What is Lead Generation?… What is a lead?

By Sean Fenlon on September 24, 2007

After attending the TARGUSinfo Lead Quality Summit, the thing that surprised me the most was that even professionals in the lead generation ecosystem continue to speak different languages to one another.

Not just industry-specific language, but also language core to lead generation as a concept.

What I realize is that those involved with leads and lead generation need a CONSISTENT lexicon and vernacular.

Below may ultimately become the DoublePositive entry into Wikipedia for the respective terms…

What is Lead Generation?

I agree with Matt Coffin. Lead Generation is NOT a Value Proposition, and Lead Generation is NOT an Industry. Rather, Lead Generation is a subset of the ADVERTISING industry.

Lead Generation has a different definition depending on whether the perspective is from the lead supply side or the lead demand side…

On the lead demand side, Lead Generation is a specific INTENT of advertising dollars. In other words, I am spending $X in advertising in order to generate at least Y leads, so that my cost-per-lead is $X divided by Y.

On the lead supply side, Lead Generation is a performance-based delivery model of advertising sales. In other words, companies that sell advertising in any form prefer to take no risk if possible. However, if they cannot sell their advertising in a no-risk model (such as a raw sponsorship or CPM), the will offer to absorb some of the risk by offering advertising on a performance-basis. The first form of performance-based advertising occurred in 1998 by selling the “click” of an Internet user (CPC) instead of simply selling the impressions of a banner ad. Some advertisers demanded even greater performance than merely a user’s click as only a small percentage of clicks will result in a form-fill (or phone call in some instances), thus CPA (Cost-per-Action/Acquisition) or CPL (Cost-per-Lead) is an even high performance-based delivery model.

Many companies make the supply side and demand side reconciliation simple by managing all the advertising-buying risk themselves and selling to advertisers only on a per-lead basis.

What is a lead?

For years, DoublePositive has been struggling to draw the enormous distinctions between a “lead” and a LIVE Hot Transfer.

I see now more than ever why there continues to be so much confusion.

A conversation I had with the CEO of a major shopping engine was referring to an Internet user “clicking” on a link to visit a the site of an e-commerce retailer as a “lead.” I found that rather strange use of a the lexicon – we have always referred to such a phenomenon as a “click” and pricing models are this type of user action are typically Cost-per-Click (CPC).

Later in the day, ValueClick and Scholastic, Inc. gave a case study of how offers made for Dr. Seuss books in a co-registration environment resulted in completed “sales.” However, in the PowerPoint presentation, they referred to the completed sales as “leads.” We have always referred to transactions that are fully-completed online as “sales” and this type of user action are typically priced as Cost-per-Sale (CPS). Another way to support this position is to think of yourself as an advertiser that ONLY pays the advertising cost when a sale is completed – I don’t think you’re too concerned with “lead quality” since the quality is essentially perfect every time you are asked to pay.

A lead is NOT a click. A lead is NOT a completed transaction.

A lead IS a consumer’s “Expression of Interest” in a product or service offer. Using this definition, an “Expression of Interest” is typically represented by a form-fill process (anywhere to 1 field of contact information such as an email address to dozen of fields of information).

Many of these “leads” are what we refer to as “marketing leads,” meaning the consumer’s contact information goes into a marketing database for additional marketing communications. A good example of a “marketing lead” would be a consumer requesting more information from Crest on “Teeth Whitening Strips.” The consumer may receive a coupon for the product by email or perhaps a free sample by mail. But there is never a Crest salesperson attempting to make contact with the consumer that expressed interest in “Teeth Whitening Strips” as the value of the transaction is too low and the transaction is sufficiently simple where additional sales support would be superfluous.

In this universe of marketing leads, the concept of “lead quality” is essentially limited to accuracy of data, since there is seldom any individual transaction that is track-able in order to determine consumer “interest” (or consumer “motivation” in the words of the IAB Lead Generation Committee).

Marketing Leads makes up a significant part of the Lead Generation universe. Brands such as Nike, Pfizer, Proctor & Gamble, and others often spend millions of dollars per month for “Marketing Leads,” however, due to the value of the product or service being offered, the price seldom exceeds $10 per lead. Offers placed in co-registration environments and also incentive-ized offers are good options for marketing leads, since there is seldom any human cost associated with sorting through the leads to find genuinely-interested consumers.

“Sales Leads,” however, demonstrate significant differences from “Marketing Leads.” Sales leads are expressions of interest in a particular product or service.

So, my next post may be titled “What is a…”?
1. “Lead” Supplier

2. “Lead” Aggregator

3. “Lead” Generator

4. “Lead” Seller/Buyer

5. “Lead” Etc.

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