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  • Google the Lead Generation Killer?

    Posted on September 8th, 2009 Michael Ferree 12 comments

    There is drama brewing the in the lead generation industry!

    If you didn’t catch the news that LendingTree has filed a lawsuit against one of its key service providers, Mortech. Whats dramatic about the lawsuit is not really the lawsuit itself. Let me explain:

    Everyone should know who LendingTree is, but there is a good chance you do not know who Mortech is.  Mortech provides real time loan pricing data from 100′s of banks to the mortgage industry. There happens to be a number of different companies that provide the same service, but in this case LendingTree chose to partner exclusively with Mortech.

    The drama begins to unfold when LendingTree learns that their exclusive partner is allegedly speaking with Google about providing the same services. The LendingTree suit claims that Mortech infringed on their contract and broke their confidentiality agreement by discussing a similar, if not the same, service that is provided to LendingTree. The drama is not necessarily about the specific lawsuit, but rather the fact that Google is looking at bringing a mortgage pricing engine/lead generation platform to their search results.

    Believe it or not, Google is not the first search engine to try this. As a matter of fact,  AOL attempted mortgage lead generation in early 2007 with no success and then Yahoo tried lead generation later the same year, again with no success. Don’t count Google out just because AOL and Yahoo couldn’t make it work. Google is taking a completely different approach with their strategy. You can get an idea of what Google’s plans are by checking out Search Engine Lands 2008 article that covered the launch of the UK version. This beta was different then the upcoming US version in that the rates were added by humans. The US version will include real time rates posted by Mortech’s pricing engine. By doing this Google would eliminate the interaction with the brokers, post accurate rates and then be able to possible sell the inquiries on a CPL.

    This is big news for companies in the lead generation industry. Its my guess that LendingTree recognizes this as a major threat and is going to do everything possible to stop or slow down the launch of this new Google service. The lawsuit, while directed at Mortech, is more about stopping Google from becoming a direct competitor in my opinion.

    The launch of a service like this will easily take clicks away from companies bidding on mortgage related keywords. I don’t think that can be denied, but will it kill the mortgage lead generation vertical altogether? Of course not. A bigger question that needs to be asked is if this plan is successful will they go into other verticals? If Google can successfully generate and monetize mortgage leads from this new service what is going to stop them from moving into other verticals?

    The evolution on online marketing has been slowly moving from the CPM and CPC pricing model to a CPA or CPL pricing model. Google noticed this on 2006 and launched their CPA pricing model within Google Adwords. I think this move into the mortgage lead generation vertical shows that they believe advertisers will continue to make the shift towards CPA based marketing strategies. Google will be able to integrate their own lead acquisition platform into multiple verticals and instead of worrying about cost per clicks, ad variations and conversion rates advertisers will simply be able to buy the leads directly from Google.

    What do you think? Is this a long shot or exactly what Google plans on doing? Give me your thoughts.

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