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09.01.09 Profitable Investing In Local Lead Generation  By Andrew Wee If you've embarked on the affiliate marketer route, you might already be very successful with pay-per-sale, pay-per-lead/pay-per-action, and maybe even the new-fangled pay-per-call business model for a network or merchant-direct program. But are you awesome of the awesome profit potential of lead generation for local businesses? There're a number of marketers who've shared their experience in this space: • Jeremy Schoemaker "Shoemoney" covered a case study for a local Chevy dealership including the creatives and analytics for the campaign • "CDF Networks'" Chad Frederiksen covered some of the elements of a lead generation business • Dennis Yu had a guest post by Gerald Neo "How to grow your SEM business in Asia" Taking an example. If you got a $100-200 payout for a finance-related lead, at a cost of $30-50 in lead generation costs, which works out to a 275% margin. Which sounds attractive. However, the finance service provider might make a commission/profit in the magnitude of $1,000 to $5,000 on the customer, about a 19,000% gross margin. Factoring in a 20% default rate and operating expenses of 30%, the customer value is a healthy $1,500 (assuming the provider manages their risks prudently). - So if you're an affiliate, would you prefer to make a $150 commission per lead or $1,500 per customer? Just remember that a number of CPA affiliates who've tried to go down this route have given up because of the extra administrative and operational effort that is involved. -
I've been coaching a client in the real estate industry about the mechanics of lead generation and he recently spent $200 in a test PPC campaign, which generated 8 leads, and resulted in 1 conversion translating into a gross profit of $4,000. Aside from his costs, his time spent was marginal, so he's coasting at about 19 times ROI. Note: this was a test campaign, so you should not go out and extrapolate a linear ROI from starting a $5,000 campaign. However, he applied a number of points which led to the success: • GeoTargeting to a specific location: Face-to-face business transactions are almost always more valuable than ones which you hand off to an Internet-based merchant/services provider. • Highly targeted: The campaign was geared towards one specific demographic - income, value of real estate, position on the buying cycle. • Pre-qualification: Even with the demographic locked down, he offered a paid informational report to pre-qualify the lead. This resulted in 8 prospects who had bought the report. • Face-to-face closing: As he was in the same geographical area as his prospects, he met up with one individual and closed the transaction. Continue reading this article. About the Author: Andrew Wee is an Asia-based Internet Marketer focused on blogging, social traffic generation and affiliate marketing. Previously rated as one of Asia's top technology journalists, Andrew covers breaking news and industry developments at WhoIsAndrewWee.com |
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