Below is a list of tech company’s who IPO’d in 2011. Can you plug in the appropriate stock performance?

The choices are:
-0.98%
-37.15%
+40.16%
-0.95%
-20.99%
-33.15%

What is your guess? Notice. Two stocks were relatively flat. Three lost more than 20%, with the average being closer to 30%. Only one was positive and by a lot.

Is your guess something like this?

What if we said the actual answer looked like this?

That’s right. Of all the tech IPO’s including some of the most anticipated and hyped companies, only one had a win, and only one looked like this:

Bankrate (RATE).

Compliance is the ongoing battle to not run into legal hurdles. The downsides of non-compliance are huge expenses. Fraud is the ongoing battle to insure data integrity. It is like Chinese water torture for a lead buyer.

We came across this stat below. It’s from the leading fraud monitoring company, Fraudlogix. While not 90%, fully 15% of leads are fraud. What is fraud? The problem is that fraud can be and usually is real data. It’s more insidious than click fraud, because it’s engages and wastes human capital. Data fraud is zero intent traffic. The person’s whose information is entered didn’t do it, and they have no desire to be contacted. They will pass validation software and could even score well as a lead, but the only customer they will turn into is an angry one.

The Fraud Paradox is what those who contemplate minimizing their fraud go through. They look at the above data and do the math. If they run a $100,000 per month operation, they are looking at losing $15,000. At $1.5mm per month, they are looking at $150,000 PER MONTH in lost revenue. The problem is a simple one. Lead markets are poorly optimized. If a seller cuts out 15% of absolutely non-performing traffic, they do not see a 15% bump in prices to make up for the lost revenue. They could argue for a greater than 15% bump given that there are labor savings as well. The fact is that they won’t see any bump. So, their incentive for using fraud monitoring is limited only to a last resort, where they will lose the business entirely.

The second part of the Fraud Paradox is what happens after someone actually starts to implement fraud monitoring. (The someone in this case is almost always an aggregator, and fraud monitoring, like compliance, only works when the landing pages of where the data is collected is tagged.) When someone starts to implement fraud monitoring, the fear of losing business has them only use the service sparingly…at first. It then become like a radar detector for a car. They start to realize that instead of living in fear, they can actually start to open up their marketing efforts to more sources. The net result – virtually everyone who uses these services sees an uptick in their business over time.

Vantage Media and BrokersWeb Combine to Create Multi-Vertical Leader in Online Customer Acquisition.

That’s the title of the release that hit the wires this morning. It’s an announcement that, in some ways, is long overdue. BrokersWeb had begun a process (the term used for a company hiring a bank for fundraising or m&a) earlier this year to seek a strategic acquirer, but it was pulled from the market relatively quickly. The company, though, did not take in any money or change their strategy, i.e., desire to be acquired. At the same time, months and months went by without any word about the not-abandoned process. Until now that is.

Had I been asked to guess which company would most likely acquire BrokersWeb, I’m not sure I would have guessed Vantage Media. In fact, I’m pretty sure I would not have guessed them at all. I would have looked to one of the two public companies in the space – QuinStreet or BankRate – as the most likely acquirers. Both QNST and RATE have core products offering vertical click marketplaces, and while each already has their own auto insurance click marketplace, buying BrokersWeb could have helped them essentially lock up the market. For QNST, buying BrokersWeb would have helped them consolidate a competitor that in the last 16 months has gone from non-existent entrant to serious pain in their side. Were I asked to guess what company Vantage Media might buy, with the hint being it could be a big acquisition, I probably would have put BrokersWeb up high on the hit list.

Vantage Media may not be a household name, but the company is anything but an upstart in the online customer acquisition space. The DiPaola brothers started the business more than a decade ago, discovering paid search when doing some almost accidental affiliate marketing for Crutchfield, and then becoming one of the earliest players to focus on education. Vantage Media focused exclusively on for-profit education via search, and the span of a few short years became a $30mm+ player at a time when very few companies had achieved such scale. The brothers sold a majority of the business to venture / private equity firms four years back, and the new management team looked to take the business beyond education. Vantage never left education, but they started to position themselves as a search marketing agency that took principal risk. Earlier this year, the company underwent a transition again with a new CEO taking over, Patrick Quigley, one of, if not the first employees of QuinStreet.

We have covered BrokersWeb a number of times on this site. The company began as a health insurance play, leveraging its suite of organic domains and a select group of partners. As QuinStreet’s auto insurance click marketplace started to take off (thanks for its acquisition of SureHits), BrokersWeb decided that they would focus their efforts less on health insurance and build an auto click marketplace. The move made sense, especially in light of the changes taking place on a policy level with health insurance with new laws lowering how much agents made on new policies. The move paid off big with BrokersWeb posting ridiculous growth, numbers like $2mm to $16mm to $40mm+. The only downside to this growth was that their overall headcount didn’t increase during their exponential growth, meaning the company didn’t have an infrastructure that would allow them to confidently continue that growth. They knew they had the proverbial bull by the horns, but they also knew it could buck them off if they didn’t take action.

Combining BrokersWeb with Vantage brings together an interesting set of disciplines across multiple verticals not to mention a company that should do well north of $150mm in 2011 with $200mm+ a realistic target for 2012. Also of note, this was less about an asset, e.g., acquiring an agent base, and all about acquiring a team. Vantage saw what the BrokersWeb team could do, and obviously views this as a chance to aid them as they look to repeat the success of auto insurance into other verticals (education anyone?). That BrokersWeb didn’t look to find just the largest buyer (Vantage is big but not that big) tells me the team at BrokersWeb cared less about the money and more about building a big business, which is great news for the industry. Congratulations to both companies.

Those who have been in the lead generation space for any appreciable amount of time will know Jordon’s work even if they don’t know his name. Alongside Luciano Rammairone, Jordon led ClassesUSA from concept to sizable exit to Experian Interactive all while teaching others in the space how to think about the online education lead generation business. Luciano is the Chairman of one of the largest online and offline education lead businesses, CollegeBound Network while Jordon has dedicated the last several years to doing what he does so well – breaking down barriers. Keltz made an early bet on the senior living space at a time when the buyers were just getting comfortable with pay per move-ins not even leads. I’m sure he and the team have some stories about their efforts to facilities happy with local print ads to leads. (“What? They don’t just walk in? We have to call?”)

Similar to senior housing, the market for green lead gen is in its infancy. It’s much smaller than senior housing is today and has some built in limitations. Solar lead generation is the biggest sub-segment.

• Solar panels though are only good for homes that see enough sun to offset the high cost of installation.
• They rely on government subsidies which could go away
• They don’t have a large organic demand, i.e., people aren’t thinking about them
• There is some built in competition from existing home improvement lead gen sites as it’s a similar buyer base (think how mortgage loan officers pivoted into debt when the market changed)

No industry is perfect, and if solar / green lead gen looked so easy, we would already see many competitors. The hardest part for any vertical is building the market – both the user demand and the buyer base. The good news here is that, like senior housing, the long-term fundamentals are there. Given that Jordon has been spot on twice before has me thinking, that in 18 months time or less, we’ll be seeing many more companies paying attention to the green lead gen space. While I don’t necessarily wish more competition, it would be great for the industry as a whole to continue to service new sectors.

LeadTune and Datamark Reach Agreement

Reject Prevention Technology to Help EDU Clients Avoid Dupes in Real Time
SALT LAKE CITY, July 18, 2011 /PRNewswire-iReach/ — LeadTune, a leader in lead conversion technology, has entered into a formal agreement with Datamark to integrate its Rescue product into Datamark’s LeadBin. The integration will allow all current and future Datamark clients to take advantage of LeadTune’s reject prevention technology.

Click Here for the full release.

Editor’s Note: While no release is more newsworthy than another, this one caught my eye as it has been something long discussed but often not pursued. The idea is relatively straightforward. Before sending a lead to a school, see if that lead should get sent to that school. If it shouldn’t, e.g., because it’s a duplicate, then don’t send it. The challenge with this is access. Not all schools will feel comfortable allowing LeadTune to sit in between them and the seller. Two of the larger schools, Apollo Group’s University of Phoenix and the schools run by Education Management Corporation have their own ping system where sellers see if the lead would get bought. Some sellers cynically believe that while helpful, the ping system simply gives the school a chance to not pay for a lead but follow-up with it if it isn’t enrolled.

mediaspike Experiences 150% Increase in Lead Allocation with eBureau’s Education Lead Quality Score

ST. CLOUD, Minn. July 26, 2011, eBureau, a leader in predictive analytics for performance marketers and digital advertisers, today announced that mediaspike, Inc, a lead generator for the education industry, has seen a 150% increase in lead allocations since deploying eBureau’s new Education Lead Quality Score. mediaspike’s philosophy for lead generation is to be on the forefront of lead quality through the use of analytics and technology. eBureau’s Education Lead Quality Score allows mediaspike to focus on quality for their clients by scoring the leads they generate to determine the likelihood of start, resulting in higher enrollment rates for their college clients.

Click Here for the full release

Editor’s Note: eBureau’s Jeff Liebel will be moderating, “What Every EDU Marketer Must Know” at LeadsCon East 2011. EBureau is both sponsoring and exhibiting. (Thank you eBureau for your continued support.)

Marketfish Sets New Industry Standards for Clean Data

Integration With LeadSpend, impressionwise Helps List Marketing Leader Change the Data Hygiene Game
SEATTLE, WA–(Marketwire – Jul 26, 2011) – Marketfish, a self-service lead generation platform for list marketing, today announced two important partnerships that are helping it commit to the best data hygiene practices in the list marketing industry. By combining forces with LeadSpend’s email validation technology and impressionwise’s online messaging analytics, Marketfish will clean data in real time before campaigns are sent out, ensuring maximum inbox delivery and exceptional campaign performance. Advertisers will be able to reach the exact prospects they want without sacrificing email best practices. Specifically, these partnerships will ensure that a larger proportion of advertisers’ target audiences will receive the intended emails, while the percentage of emails that go to the wrong people or to bad addresses will be reduced or eliminated.

Click Here for the full release.

Editor’s Note: Craig Swerdloff, the Founder of LeadSpend, will be at LeadsCon and joining the important discussion, “The Other Part of Compliance – Managing and Preventing Fraud.” He will also be showcasing his technology later during the “Deep Dive” session on the same topic. (The “Deep Dive” takes place in a smaller, more intimate environment that enables more one on one interaction.)

MediaTrust PerformanceExchange Earns Straight A’s In Education Performance Marketing

Los Angeles, CA—(July 27, 2011)—MediaTrust, a leading digital performance-marketing firm based in New York and Los Angeles, has released an online education marketing case study that documents the success of its MediaTrust PerformanceExchange (MTPX)—a real-time CPC bid exchange for performance marketing— within the online education vertical. Working with industry-leading online education advertiser, AcademixDirect, MediaTrust proves performance marketing can still yield profitable results for lead generation and direct response advertisers looking to increase business, even with recent marketing regulations in place. With the success of the PerformanceExchange credited to its quality traffic, compliance, and customer-centric Partner Management team, MTPX is quickly extending its reach into new marketing verticals such as: insurance, finance, and home improvement.  Based upon current business trends, MediaTrust expects these verticals to quickly scale and produce competitive eCPAs (effective Cost Per Action).

Click Here for the full release

Editor’s Note: Watch MediaTrust’s CEO Peter Bordes on stage as he joins the panel, “Is CPC the New CPL.” MediaTrust is also exhibiting at the show.

The largest of the for-profit schools are publicly traded companies. Looking at their stock prices over the past year has provided a glimpse into the rule making process. For those not following the rule making process, an entire sector has waited with baited breath as these rules determine the allocation and availability of federal funding. Given that federal funds make up the preponderance of revenue at for-profit education institutions. Any change to their availability could have severe impacts on a companies ability to generate revenue and thus the amount of leads they would purchase.

Again as Inside Higher Ed reports, “the final rules focus on the amount of debt that students in for-profit and certificate programs take on, and on their prospects for paying it off. The final regulations offer colleges significantly more leeway, lowering the required debt-to-income ratios and giving institutions more chances to improve before they lose eligibility for federal financial aid.” Good news? Just take a look at the market today. As usual, there are those on both sides that aren’t happy with the rules, but given that new rules were happening, it’s nice to see ones that truly tried to balance the needs of both sides with the students still winning, i.e., receiving an education with greater accountability to their professional needs.

LC: Congratulations on Being named Ernst & Young Entrepreneur Of The Year 2011 Florida Award Finalist. Sounds great. What exactly does that mean?

MT: Thank you. It means that we have a fantastic team that built one of the fastest growing companies in online media.BrokersWeb is anything but your first start-up. Take us through what brought you to this point?Our last company was a display adnetwork serving every vertical. It was a good business however we realized that there were a handful of verticals generating most of our revenue. This new company was built with the vision of focusing in one big vertical knowing that if we executed correctly we could build a dominant presence. After researching, we concluded that insurance was one of the verticals with the biggest potential. We started with health insurance and expanded rapidly into other types of insurance like auto, life, medicare supplemental, renters and home. We continue to expand our reach and depth within insurance. In full honesty it’s been hard but so far we’ve been lucky to find the right team to build all the opportunities we identified.

LC: Very impressive. How does the world of lead generation compare to the other industries you’ve served?

MT: Its so much more sophisticated in every way: technology, media buying best practices, tracking capabilities, etc. Its so ROI driven that is the best example of why online media is a great business for all the participant parties (advertisers, media, consumers). I admire so many companies in the space, we’ve learned so much from all of them.

LC: You seem to like challenges. What has the transition into other avenues of insurance, specifically auto insurance been like?

MT: Like in any other industry, building a business is all about building relationships. We were enlightened by all our clients and publishers of the big opportunity that there was in other types of insurance aside from health insurance. They were familiar with our business ethics, quality traffic and higher publisher payouts in our health vertical, they asked us to go into those new types of insurance, and we delivered.

LC: What are some of the challenges when it comes to scaling a business, especially in a new vertical?
MT: Finding and hiring the right people, identifying and assigning them the right initiative and creating the right reporting structure that force everyone to review daily (or hourly if needed) if things are developing towards goals set. This sounds simple and common sense, however because of the day to day, the challenge is to maintain clarity in all of this.

LC: If you could change anything about the online lead generation landscape, what would it be?

MT:Transparency and how marketers are held responsible for the spend of their advertisers. We really like our business model because it forces us to deliver only good quality, otherwise our bids go down almost immediately. As we continue to focus in improving the quality of our network, we’ll continue to see a growing BrokersWeb.

This show has been more than a year in the making. As followers of almost all things customer acquisition online, it was hard not to notice the rise of the group buying / group coupon businesses. The biggest question for me was how to classify them. Groupon, LivingSocial, etc. are lead generators. They are aggregators that sit in between merchants and users, helping each meet the other on a performance basis. As with lead generation, the actual “lead” (in this case a voucher) is rarely profitable for the merchant. It requires a percentage of voucher users to become long-term customers. Deal sites are direct response, customer acquisition businesses that have unlocked the economics of run of network spend with local targeting.

Daily Deal sites are fascinating businesses. And, while lead generators, do they belong at LeadsCon? The answer we decided was no. It is the same reason why LeadsCon tends to shy away from an emphasis on business to business lead generation. The goal of LeadsCon is to create a targeted experience where attendees who don’t know each will feel as though those they meet could make for good partners. We try to avoid a high false-positive rate. That is why Daily Deal Summit is a separate event. The business model is the same but the buyers are different, the lead platforms are different, and the technology solutions are different. Traffic acquisition is almost identical, and that explains why more than a few from the sell side of LeadsCon are checking out Daily Deal Summit.

This is the latest in an amazing round of consolidation within the insurance lead generation category. The reigning champions of insurance lead generation, Quinstreet (QNST), up 60% since its IPO, and Bankrate have spent hundreds of millions of dollars in the past 12 months combining companies. The former owns SureHits, and added Insurance.com  and CarInsurance.com among others. Bankrate which owned InsureMe added the leading lead generation firm, Netquote to its roster, bolstering its financial services business at the same time with the purchase of CreditCards.com.

Prior to moves by Quinstreet and Bankrate, All Web Leads was in the top three of insurance lead generation firms, and this move helps them counter the moves by their larger rivals. It’s a bold move and took some impressive orchestration to pull off. The company brought in Great Hill Partners, a Boston-based private equity firm, to make the transaction possible.

The natural question on many people’s minds will be, “Really?” The two companies have very different cultures. Yet, a look at their strengths starts to explain the business fit. InsuranceLeads.com has primarily focused on growing its insurance agent base. Until recently, it had not focused as heavily on the traffic acquisition side. All Web Leads was much stronger on the traffic acquisition side but had a smaller agent base. Putting the two together creates a company, according to them, that has among the largest agent bases and generates the most leads. All Web Leads will manage the combined entity out of their Austin headquarters, and the new entity will generate we hear greater than $100mm in revenues this year.

In summary, exciting. Congratulations to both companies and the industry.

Here is a copy of the release.

All Web Leads, Inc. Joins Forces with Great Hill Partners to Acquire InsuranceLeads.com

Combination Creates Industry’s Only “End-to-End” Online Marketing Services Company Focused Exclusively on Insurance

All Web Leads, a leading online sales lead generation company supplying the US insurance industry, announced today that it had acquired InsuranceLeads.com, a leading provider of online leads to insurance agents, brokers and carriers. To finance the acquisition All Web Leads has teamed with Great Hill Partners, a Boston-based private equity firm with over $2.5 billion under management, who have made a majority investment in the combined entity. All Web Leads’ current executive team will lead the combined company, which will continue to be based in Austin, Texas. Morgan Keegan served as an advisor to All Web Leads, Inc for the transaction. Financial terms of the transaction were not disclosed.

“We are very excited to welcome the InsuranceLeads.com team to the All Web Leads family,” said Bill Daniel, CEO of All Web Leads, Inc. “This acquisition will create tremendous additional value for the insurance agents, brokers and carriers that purchase Internet leads by more closely matching their business needs and those of online consumers.”

“All Web Leads has built an impressive, data-driven online marketing business focused on the insurance sector,” said Michael Kumin of Great Hill Partners. “We are pleased to partner with Bill and the team at All Web Leads in the acquisition of InsuranceLeads.com and are excited to support the All Web Leads franchise in the next phase of its growth.”

The combination creates a technology and data-driven insurance leads powerhouse – the largest direct lead generator in the insurance industry and the second largest active customer base of insurance agents, brokers and carriers. Insurance represents a fast-growing online market, with consumers increasingly using the Internet to research policies and prices prior to contacting an agent. Insurance lead generation companies connect consumers searching for insurance online with agents, brokers and carriers who provide those products and simplify the process of obtaining multiple competitive quotes.

The combined company now operates the largest network of direct consumer marketing web properties devoted to helping consumers more easily obtain multiple insurance quotes. More than 10,000 insurance agents, as well as numerous brokerages and insurance carriers, subscribe to the company’s services.

About All Web Leads, Inc.
Founded in 2005, All Web Leads (http://www.allwebleads.com) is a leading online sales lead provider for the U.S. insurance industry. The company delivers real-time, targeted, high-quality sales leads to top insurance producers. All Web Lead’s technology-driven approach to online marketing helps bring together agents with qualified customers who are actively searching online for insurance products. The company is headquartered in Austin, TX.

About InsuranceLeads.com
InsuranceLeads.com has one of the largest and fastest growing networks of individual insurance agents, small, medium and large insurance sales organizations and major insurance companies. The company’s insurance sites help thousands of consumers a day receive competitive insurance quotes. The company was founded in 2003 by insurance and technology professionals with the goal to become the nation’s leading, real time, internet insurance leads generating company.

About Great Hill Partners
Great Hill Partners is a private equity firm that manages over $2.5 billion in capital to finance the expansion, recapitalization or acquisition of growth companies operating in the business and consumer services, media, communications, healthcare IT, financial technology and software industries. Great Hill Equity Partners IV, L.P. and its affiliates target equity investments of $30 million to $150 million. For more information, please visit http://www.greathillpartners.com.

About Morgan Keegan
Morgan Keegan, a full-service brokerage and investment banking firm, has more than 4,100 employees in 300 offices across the country. The firm’s investment Banking division provides comprehensive merger and acquisition advisory, public equity and private capital services to public and private companies as well as private equity groups.

Morgan Keegan’s Technology Investment Banking Group, formerly Revolution Partners, is among the largest and most active Investment Banking groups serving the technology industry. The technology group is well-regarded for its expertise in particular technology sectors, including software, IT services, communications, digital media/e-commerce, wireless, clean tech, storage and semiconductors.

That was certainly the case with ClassesUSA when they inked a deal with MSN. The media property didn’t care that ClassesUSA was just a startup. They had a rate, and they stuck to it. Similarly, ClassesUSA knew they had guarantee as much revenue as possible in order to get the cost down. What most people didn’t know about this story is that when they first started working together, ClassesUSA didn’t really work with the lead buying institutions. They approached online learning in a more literal manner trying to provide classes to interested students. An almost accidental pivot led them to working with the schools we today think of when we say online education. The rest as they say is history – a successful exit and still one of the largest, most consistent suppliers of student inquiries.

The ClassesUSA story could have turned out quite differently had they not taken the media risk and especially had they not changed horses mid-stream. Their story is one of the more memorable, assuming you actually were there to remember it, because it didn’t take much time until companies much larger started to take note. With today’s fragmentation, it isn’t as easy to craft a similar coup, for it wasn’t just an issue of volume but figuring out inventory that seems unattainable to others. Another company that comes to mind is Education Connection. No one else came close to owning television like they did. How a girl in her pajamas have anything to do with a degree? The connection, no pun intended, was definitely tenuous, but they managed to inspire threads about the commercial in forums and have auto-complete suggest “education connection girl” as the second most searched term.

Recently, we learned of another ambitious arbitrage, a less trackable but no less ambitious effort. ED Ideas, who operates CollegeComplete.com has done something that certainly no one in performance marketing has – sponsored a NASCAR car. As the company writes, “The traditional NASCAR audience has been, to a large extent, overlooked by higher education.” Well, no longer. And, how did they choose their driver? They chose to sponsor Nationwide Series driver Chase Mattioli “primarily because he is one of the only NASCAR drivers who is – simultaneously and in between races – an active college student.“ May they be so lucky that in short order their brand will be associated with the driver or with NASCAR.

Arbitrage seems to know no limit, online of offline. It’s less a matter of the what and more a question of the potential economics. So what might constitute one of the more extreme experiments? The answer might be at the root of all online, the top level domain. With domain name registrations mirroring McDonald’s in quantity sold, obtaining a brandable one has become either impossible or extremely expensive. A good single word domain runs at a minimum in the low six figures and into the seven figures. What if instead of focusing on just the “.com” you could own the whole URL. Imagine replacing .com with .yourbrand or .yourcategory? These are the discussions now taking place at most major brands. The ruling body for domain names (ICANN.org) has created a process by which just about anyone can apply for their very own dot something (gTLD) and own the complete URL.

There are several plays here for brands and generics.  For brands, there can be no denying the authenticity of a URL ending with .nike, .ibm, or .att, not to mention their never having to wonder if a domain name is available or how much it would cost.  For generics, think of Hollywood. Someone will certainly apply for .movie or .music, hopefully ridding us of ridiculous movie domain names, like BlackSwanMovie2010. The question / opportunity now is for performance marketing. What if you had .college, .money, .wealth, .diet, .date etc. Would that make your ads more credible, increase clicks and conversions? As a network, it could mean countless white labels, each having their own domain name. All interesting applications, but all, like many opportunities are also a gamble. By gamble we mean you will have to pony up. It costs $185,000 just to apply for the name, and then there comes the cost to operate the technology for registering names and making sure those you do register resolve correctly and quickly. Companies like Neustar help make the process manageable, i.e., no additional tech resources needed, but the barrier to profitability is still going to be something like $200,000 per year if not more. As mentioned, not cheap, but it could be game changer for someone. Will any in the performance marketing space wants to take the risk.