Sparkroom — www.sparkroom.com

By Sean Fenlon on April 2, 2008


I’ve been in the lead generation ecosystem for a long time. To put that statement into perspective, my previous company, TheLoanPage.com, was launched back in 1997, and I have been trying to drive Internet consumer traffic to online forms essentially since the Netscape IPO.

The three companies I saw establish the biggest beachhead in the early years were Lending Tree, LowerMyBills.com, and Nextag – all of whom went on to build multi-hundred-million dollar business, sell for handsome multiples, and provided a handsome return to their investors. These businesses sold “leads” as opposed to selling traffic on a CPA or CPL performance-basis. Since their early respective successes, I feel as though there has not really been a staggering amount of innovation. There are, of course, some notable exceptions. Adchemy began in 2004 with the intent of bringing high-science to the lead generation world. LeadPoint was also founded in 2004 with the challenging mission of become the world’s eBay for leads. DoublePositive was also started in 2004 with the purpose of pushing Internet leads out to a whole new performance-based delivery model – LIVE Hot Transfers instead of Internet leads. All three companies have had a substantial footprint in selling to the mortgage industry (similar to Lending Tree, LowerMyBills.com, and Nextag). But even with the meteoric rise of Education, Insurance, and Automotive and lead-buying industries (in the face of a challenged mortgage landscape), I have not seen a tremendous amount of business model innovation in the space. Especially in the mortgage industry. Sparkroom appears to be another exception to this rule.

I first learned of Sparkroom from my friend Ed Powell, a former sales executive with Lending Tree and GetSmart who played a significant role in their early days all the way through their sale to Barry Diller’s IAC. During his time at Lending Tree, Ed had identified that the single biggest challenge of the mortgage leads ecosystem was the lack of objective and rational decision-making with respect to lead buying and lead performance. Ed partnered with his friend Jamie and founded Sparkroom.

Jamie and Ed acknowledge that the lead tracking and lead management space was quickly gaining new entrants such as Leads360, Leads ROI, and LeadMailbox, but felt that these companies were focused on CRM functions (as they should), which left a void and an opportunity to focus like a laser on technologies that could facilitate analytics and dashboards with a comprehensive ROI being clearly defined.

Sparkroom was founded in early 2007, was funded by Matrix Partners in May 2007, but just recently emerged from stealth mode. My most recent conversations with Ed and Jamie leave me feeling particularly bullish about their direction. They have added a “services” layer as an option to sit on top of their technology. Mortgage originators thus have the option of using the Sparkroom platform directly (Software-as-a-Service), or rather engage Sparkroom vis-à-vis an account executive who can directly manage the Sparkroom platform on behalf of the client in order to achieve specific ROI objectives. In other words, if you goal is to double mortgage loan originations while decreasing your cost-per-funded-loan by X%, Sparkroom can manage this effort for you and do all the work.

I cannot help but see this play as very similar to the “Agency of Record” concept which is most commonly found in the education vertical. Cole & Weber manages multiple lead sources for Capella. QuinStreet manages multiple lead sources for Devry. Up until 2008, Advertising.com managed multiple lead sources for University of Phoenix. These types of relationships allowed the schools to focus their resources on their core business of education (not Internet marketing). It looks as though Sparkroom is bringing this same type of offering to the biggest lead-buying mortgage companies, and I would expect, if done correctly, this will be an extremely valuable service.

Of course, I’m always biased toward fellow entrepreneurs diving into a brave new world, but I seldom write a blog post as long as this one unless I feel as though the offering is something quite unique.

Best of luck to Jamie and Ed.

SPF


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