Is lead-gen a booby trap?

Lead-gen – it's all about lead-gen today, isn't it? Be careful; there are a dozen reasons why just selling leads is literally painting yourself into a corner.

Trade publishers have always been ideally suited to bring customers to advertisers. Producing trade shows and conferences can be your most profitable lead-gen brand extension, of course. Catch exhibitors after a trade show. Flush with business cards and badge swipes, lead-gen smells sweet.

After those leads are put in SalesForce and the follow-up is done, you will sometimes hear grumbles about "how lousy the leads were" – as if the salesman and the product had nothing to do with the outcome. If the prospect was properly qualified, the outcome of the sale did not suddenly make him unqualified. How did that become a "bad lead?"

Webinars and white papers are lead-gen products tailor-made for us as publishers. We get paid for our content expertise and deliver the information in a package paid for by advertising. It's all good.

There's nothing new about lead-gen. We used to run bingo cards in our magazines; but none of us ever got paid per returned card. There was no 1:1 relationship between rates and response. Advertisers understood the value of branding display ads offered. Now a generation of ad-buyers raised on Google per-click ads doubt the concept of "branding."

Switching to pay-per-lead
Recently I met with two chiefs of a B2B publishing firm who tell me their advertisers are demanding lead-gen – or else. They plan on making lead-gen their exclusive advertising model before long.

Ouch. Run the numbers and you'll see it's a dead-end. Based on their rate card, one website had $27,300 worth of ads on it that month. At $100 per lead, that site would need to produce 273 leads a month to break even with today's CPM sale; 546 leads at $50 per. These are not clicks—these are potential buyers filling out an entire form. Nearly 6,600 leads needed every year just to break even with today's sales. Is that realistic?

You think you have advertiser complaints now? Wait 'til they are paying $100 per lead. They'll be judging each one: measuring, complaining, asking for make-goods! You can hear them now: “But four were grad students...”

Implicit in any demand for lead-gen is the concept that advertisers can come to identify your leads as a fixed cost, so every time they advertise they make a profit. In other words, they expect you to be an alchemist and manufacture gold out of advertising.

Meanwhile, you will be promoting these lead-buying companies way beyond what you can get paid for. What about the hundreds of thousands of future buyers who happened not to fill out a form, but became familiar these products? Because your buyers don’t value branding, are you going to buy into that? Educate them.

For example what culpability should advertisers have in getting a response? What will you demand from the advertisers? The ad above caught my attention on more than one website. What possible response can this ad get with no offer, no benefits -- even if you need shaft seals? No matter what an ad contains, when “they don’t work,” it is always “your fault.” Wait until it is per lead. And are there really 20 good leads every month for this product? 50? When you turn yourself into an advertising actuary, the discussion changes from value to arithmetic.

There are excellent ways to offer lead-gen as part of a comprehensive program where you get paid for content and branding also. Becoming a salesman for your advertiser is not the business you are in, is it?