Google, Lending Tree, and Mortech: The Past, Present and Future of Online Lead Generation
Last week, on the evening of August 26th, 2009, the New York Times Blog asked, “Is Google Entering the Mortgage Quote Business?” An hour later, a story appeared in the Wall Street Journal titled, “LendingTree Suit Claims Google is Getting into Mortgages.” By the next morning, the floodgates had opened with stories like the one on Yahoo asking, “Is Google Launching a Leding Tree Killer?” The answer is in the statement made by Google representatives, where they said (according to the Times piece), “We’re constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.”
Search Engine Land, who first broke the news about a similar test done in the UK last year, Google Merchant Search, correctly summarizes the issue (the indirect battle between LendingTree and Google via a suit against Mortech) by saying, “The focus on mortgage search or quotes is a bit of a red herring…” and that “The UK test was really about developing a model to deliver leads on a CPA or pay-per-call basis.” John Batelle adds, “There’s a lot of demand out there for leads. Google smells an opportunity to cut out a middle man, and increase margins.” LeadCritic wonders very aptly “What will stop Google from running their own lead generation strategies in any other vertical?”
Putting it all together here is what we have:
- LendingTree vs. Mortech – someone was looking out for LendingTree. They received informaiton that Google would almost never want them to have which allowed them to delay (for a bit) a significant entry into the mortgage lead generation business by Google. The technology that Mortech provides adds significant value as it enables mortgage brokers to offer conditional loan offers. Only LendingTree currently offers those who complete its form actual offers.
- Google vs. LendingTree – we don’t know that many people at Google, but we know that Google doesn’t really spend a lot of time focusing on other companies. They are competitive but not in the traditional sense. That they entered into mortgages has nothing to do with LendingTree. It only has to do with the scale and complexity of the mortgage market, with scale and complexity being two key ingredients that Google looks for when deciding on new initiatives.
- Google and Lead Generation – this is where it gets very interesting, and where an entire chapter the length of some books could be written. A) Given what we know of Google, i.e., they are a platform play, while they will be entering into mortgages at some point in time, they designed the product (AdLeads?) to work with any number of buyers. We don’t know whether buyers pay on a per lead or per call basis, but I suspect per lead is the easiest. B) Google doesn’t just disintermediate because they can. They aren’t getting into leads, mortgage leads in particular, because they felt too much money was going to the aggregators. The only reason they would enter is because they felt not enough value was coming from them. Not monetary value but customer value, and that’s the key.
We wrote recently about doing right by the customer and still making money. The focus on money is what often leads to a poor user experience, or said differently, the need to cover costs has companies make decisions they might not make were money not an issue. Any lead company in a vertical selling multiple / shared leads goes through this. People like choice, it’s why Google shows more than one ad on its search results pages, and why the average person clicking on a paid ad clicks on more than one. But what is the right number? Clicks aren’t like leads. There is very little friction to an incremental click. There is a higher threshold from a user’s standpoint to becoming a lead. Because there is no right answer without testing at a high potential loss, we as an industry have allowed someone else to potentially answer it for us. And, it could result in an answer some don’t like.
The “low-hanging fruit” predictions regarding Google’s lead generation product:
- Google will not collect user data, i.e. unlike today’s approach, the user will not have to fill out any contact details before being connected to buyers
- Google will err on the side of unhappy advertisers not users; they have such a funnel of traffic that the role will be reversed from a traditional aggregator
- Users will click to connect on a listing, which is when they can decide whether to share their information, and at the point of true transparency (seeing the actual broker for instance), the advertiser is charged.
- The onus will also be on the user to follow-up, i.e., they will according to prediction 3 get to see the advertiser’s info without the reverse happening. Were Google to allow users to connect with eight advertisers at the click of button and lead to eight calls right away, users will blame Google, so they should in theory disable this at first.
Before panic sets in to those in online lead generation, Google’s entry is no sure thing. True, switching to a lead model is a Pandora’s Box and once that option becomes available, it’s not easy to close it off. But, their predicted conservative approach means that it might not be a financial windfall off the bat. While Google has what the rest of us only dream about – tons of traffic at their disposal – if the lead based approach doesn’t produce close enough to the returns that the click based approach does, no matter how not evil the new approach is, it won’t last. Finally, there is always a role for a middle man, but it needs to be a value-added middle man. Marketing services firms can always fill a void. To me, it’s just like the designer clothing market. Some people will shop retail, others discount chains. The two aren’t mutually exclusive. This move while seemingly scary, will in the end just lift the tide for all and equally important validate much of the hard work done by others.
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