LeadsCon Las Vegas 2012 Panel Recap: QuinStreet CEO Doug Valenti & Bankrate CEO Tom Evans

By Sean Fenlon on March 15, 2012


Jodi’s post is a tough act to follow, but I did promise her that would provide a recap of the marquee LeadsCon panel of LeadsCon Las Vegas 2012. The panel was presented by Doug Valenti, CEO of QuinStreet, and Tom Evans, CEO of Bankrate – the top two publicly-traded companies in the LeadsCon ecosystem. The panel discussion was moderated by Stewart Barry, a partner with Investment Banking firm Union Square Advisors. Stewart has represented several buy-side and sell-side clients in the LeadsCon ecosystem, and was a natural fit for the role of moderator between these two high-octane CEOs.

In the spirit of full-disclosure, I have met Doug Valenti several times and consider him a friend. I met Stewart Barry after the panel and found him to be incredibly knowledgeable of the LeadsCon ecosystem and also a wonderful person. However, I have not yet had the opportunity to meet Tom Evans.

Arguably, the premier session of LeadsCon LV 2012, I characterized this as a “must see” to DoublePositive folks and it did not disappoint. The discussion almost immediately gravitated to the role of mobile in Lead Gen. Several oft-cited statistics were presented about the rising tidal wave of mobile usage. Both CEOs acknowledged that they have observed a recent surge in visits to their owned and operated sites via mobile devices.

As a quick sidebar note on the role of mobile, the only other session I was able to attend was presented by Jeff Lawson, CEO of Twilio. Jeff is an excellent and engaging presenter and really provided a wakeup call particularly to the mobile marketers and media buyers regarding how to adapt and evolve their call-to-actions to better fit the many different mobile environments. One screen shot was particularly compelling – a screenshot of how most iPad users are typically leaning back or lying down while using their devices, then followed by a screenshot of a typical web-based long-form with several page-steps and dozens of fields right above an iPad touchscreen keyboard (which doesn’t even include a tab key for the user to move between capture fields). Good luck getting those forms to convert with iPad users. :-S

Tom Evans segued out of the mobile discussion by making the point that it’s just another way to deliver media. Tom surprised many in the audience by reminding them that Bankrate is a 28-year-old media company and that he joined the company in 2004 with a strong media background. Bankrate has been positioned and perceived as a media company more so than a media buyer. Much of Bankrate’s traffic through the years has been organic search traffic to their owned and operated properties including www.bankrate.com proper. Organic search traffic tends to leave some in the industry unsettled because of the dominant influence that Google plays with its ranking algorithms for valuable search queries. However, Tom pointed out that the recent Google updates (aka “Panda 1” and “Panda 2”) were ultimately net traffic gains to Bankrate’s sites.

The conversation naturally flowed to online consumer privacy issues after the mention of Google (given the recent uproar regarding Google tracking online consumers across all of their properties). I believe Doug Valenti echoed the sentiments of all the white hat players in the audience that greater scrutiny and a better developed policy is needed around this topic of privacy. The challenge here will be educating the policy-makers around how consumer privacy/tracking works in general and then to translate that into what is good and what is bad for consumers. Most online marketers fear a brute-force Patriot-Act-style legislation that could severely impact many online marketing business models while providing very little additional privacy or control for consumers. My personal philosophy is that the key is consumer freedom and consumer transparency. Make what is being tracked very transparent to consumers while describing the benefits, while also providing the freedom to opt-out and otherwise control their own personal tracking settings.

The conversation then led to a conversation regarding online media in general. Both Doug and Tom consider their respective businesses to be media companies (i.e. sellers of media, albeit most of it on a performance-basis), even though both businesses are also very active media buyers as well. In that regard, it was refreshing to hear them speak of the consumers that visit their owned and operated sites as their “customers” and they both care deeply about the engagement and experience of those users. Too often in the world of online performance-based marketing, the consumers are viewed by marketers as clicks and zeroes/ones on a traffic log rather than humans.

Tom Evans described an interesting challenge for the whole online media ecosystem. Traffic to online media is dominated by the big portals and players (e.g. Google, MSN, AOL, Yahoo, etc.). They are all working hard to command the same rates for their premium inventory as offline premium TV could command. I believe Tom stated the range to be $8-$15 CPMs. In contrast to that, Tom identifies the massive amounts of non-premium inventory from these same players and other smaller publishers that are being auctioned off through real-time bidding exchanges in the sub-$1 CPM and often even sub-$0.50 CPM range. On the other end of the spectrum are performance-based media sellers such as Google or Bankrate selling clicks that net an effective $60-$70 eCPM to the publisher. Thus, Tom identified the big media companies to be stuck in a strange spot in the middle. I personally view the continuum of eCPM’s as a simple reconciliation of supply and demand, and the continuum becomes more rational as the market gradually becomes more efficient through value-based pricing and real-time bidding.

Both Bankrate and QuinStreet have been highly acquisitive in the LeadsCon ecosystem as a supplement to their organic growth. Both CEOs agreed that owning the media (as opposed to buying the media – perhaps “renting” the media is a better term here) is a key consideration of value in their M&A strategies. Doug Valenti used his recent acquisitions of two B2B media companies (Ziff Davis Enterprise and IT Business Edge) as examples. If the business that is the acquisition target is not a media company, but rather a network or technology company, the key criteria they use to evaluate the strategic fit is whether or not there could be growth “acceleratation” post-acquisition as a result of the larger platform. Doug Valenti used the acquisition of SureHits as an excellent example of successfully using this approach. Both CEOs agreed that as publicly-traded businesses, they had a responsibility to obsess about scalability of acquisition targets, but also to enforce best-practices in the industry and accelerate the transition from the Wild West to well-organized and well-governed business practices. In other words, there seemed to be very little appetite for businesses that utilized incentives or promotions (or good forbid spyware/malware) as part of their interactions with consumers. My takeaway was that Wall Street tends to reward businesses that are perceived more as media-owners and platforms more so than media-buyers/renters or intermediaries.

The discussion then shifted to the topic of vertical markets. This has always been a fun topic since 2007 when hundreds of millions of mortgage lead gen dollars simply vanished as a result of the mortgage meltdown. Many lead gen businesses then began going to great lengths to identify the characteristics and attributes of the best verticals to enter. Tom and Doug confirmed a few of the most basic desirable attributes – high-value “considered” consumer purchases, sometimes referred to as “chunky.” It is interesting to note that both QuinStreet and Bankrate share several vertical markets (e.g. Mortgage, Insurance, Credit Cards) but Bankrate does not operate in several other vertical market that QuinStreet does (e.g. Education, Home Services, and B2B). Verticals that also reflect desirable attributes that I do not believe QuinStreet or Bankrate have entered – at least not yet in a big or meaningful way – include Health, Auto, and Travel.

The topic of the Home Services vertical invoked some interesting disagreements amongst the panelists. While QuinStreet has a strong presence in Home Services, Tom Evans was sharply skeptical of the opportunity, citing the lack of “any big business in Home Services.” When the moderator Stewart Barry politely reminded Tom of ServiceMagic as a very big Home Services lead gen company, Tom acknowledged the example but continued to be skeptical of the opportunity because of the noisy/messy long-tail characteristics of the service providers and contractors (who are also the lead buyers).

The conversation then shifted gears away from vertical markets per se and into various pricing models (e.g. clicks vs. leads vs. calls, etc.). I was thrilled to hear the position of both Tom and Doug on this topic to the extent that it matches the long-held DoublePositive philosophy. They both held the position that we are all in the customer acquisition business, and that our function is to deliver net new customers at scale and at target cost. Thus, clicks, leads, calls (and I’ll self-servingly add Hot Transfers to this list), are just various performance-based pricing models at different stages of the funnel, but are designed to achieve the exact same ultimate outcome.


I will only add one additional observation from the market that I suspect both Tom and Doug would agree with, that the deeper in the funnel that the pricing is determined yields an inverse relationship to scale/volume vs. risk/challenge. In other words, the challenge/risk of buying clicks and converting them into sales is greater than that of buying leads, calls, or Hot Transfers, but there is a much greater volume of clicks available to buy in market for those that can manage that risk/challenge.

Tom Evans described the evolution of pricing models at Bankrate. When he arrived in 2004, they sold mostly display ad inventory on a CPM basis. Their online rate table product allowed them to evolve into a CPC pricing model that sold clicks. The insurance vertical acquisitions of InsureMe, NetQuote, and InsWeb pushed them into selling leads on a CPA/CPL pricing model. DoublePositive is happy to be working closely with Bankrate Insurance which allows Hot Transfers as one of the delivery model options, thus a CPT or Cost-per-Transfer may soon follow. Tom seemed to suggest a bias for the higher pricing models with his colorful comment during the panel that “We’re still asking people to swim through a lot of swamp water to get to the jet fuel… We charge a lot more for the jet fuel.”

The “jet fuel” metaphor is a good one. Tom mentioned that a $1,500 total marketing cost-per-funded-loan is still the market average in the mortgage industry. Most buyers would gladly spend $1,500 for a single click, a single lead, or a single call/transfer provided that they had a 100% conversion to funded loan rate, but that is only hypothetical. It is the “swamp water” that requires lower blended price points. In Baltimore, we refer to this as crab-cake filler. :-)

As an extension of this principle, both Doug and Tom agreed that it is still difficult to get end-of-funnel sale or transaction feedback from lead buyers. This has been a common meme at every LeadsCon, and a common frustration of lead sellers for over a decade. The buy/sell market will never be as efficient as it can be as long as the feedback loop of true value is broken. Bridging the gap of this broken feedback loop is a key pillar to the DoublePositive media buying and right-pricing strategy.

At the end of the panel discussion, the moderator allowed a few questions from the audience. An interesting question from an audience member was regarding the roll of affiliates within their supply channels, especially with respect of both CEOs passion to eliminate bad actors. Tom Evans responded by stating that his affiliate channel was Bankrate’s least-profitable channel. The most profitable channel was of course organic traffic from owned and operated sites. However, direct media buying (where there is no fear of bad affiliate behavior) yielded higher margins than the affiliate channel, thus challenging the myth that businesses utilize an affiliate channel (and the noisy risk of bad affiliate behavior) merely for higher margins.

The next question was a nice segue. A representative from Progressive Insurance asked “who pays the cost of these bad affiliate actors?” The answer shared by both CEOs is that both the lead buyer and the lead seller share the cost. The lead seller bears the cost by having their performance diluted thereby preventing from securing higher rates in market for the rest of their inventory. The lead buyer bears the cost by working to a lower blended price per lead (thereby reducing their overall volume) but also wasting operating time/money and emotional bank accounts of their sales force.

The final question from the audience was about International expansion opportunities. Doug Valenti took the lead on the answer and first set the table by stating that the vast majority of the opportunity for lead gen businesses is still in the USA. He went on to describe QuinStreet’s international strategy and how it fit into Western Europe and Latin America. Doug confessed that China is a tough nut to crack given the highly-localized and highly-personalized idiosyncrasies of the culture and the market there. DoublePositive board member Stein Kretsinger has made several investments into online advertising businesses in China and agreed with Doug 100%.

Overall, I found this panel discussion to be one of the most memorable and enjoyable in LeadsCon history. I’m hoping that Jay is able to make this inspiring State-of-the-Union style panel an annual affair. Bravo to Doug, Tom, and Stewart, and Cheers to Jay.


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