about this stuff even if you are in sales–who does it best and why?

The secret is this. The traditional lead-gen company is only as effective as their advertising spend. The revenue that they make from selling leads is in direct proportion to the presence and quality of their advertising. But contracting revenues will logically have a deleterious effect on their ability to acquire consumers. It is a grand dilemma; either increase prices to make up for a diminishing add buying power, buy fewer media placements or a poorer quality of media, or divert funds from other sources (like a reduced payroll) in order to maintain your marketing spend.

This is the meat of John’s post. What will the declining big volume buyers (like New Century and Ameriquest) do to the quality of big volume sellers? Does it create opportunity for smaller buyers and sellers? If it does how do you capture that opportunity most efficiently?

The only note I will add to this, because I like to have my readers form their own opinions, is that we have seen (and you have too if you are watching our Lead Marketwatch widget) a subtle surge in the quality of smaller organic lead generation players in this space. If that trend continues smaller lenders may be able to tap into more of these through an exchange. Furthermore, bigger lenders, that need more volume, may be able to conveniently and more economically have these smaller sources vetted and aggregated by an exchange and the exchange marketplace.

Thoughts?

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