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  • A Private Equity Backed Lead Generation Company – A Case Study

    January 27th, 2011
    1 Comment »

    This is a guest post by Steve Ross, Managing Director, MCM Capital Partners. The views expressed below are his own and not too promotional.

    MCM Capital Partners, a micro-cap private equity firm headquartered in Cleveland, Ohio, ventured into unchartered waters in 2005 with its acquisition of Cole Information Services, an orphan division of a $100mm+ direct marketing company.   MCM’s investment thesis in acquiring Cole was predicated upon: (a) the company being a niche service provider in providing small businesses with actionable intelligence to market their products and services; (b) its seasoned management team being desirous of remaining with the business;  (c) the company’s successful launch of several promising online marketing products that would quickly become invaluable to thousands of small businesses; and (d) the fragmented nature of the direct marketing industry which would support an acquisition strategy to grow Cole’s top line.    MCM’s task was to take this gem of a company that had been operating as a dependent division of a large company and work with management to transition it into being a profitable stand-alone company.

    MCM has a 19-year track record of investing in niche manufacturing, value added distribution and specialty service companies that generate up to $75 million in sales.  The following were the key drivers that MCM was able to offer Cole to facilitate the transition:

    Sharing of Best Practices

    CEO’s are faced with the extraordinary challenge to grow revenues and build shareholder value.  MCM holds an annual CEO Summit in which our portfolio company senior executives listen, learn, and share their operational practices with industry experts in different fields.   In 2010, MCM invited Mark Goren, CEO of Point to Point Communication (www.pointtopoint.com) to discuss the value of social media in business today.  Cole capitalized on this concept by launching the most aggressive social marketing campaign of our entire portfolio via an active blog, a Facebook presence along with a host of other social media initiatives.

    Access to Human Resources

    When MCM acquired Cole it was our objective to retain all members of the incumbent management team and broaden the ownership of Cole to the management team.  That being said, it did not come as a surprise that a key human resource need arose at Cole shortly into our ownership.   Fortunately, MCM maintains relationships with top tier executive recruiters, which enabled MCM to provide Cole’s CEO, Jim Eggelston, with a list of pre-screened candidates to consider for certain financial and sales related positions within his management team.

    Establishing a Value Added Board of Advisors

    MCM established a value-added Board of Advisors at Cole that included several former CEO’s of private direct marketing companies.  Cole’s Board of Advisors includes the Chairman of a $100 million direct marketing company, a CEO of $50 million company, and two former executives of a business database company that was acquired by Dun & Bradstreet.

    Outsourced Corporate Development Services

    Growth via acquisition is an objective of MCM’s investment strategy with Cole.  To date, MCM and Cole have evaluated over 40 potential acquisition opportunities for the company.   MCM has identified these opportunities via our network of over 4,000 business intermediaries as well as a search firm that is currently on retainer.   Should you be aware of any potential sellers in the lead generation industry, please be aware that we pay standard intermediary fees for any introduction to a seller that culminates in a lead.

    You may reach Steve via email: steve{at}mcmcapital.com

    Company Reviews
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  • BrokersWeb.com Expanding into the Auto Insurance per-Click Marketplace

    June 24th, 2010
    5 Comments »

    Looking at Quinstreet’s market cap recently, you might presume something is wrong with the business. They are trading almost one-third off of their peak and almost twenty percent below their IPO. Yet, stock analysts who cover the sector estimate nothing but continued growth. Some of this selling of the stock is a result of perceived exposure to the Department of Education’s ongoing process to overhaul portions of the Higher Education Act. It’s a complex topic that is even more complex the further one is from an educational institution. The uncertainty and complexity hasn’t helped education institutions, most notably the for-profit education companies and those who service them like Quinstreet.

    The online education business might comprise the largest segment of Quinstreet’s business, as it was their primary line of business. But, education does not represent their fastest growing segment, financial services does. For those with some familiarity with Quinstreet’s business, financial services means SureHits, the auto insurance click marketplace the company acquired several years back. The SureHits business differs fundamentally with the cost-per-lead approach of Quinstreet’s online education business and with the cost per lead approach favored by a large number of other marketing services firms in insurance such as Netquote, InsWeb, and AllWebLeads.

    Outside of the obvious, namely that vertical click marketplaces charge on a click basis, vertical marketplaces have other differences that many advertisers favor. An advertiser in a vertical click marketplace owns the conversion experience. A common complaint of lead aggregators is that buyers do not know from where the leads come – what was said in the steps of the funnel up to their acquiring the name. In the click marketplace, they own the ad, the landing page, and are responsible for the conversion. The ultimate cost per lead could end up much higher than through a lead aggregator, but it is the only option for many brands who have policies against leads. The marketplace is all about control, and judging from SureHits success, there is something to be said for vertical marketplaces as an alternate vehicle in the quest leads. But, they are not for everyone. If you do not have expertise in online advertising, you will find yourself spending a lot for little in return.

    This week brings news of a new entrant into the vertical click marketplace for auto insurance – BrokersWeb. Those in the health care space most likely know BrokersWeb by their HealthCare.com brand and their additional owned properties HealthInsuranceFinders.com, HealthCare.org, MedicareSupplemental.com, MedicareSupplement.com, and LifeInsurance.org. In addition to owned properties, they also have robust network of highly-targeted website distribution partners. (HealthCare.com purchased the BrokersWeb assets in Q3 2008 and has grown them 5x since – primarily through partner distribution). As you can see from the domains, the company goes deep into the health care vertical, and it is my understanding too that they are the only solution for those niche health insurance sub-categories, i.e. Medicare Supplements, Group Health Insurance and Dental Insurance. Prior to this week’s auto insurance launch, life insurance was the most recent, launching in 2009 and buoyed significantly by the organic traffic coming through the highly ranked LifeInsurance.org.

    Auto insurance may not seem like a logical next step for a company with deep health expertise, but from a market perspective, it is the exact right choice. Everyone who drives needs it, i.e. a large overall market, relatively high natural churn so advertisers must spend to grow, and those insured with one company can switch to a new carrier with less friction than cell phone. Plus, there are a lot of major brands spending for direct access to customers – perfect for a vertical click marketplace. As such, it’s a logical next step for a company with an operating history in vertical click marketplaces. Like any entering, there is still the classic chicken and egg scenario of having enough buyers and sellers. Distribution partners will want high CPC’s, and advertisers will want to see quality before coughing up the high CPCs. It’s a slow process, and simply saying, we’re doing it doesn’t mean both sides will come. Luckily, there is enough latent demand from both that BrokersWeb stands a good chance of speeding up this process in order to become a viable player, and they are kicking off the launch with several high profile players on each side at launch. This includes top-tier bidders such as GEICO, Esurance and The Hartford on the advertiser side and AutoInsurance.com and OnlineAutoInsurance.com on the distribution side. We wish them luck as it’s always good to see growth in the space.

    Company Reviews, News & Analysis
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  • Altius Education

    December 14th, 2009
    1 Comment »

    Altius Education Logo

    Many companies have entered the for-profit education sector, especially those looking to generate leads. Few other online segments offer such attractive economics. The online lead generation space, certainly with respect to education, has few barriers to entry, requires a rather low amount of capital intensity, and success doesn’t require becoming class leading. It only requires one to perform incrementally better than the next provider. None of these are inherently wrong. They simply explain why so many who enter the online education lead generation segment focus on becoming a lead provider to the schools. As we see in the Quinstreet IPO filing, execute well, and a company can earn well north of a hundred million dollars annually servicing the sector. And, Quinstreet is not the only one. The race for the number one spot in education lead generation revenues is much closer than most think. There are three if not four in the $100mm club for online education lead generation. If you were going to enter the online education arena, wouldn’t you just operate a similar business? Not if you are Paul Freedman and his newest venture, Altius Education.

    Altius, as we found out from Founder and CEO Paul Freedman is Latin for “higher”, which makes the company name a clever, yet clear, description of their focus – the world of higher education. For another clue about Altius’s model, it helps to know something about the focus of the lead investor, Maveron who along with Spark Capital put an eye-opening $8 million into Altius’ Series A round. Maveron, as many inside the world of investing know, was co-founded by Howard Schultz, the man who has built in Starbucks one of the most recognizable brands in the world. His passion for consumer brands drives Maveron’s investment strategy. If a company doesn’t touch consumers, they don’t invest, which explains why many of Maveron’s investments are, in many places, also household names – from the super swanky Pinkberry to education leader Capella University. Such a large captial raise, though, would not have been possible were it not for Paul, the entrepreneur behind Altius. Unlike the dot com boom in the 1990′s where a sock puppet and a dream could get funding, serious money today requires a track record. Paul’s began in college during which he built a site for for people to do homework without going to the library. His was a natural language engine during a time when when the majority of reference material consisted of Microsoft Encarta at best. By the time they built up scale in traffic, the monetization had dried up, at least from an ad revenue perspective, so they retooled the technology to go from b2c to b2b, licensing it to universities. It enabled schools to have an automated knowledge base that students could tap to answer their questions. Schools needed it because in almost one admissions cycle, user behavior went from phone calls or letters to emails and web traffic.

    AcademicEngine, as it was known at the time, was sold to Hobsons in 2004, and Paul stayed on to lead its development through 2008. During his tenure, he noticed a pattern in the higher education space. More year students were choosing two year programs as a pathway to a four program, while traditional four year schools were both rejecting more students while increasing their appetite for junior transfers. There was and is a demand problem, but from a supply side, the two year programs, primarily community colleges, weren’t necessarily addressing areas for high economic demand post graduation or focusing on the matriculation process. More interesting than the problem was how Paul decided to solve it. He decided that he would focus on online education but innovate on the current supplier model. And, this where the need for a large amount of working capital comes into play. Altius partners with traditional non-profit who currently do not a strong online presence, or in any in most cases no online presence. Together, the non-profits and Altius form a for-profit company under a new brand with the school providing the content and professors, leaving Altius the rest, primarily the technical back-end and making sure the school has resources and processes in place to make sure leads become students. The schools get to focus on what they do best with Altius making sure that there are digital butts in seats.

    Ivy Bridge College Logo
    Altius’ first partnership was with Tiffin University, and together they created Ivy Bridge College of Tiffin University. Already, the new school has matriculation arrangements with 24 traditional schools where those graduating from Ivy Bridge are ensured admission. Ivy Bridge and the two newest programs being publicly announced January 2010, are all mission thematic. They build programs that are as Paul says, “not in the belly of the curve,” and he believes that the Altius approach will lead to better content, more engaged students, and ideally, better jobs. If the early indicators can tell us anything, they most likely tell us that Altius stands a good chance. In their first year of operations, they have enrolled 500 students; these are people who filled out a lead form, then an application, met the requirements for admission, scheduled their courses, and then actually began taking classes. Their lead to enrollment rate is not much higher than the industry average, more importantly, their term on term student retention is five times higher. Naturally, the test will be to see how it scales. Regarldess, it’s an impressive venture. We hope they succeed because it helps the world of education and lead generation. We thank Paul for sharing, and you can meet Paul at LeadsCon Las Vegas 2010.

    Company Reviews
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  • Spotlight on: Jordon Keltz

    November 20th, 2009
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    seniorsforliving

    “It all started above a deli in Staten Island.” And so begins one of the lesser known and more  intriguing stories in the world of online lead generation, one that has resulted in not just one successful exit but potentially three. Junkies of online lead generation will know the name ClassesUSA, and they will know it not for some of its innovative work on display today but for owning display before anyone, even the schools themselves, understood that it could be done.  And, it all started above a deli in Staten Island.

    The story which is today SeniorsForLiving.com began in 2000 when Jordon Keltz, who ran an internet consulting company ,became introduced to Luciano Rammairone, the founder of CollegBound. Today, they rank among the largest of online lead generation providers, easily in the top there, but in 2000, CollegeBound was an offline business, a series of publications for students and adults interested in higher education. Web guy meets education guy. They name their online venture ClassesUSA. The rest is history. Right? If only it were that easy. And, if it were that easy, the story wouldn’t be nearly as interesting.

    The year 2000 was early for online education lead generation, but it wasn’t early for several of the larger for profit institutions. Apollo Group’s University of Phoenix for instance had just entered its third decade of existence, but unlike today, where liquidity / monetization for those entering the marketing of online education, there was no field guide for ClassesUSA aka “Classes.” Their first site in fact had none of the usual suspects that we find on today’s online education properties. Luciano knew he wanted to create an online business, hence partnering with Jordon and creating Classes. But, with neither knowing what exactly that entailed what do you do? In their case, the logical choice was creating a showcase of classes that could be taken online. And rather than compensation occurring on a per lead basis, they received payment on a per transaction level. These weren’t degree programs but vocational courses; think of it as an early version of EduFire.

    Site built. Next was traffic, and this is where things start to click into place for amateur historians. In 2002, Jordon made a deal with MSN for placement. This wasn’t a straight banner deal but a more robust integration of their content and course listings. It was a cpc deal for MSN, where clicks on the courses would earn them money. It was still an arbitrage play for ClassesUSA, because they only received payment on a purchase. What they didn’t know at the time was that this deal and style of placement would become one of the best things that happened.  He certainly would have guessed it when they were losing money each month over month. But that would soon change, and it would change the entire focus of their business as well.  The placement attracted the attention of AIU who saw the Classes content as a natural fit for its certificates. That AIU wanted to pay on a lead basis was an initial stumbling block for a company that operated on an ecommerce model, but they went ahead and tried it.

    Not long after, Jordon found himself hearing from Capella and the University of Phoenix. They too had seen the site, and now with AIU on there, they wanted placement as well. And, it was then that the business started to shift. Leads worked. They went from losing money to making money, and even better they had the premier entities coming to them as opposed to the other way around. The content deal started working too well in fact. Jordon negotiated a cap on the number of clicks they would pay out to MSN. After that cap, it was pure profit. Around the time that they began renegotiating the deal was the time that MSN introduced PerformancePlus, their display on a CPA program that was open to a select few big spenders, one of whom was Classes. Now, they started running individual school ads on display and on other placements throughout the site. And, guess what happened when they put Phoenix on the home page? Everyone wanted the same – from schools to other aggregators. The gatekeeper to that traffic for a period became Classes and on the path to exponential growth.

    The next step became to own all of elearning on MSN, which they did, and then to apply that formula to other properties. Jordon proceeded to create a partnership with AOL, and in the next two years, he had crafted arrangements with almost all job and career sites. In 2005, Experian gave Classes an offer they couldn’t refuse, becoming part of Experian Interactive along with LowerMyBills and AffiliateFuel. Jordon moved Classes from its Staten Island headquarters that they shared with Luciano’s other business, CollegBound Network to the city, Manhattan. At about the same time, an old client from pre-Classes days was pitching a lead generation idea to him that Jordon invested in, and when his contract with Experian ended, he decided to take over the helm and apply his learnings to the senior housing lead generation space… which brings us to SeniorsForLiving.

    The online lead generation space for seniors is a fascinating and tantalizing one. It has all the right makings for a successful vertical – a large audience (boomers and their parents), a high ticket price (senior housing is not cheap), a transactional component, and a decision that requires follow-up, i.e. you don’t buy it online. As any who has tried to get into a new vertical can tell you, it’s a grueling process. There is a huge sales undertaking as you work to get coverage for the leads and as you work on educating buyers who in the past haven’t used leads as part of their business. It is according to Jordon where education was about ten years ago. There are some national brands that buy leads, but the mid to long tail isn’t there. And, senior housing lead generation is more akin to ground schools lead gen as a physical presence is needed. If there is anyone who will have success beating down doors, though, it’s he. A key to success he tells me is making sure institutions understand performance based marketing is the way to go, and trying to institute some online dna into marketing teams that are often focused only offline. Sounds familiar to many, I’m sure.

    Overall, Jordon is sticking to the formula he knows and believes in – user choice and exclusive leads. Their model focuses on a portal based approach where everything relies on the user making informed choices and understanding what happens next. That user doesn’t fill out a generic form but one for a specific institution. Not new to the game, SeniorsForLiving is focusing on quality of leads. As for traffic generation, they have made themselves very publisher friendly, and given what he did in the past, I wouldn’t be surprised if there weren’t some interesting partnerships in the works.

    Company Reviews, Marketing Strategies

  • RapLeaf – Can Social Media Data Help Lead Generators?

    October 19th, 2009
    1 Comment »

    Rapleaf logo

    Years ago, I remember hearing about a company called RapLeaf and its desire to create the equivalent of the eBay Feedback  Score, a universal quantification of one’s reputation. Look at the score and you would have an instant understanding of their person. Unlike eBay, whose Feedback Score relates only to their activity within the auction site, RapLeaf wanted to create a score that transcended any particular site. That meant gathering data across sites. Unfortunately, their plans for creating the repository for reputation didn’t catch on, but showing their roots as successful entrepreneurs, Auren Hoffman and company, did what Max Levchin did with Slide. He transformed the business into something else that works.  Today, RapLeaf leverages their expertise in social media data aggregation to offer businesses a way to understand their customers better by having access to their social activity.

    Calling today’s RapLeaf a startup version of Axciom or any number of data providers that if given some data can append it with additional is both accurate but selling short the uniqueness of RapLeaf’s data aggregation. I read a tweet recently that said, “2009: nearly 23% of Facebook users earn > $100,000/year; 16% for MySpace; 38% for LinkedIn.” The data came from a recent CNN Article titled, “Does your social class determine your online social network?” Regardless of one’s own personal feelings about the various social networks, as seen by this report, if you can know to which social networks a user belongs, you can glean some pretty insightful information that will help you make some potentially important business and marketing decisions. All a company needs in order to work with RapLeaf is a customer or potential customer’s email address. From there the process mirrors a more traditional data append service. As for what information, RapLeaf returns, here is a graphical representation instead of just a list.

    Data Fields

    So how are those in the online lead generation space using RapLeaf. To give you a hint of the potential power, a good friend of mine once joked that he would be more than happy if others didn’t learn about RapLeaf… and he meant it. An interesting example in my opinion comes from a not so obvious sector, those in payday loans. They use the RapLeaf data as a feedback loop. In other words, many in the space have found correlations between the quality of a lead, i.e., its likelihood for payback, and the social networks with which they belong. That correlation is probably not something we will see in a CNN article, though.  A more traditional example comes from outside the world of online lead generation where an agency or brand will desire to segment its users based on their social activity. This way, they can create custom segments and invite users to dialog with the company outside of just email. They can write those with Facebook accounts to become fans of their Facebook page, which will lead to both higher activity from that segmented blast and lower costs (by not sending a Facebook message to non-Facebook users).

    Not unlike other data providers, RapLeaf charges on a query volume basis, and companies can access the data by sending over files or in real-time through their API. Many in the online lead generation space have extensive familiarity using third party data providers and will wonder whether another source can really add value. Not addressing the lead scoring products but only data append, TARGUSinfo and eBureau have the largest share of market in the lead gen space (or so I believe) with Service Objects and Melissa Data being names mentioned frequently as well. The first two have products that focus on the robustness of primarily a phone or postal data whereas RapLeaf focuses on the robustness of an email address, and what you can learn by understanding not just email robustness but social strength – age, gender, and number of friends. Social networks, though, change very fast. LinkedIn today might imply a professional on the whole, but in two years, who knows. So, like any data set, making the most of it means continuously using it and not just a one time check or broad assumptions. Higher cost, but quality in leads to quality out.

    Data Append Rapleaf

    RapLeaf is based in San Francisco, California.

    About RapLeaf by RapLeaf:

    “Rapleaf is the leader in online people information search. Rapleaf’s services help top retailers, political organizations, airlines, hotels, banks, insurance companies, and other leading firms gain consumer insight, plan online media, and manage fraud risk in real-time. Today, Rapleaf has processed over 1 billion transactions and is one the largest people databases in the world with insight into 300+ million consumers. “

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  • Performline – Making the Invisible Visible

    October 4th, 2009
    1 Comment »

    Performline Logo

    When thinking about the online advertising world, Charles Dicken’s immortal opening line from  A Tale of Two Cities frequently comes to mind. While most tend to remember “It was the best of times, it was the worst of times…” the next part of the same sentence applies equally well, namely “…it was the age of wisdom, it was the age of foolishness…” That at least is how I tend to think of the ever-changing performance marketing landscape. A better line might be, “The more things change, the more things stay the same.” Banner ads are flashier, online video a part of every day reality, and applications once possible only on the desktop are now available online, but human nature doesn’t change.

    The New York Times, of all companies, was victim of classic human nature not too long ago. The newspaper’s online site was tricked into running ads for Vonage by a company that was not Vonage. Like any good scammer, they ran legitimate ads until no was looking, i.e. the weekend, at which time they switched from Vonage ads to phony virus-protection ads. According to reports, the new ads attempted to have users download supposed security software that ultimately bombarded users with ads until they paid for a piece of software that removed the newly installed virus. It’s an all too familiar scam that only highlights many of the vulnerabilities in the online ad ecosystem, especially in regards to display advertising. And if the NY Times is vulnerable, just imagine what lesser transgressions occur on a more regular basis. That is exactly what the New York based company PerformLine looks to make known so that advertisers and publishers don’t find themselves the unwitting victim in the often cat and mouse game of online monetization.

    Founded almost two years ago by 12-year veteran of the online advertising space Alex Baydin, PerformLine has an ambitious goal-a goal that becomes more valuable with time, not less. In a world with only a handful of sites and ad placements, keeping track of what is running where is a relatively easy task. However, it is now virtually impossible to know where your ads run. And, despite assurances from networks about the quality of sites in their network, even they spend more time than they’d like battling rogue publishers putting their code on undesirable content. If PerformLine has its way, advertisers will rest assured and feel more in control. The PerformMatch platform focuses on providing transparency to the display process, giving advertisers a visible trail to follow and scoring sites based on their compliance to the terms set forth by the advertiser. PerformMatch is a campaign verification platform that looks to find and eliminate waste by acting as an independent third-party and automating the process so that it doesn’t become the unofficial job of the advertiser.

    PerformMatch Screenshot
    (Screenshot of PerformMatch interface. Click to enlarge.)

    Bad behavior doesn’t confine itself to the display landscape, but this is the area with a lot of room for improvement. Display and email are the first two areas that PerformLine’s PerformMatch focuses on. As is the case with display, the company has proprietary technology allowing them to flag offending or potentially violating email creative so that advertisers can review it. Among other things, this allows advertisers to gain visibility into which subject lines and creative actually drive visitors to their pages. PerformMatch works for both advertisers and networks who want to make sure that traffic sources are compliant and not using troublesome ads or showing ads on compromising sites.

    According to Alex Baydin, the company will begin with display and email, but the product road map has them creating similar optics into other major drivers of traffic, including search. In Baydin’s opinion, what is happening to the online marketing landscape today is no different than click fraud. It simply has another name-targeting fraud. Every time an advertiser’s message appears in a place or in context that it shouldn’t, that is fraud. Many companies have made click fraud known and offer ways to help advertisers, but far fewer, if any, are tackling the equally detrimental problem of targeting fraud. Ignorance can be bliss until your customers write you and tell you otherwise. Just ask the NY Times.

    Company Reviews
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  • In Brief: Inadco

    August 25th, 2009
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    inadco

    Paid Content ran a blurb today regarding somewhat stealthy startup, Inadco, titled “Lead Generation Firm Inadco Raises $5 Million; Spends $3 Million Of It On Acquisition.” Alas, we know no more than they do regarding the firm behind the funding or the company that was rumored to have been acquired. What the story did do, though, is bring to light one of the best trends we are seeing in online lead generation – the platform play.

    There are a several different approaches that those in the online lead generation world have taken. The first is arguably the oldest and most classic approach – a direct marketing / arbitrage business. In this model, a company spends money to make money. It is fair to say that the vast majority of revenues flowing through online customer acquisition today follow-this model. They include some storied firms with impressive revenues. Quinstreet, for example, took the bold step of publicly disclosed its fiscal year 2008 earnings – an unusual step for a coming that has historically kept all information tightly guarded. (FYI, from the article, “QuinStreet said it generated revenue of $261 million, up 36% from a year ago, and earnings before interest, taxes, depreciation and amortization, or Ebitda, of $57 million, up 57%.”) Regardless of why they shared the numbers, it’s great to see, as it they wouldn’t do so were they not confident in their business and the industry. Sneaky large companies such as CollegeBound also fall into this direct response based model.

    The second model is the brand building approach. It’s one that is very new and epitomized by companies like BillShrink, CreditKarma, and KnowBeforeYouApply.com. The premise sounds easy enough – create a compelling consumer proposition such that users choose to visit your site. They either hear about you through PR / friends, or they find it through organic search results. While many companies own well ranked organic sites, Quinstreet chief among them, what differentiates that SEO approach from the brand approach is the investment in recall, in building a service that users don’t just use once but come back to time again. Among contenders, BillShrink has had the most high profile attention (hard to beat inclusion in a national T-Mobile commercial), but none can yet claim victory for the approach. If lead generation is in the second inning, then the brand approach is just getting drafted. Like the disclosure of earnings by Quinstreet, that companies like these exist is a boon to the long-term future of online customer acquisition, because it signals investor’s willingness to embrace the sector and a real focus on the user.

    Third comes the impetus for the post, Inadco and the platform approach. When we look out over the landscape of internet advertising companies, we see plenty that fall into the above categories – from direct response firms to consumer plays. The largest plays, though, have often been platform plays. Google, for example, makes all of their money by creating efficiencies for advertisers to reach publishers and for publishers to earn money off ads. They just happen to be their own publisher as well. Creating a platform is no easy feat, but doing so means being able to achieve a scale that most other businesses can’t – in reach and revenue. The best are technology driven and can create true barriers to entry. Such is what Inadco certainly hopes to build. And, while we have no shortage of platforms offering this level of efficiency on a CPM/CPC basis to advertisers, we have very few doing it on a per lead basis. The belief is that they can create a monetization engine that for a good chunk of inventory will perform better for publishers than the click to a third-party site options today. It’s not an easy business to build, because it takes time to get to scale, and there are no dumb money short-cuts that exist with some other forms of online ad spend. Inadco will earn their success, but when they do, they will really have earned it. Two others focusing on the platform approach – Pontiflex and Performline. What’s great is that each has the chance to succeed without needing the other to fail.

    Company Reviews, Marketing Strategies
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  • Tripology – Travel Lead Generation

    July 8th, 2009
    2 Comments »

    There is travel, and then there is travel. The internet has done wonders for the first, the do-it-yourself trips. If there is ever a case-study for how the internet can improve our lives through increased transparency, competition, and empowerment, the travel industry has a strong case to make for being number one. Just as I can’t imagine no being able to buy a domain name online and in real-time, so too can I not imagine the ability to view the travel landscape on-demand and without having to go through an intermediary that in the past has simply served as a gatekeeper earning above average markups doing administrative work. Ultimately, though, for me, any potential issues resides less about the fees they might make and more about not knowing if I am receiving the best deal. For any that have taken trips to destinations that benefit greatly from local expertise, though, the do-it-yourself travel sites, more commonly referred to in-industry as OTA (online travel agencies) come up lacking.

    In the category of “real travel,” e.g., vacations to areas outside our commodity zone (going home, on a business trip, and other known places, to name a few), some sites have become clear favorites and pretty impressive tools. Tripadvisor has a strong following and when traveling to a foreign city, has become a tool I couldn’t live without. While it has had issues with review legitimacy, the aggregate power of the crowd and especially the number of user-uploaded photos, adds an incredible layer of confidence when trying to make hotel picks and even restaurants. I used it excessively on a recent trip. Even with the improvement in sites like Hotels.com, Expedia, Orbitz, etc., they still lack the critical mass which translates into seemingly unbiased and useful rankings of places. Unfortunately, for any that have used TripAdvisor and others, the process of planning a trip to a new destination still lacks online. Fortunately, several companies have started to address this, and we met with the most interesting, Tripology, which does more than help out end users, it has become an equally beneficial source for travel agents.

    Tripology Homepage

    Vacations in particular are higher dollar trips. There are some that fall into the do-it yourself, certain cruises and theme parks come to mind, but a large percentage don’t – single destination trips in a foreign country and anything with greater complexity, such as multiple stops and/or adventure travel. For those who have traveled to new destinations and like to travel outside of their comfort zone, picking the right places during the right time is not only daunting but in many ways also lonely. Who can you turn to for expertise after arriving or if you need advice? The list is few and not always inspiring. That is where experts come into play. The best travel agents, the value-add ones, do more than just book the trip and make a commission for doing so, they provide guidance that get us up the learning curve. The problem in the past was that there was no good way to determine who could add this value and who couldn’t. The fact that you had to use one meant you had many poor ones. The good ones though, no longer have physical addresses as a result of the market changes to online, and many users who grew up in a generation without them, wouldn’t know how to find them either. All of which makes Tripology not just a great business idea but the best kind of online customer acquisition model, one that helps users and businesses connect more efficiently than they would on their own. Given the number of buyers and the desire to be effective, the company focuses heavily on their algorithm for matching requests to buyers, which makes sense given the amount of information that people provide and time invested in the process.

    The business was created by Chinedu Echeruo, known better by those living in major metropolitan areas for HopStop (a site so good that Google copied it for their transit product). Like the founding of eBay, Tripology was started to solve a personal problem, a weakness experienced by Chinedu. In mid-2008, the company brought on travel veteran and twice successful travel entrepreneur John Peters to lead the company as their CEO. I heard him speak in New York at an appropriately themed event on Lead Generation 2.0. Tripology has received praise from both traditional media and the travel industry. For travel agents, they have established themselves as the place to connect with potential clients. Much of the company’s challenges are not so much finding lead buyers, a huge testament to their success so far, but a more lead generation wide challenge of making sure their buyers are best poised for success – helping them understand pricing, follow-up, and why they might not even be allowed to buy leads. And, John has done a great job of merging his travel experience with online customer acquisition – not an easy task when you are creating a market that didn’t exist previously. Like any market maker, their position is an admirable one but not necessarily an enviable one.  It’s easy to root for them and believe in what they do, as they in so many ways represent all that is good with online lead generation and online customer acquisition.

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  • BillShrink.com Goes Primetime

    June 4th, 2009
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    billshrink-logo

    With a one-time tagline that read, “Shrinkage is good,” you know that the company BillShrink wants to stand a part from others, and recently it has had the chance.

    For those unfamiliar with BillShrink but familiar with the online lead generation space, you could almost describe the company as LowerMyBills.com 2.0. I’d suspect that all things being equal, BillShrink’s CEO Peter Pham wishes that his board member and the founder of LowerMyBills, Matt Coffin, hadn’t had quite the success he did, because  he wouldn’t mind using that name.

    Perhaps only one other consumer site in the online customer acquisition arena has received the type of media coverage that BillShrink has, and countless articles and mentions have flown their way from TV news to the Wall Street Journal. As one following the evolution of online customer acquisition, what interests me most are the factors that have allowed BillShrink to fulfill on the promise originated by LowerMyBills. Interestingly, both BillShrink and LowerMyBills (purchased by Experian Interactive in 2004 for roughly $330mm) made their biggest gains during a difficult economic environment, but the means by which they have done so highlight not just the differences between LowerMyBills and BillShrink but many others in the customer acquisition space.

    You could say both companies have made a name through themselves via the ads people see, but the strategies for placement couldn’t be more dissimilar. LowerMyBills initially wanted to be all things to all people, a place to save on countless categories of expenditures. But, they couldn’t make money doing that. Coffin’s genius, among other things, was the realization that they could generate high returns on their refinance lead generation business, and while the main LowerMyBills page kept non-financial services, e.g., home services, viewable to visitors for a while, the company focused all of its attention on building out a media business focusing on financial services lead generation. They succeeded for many reasons, but the perfect storm of low rates, high demand, high acceptance, and cheap media among other things, enabled LowerMyBills to become a dominant player not just in online lead generation but all of advertising. The now famous Coffin-”double down” transformed his company and created a brand in the process.

    (more…)

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  • LearnHub – International Online Education Lead Generation

    May 28th, 2009
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    Learnhub logo
    Earlier this year at LeadsCon Las Vegas 2009, I found myself having a quick conversation with John Green, co-founder CTO of LearnHub. Despite our introductory chat occurring during the after-party, I remember making a mental note to speak with him later about what sounded like a unique and interesting business from entrepreneur with relevant prior experience. At some point later, I remembered that mental note, but I thought that I must have forgotten the company name and/or URL, as I didn’t think the site matched the mental note I had made. After spending some time on the phone with John recently, I did indeed remember the site correctly, but the mistake I made initially was to confuse LearnHub for something else, something less interesting. The reason I believe is that while the homepage clearly explains what the site has to offer, it goes about it an understated manner. In other words, it is easy to think of it as one of many that are playing in the presumably crowded field of college preparation. My conversation with John and learning more about the origins of the people behind LearnHub convinced me that LearnHub is anything but a me too.

    The two founders of LearnHub, the husband and wife team of John Green and Malgosia Green, worked together at Affinity Labs prior to founding LearnHub. While Affinity Labs is known for its community approach to generating tremendous organic growth, lead generation provided the revenues, and that monetization engine is what John built. Capturing data for a single buyer isn’t all that complex, but managing that process for hundreds of buyers, each of whom has different requirements – not just the fields but what they call those fields and how they want the data delivered – takes a relatively simple task and makes it logarithmically more difficult one. And all of those are just backend processing functions. Any good platform also includes administrative interfaces so that non-technology users can interact with the system, which includes not just reporting functions so that the business can know where it stands at any given moment but also fraud settings and budgeting functions. A testament to the platform, it ultimately became the platform for all of Monster Learning, e.g., FastWeb, after their acquisition of Affinity Labs in 2006.

    John and Malgosia didn’t have plans to leave Affinity Labs, especially since they did so prior to its acquisition, but they found themselves on unexpectedly on the radar of Shantanu Prakash, the founder of Educomp Solutions Limited, India’s largest education company. The three of them began speaking, and those conversations along with their entrepreneurial bent formed the genesis of LearnHub. Today, the company is just over a year old, and while the founders are based in Toronto, they run a non-traditional multi-national company. Their primary investor is in India, software development and sales  is in Toronto (with an additional sales office in the US);  marketing, counseling, and community management is housed in India. That last part might not seem intuitive, but it is at the heart of their business. They began with a premise that there is a business in international lead generation for education – not the more obvious angle of trying to generate leads from non-US students for one of the handful of for-profit institutions with localized online programs. The bigger market and the one they wanted to make more efficient is that of foreign students traveling to the United States to obtain degrees. India is LearnHub’s largest market, for many reason, but it is the largest of the more than 50 countries from which they have generated leads.

    Drawing from their their Affinity Labs days, LearnHub has focused solely on organic traffic generation; that is why the site has gone deep into standardized testing and community functions designed to attract foreign students looking to study abroad. For those thinking they should get into this market, you might pause at the operational challenges involved. The usual suspects of lead buyers aren’t the ones looking for these leads. Almost 90% of LearnHub’s buyers hadn’t purchased leads prior to working withe company, and when dealing with a school, they are dealing with a different department, a different set of people and a different budget. That doesn’t include the work involved in getting an interested and qualified student enrolled. It’s not as simple as them beginning an online course; those don’t require visas. And, it makes their business all that more interesting that they have been able to become arguably the largest specializing in lead generation from one country to another. It also gives them a leg up for when it comes time to expand into other areas such as in-country lead generation and the promotion of related services, for their current clients are a complex customer in need of many additional services. All in all a great accomplishment with a lot less capital than the better known but less robust StudyPlaces.com (backed by Kleiner Perkins and Sherpalo Ventures), and it’s always great to see a company not just taking a me too approach to online lead generation.

    For the not so subtle plug, come see LearnHub at LeadsCon East 2009, August 17 – 18, 2009.

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