Sparkroom Blog

Sparkroom Launches Lead Market Analytics

Jamie McDonald — Tue, 09 Sep 2008 20:49:31 +0000

Today we announced the launch of Sparkroom Lead Market Analytics. Read the full release here. We believe that this new product is important. Why? Because it begins to deliver transparency to an opaque and confusing market. Information is power. Transparency is inevitable in an online world where there is lots and lots of data. What Lead Market Analytics does is simple. It provides lead buyers with the tools and data to benchmark their performance vs. an aggregated industry data set. This is important because it helps buyers figure out what they are good at — where their competitive advantage lies.

A couple of key points to make:

To get access to the data, you have to contribute data. We call this community. You have to participate to gain the benefits.
Your data will always be anonymous. Competitors will not be able to identify any individual lender. This is the power of having data aggregated across an entire market. Very powerful.

Lead Critic covers it here.

Let us know what you think. We are at the LendingTree Summit in Charlotte this week and the Targus Online Lead Quality Summit in Vegas next week.

Chris Meerschaert and Jon Moises Join Sparkroom

Jamie McDonald — Wed, 27 Aug 2008 10:35:33 +0000

This morning we are announcing that Chris Meerschaert and Jon Moises have joined the Sparkroom team to lead our account management efforts. Read the full release here. They will be tasked with a very simple mandate: making data-driven decisions based on Sparkroom Lead IQ to help our customers grow their businesses.

We have gotten to know Chris and Jon over the past year. After months of conversations about lead generation and the power of aggregate data, it became clear that we shared a passion for data-driven decision making as well as a focus on delivering for customers. So it is with great pleasure and excitement that we are able to welcome such well-respected, industry experts to our team of online direct marketers.

We look forward to connecting with the lead gen world in September at the LendingTree Summit in Charlotte and at the Online Lead Quality Summit put together by Targus.

Google’s View on Lead Aggregators

Jamie McDonald — Mon, 02 Jun 2008 21:17:05 +0000

We had an interesting conversation with Jay Weintraub, the entrepreneur behind LeadsCon today. That conversation together with Google testing Merchant Search in the UK raises some very interesting questions about Google’s view on lead generation. Paul Knag tries out the Google Merchant services user experience here. LeadCritic talks about it here. The broad question is what Google thinks about the role of the lead aggregator? Google’s mission is “to organize the world’s information and make it universally accessible and useful.” Certainly, there is an argument to be made that LowerMyBills, LendingTree and the rest of the lead aggregators are not creating much value for the consumer by hosting a simple form. This is not a viewpoint that we hold at Sparkroom. Google could just as easily host that form and then act as the distributor of the leads. Ergo, they would be organizing information. Going back to our thinking on lead provider assets, we boiled it down to customer acquisition and monetization. Gee, those are things that Google is capable of doing. Oh, they already do both of those things every day and they do them better than anyone on the planet. This isn’t a question of Google trying to enter the travel space by buying Expedia. That is a bad deal for GOOG because it buys a huge customer service operation. There isn’t a similar customer service component in mortgage lead gen. Let’s do some simple napkin math:

LowerMyBills buys $100MM in Google keywords
They sell the leads generated by that $100MM in marketing expense for $225MM.
That creates $125MM in gross margin for LowerMyBills.

Google is looking at that $125MM and wondering if they can’t figure out a way to do it better while capturing all of that $125MM. They are also wondering if it doesn’t eliminate a player in the value chain that doesn’t create a lot of value for the consumer. But alas, we don’t see Google executing against this opportunity at scale. Why?

Lead aggregators are Google’s best customers. There aren’t many banks that are spending $50MM+ per year on Google.
Google has too much on its plate. Think about it. There is international expansion, scaling their business, killing MSFT with Google Apps. There is too much opportunity for them to worry about picking up the $125MM in margin that LowerMyBills is making off their advertising platform.

Lead generation is not going anywhere fast — even though the product managers at Google (and Sergey and Larry) probably think of the lead gen folks as taking advantage of their platform. Look for our thoughts on the value that lead aggregators create in a coming post.

Lenderpalooza

Jamie McDonald — Thu, 29 May 2008 12:50:32 +0000

Last week, we were invited to present at the inaugural LenderPalooza in Houston by Owen Raun from RMC Vanguard. See the press release here. In addition to running one of the best lenders focused on online mortgage origination (see the shelf in his office with award after award), Owen blogs intelligently at www.mortgageonlineblog.com and he hosts industry luminaries on his podcast. Last week, he had the foresight to put together a group of the smartest folks in the industry to talk about ways to get better. At Sparkroom, we are all about transparency, and data, and sharing; anyway, we love other people and companies who share our vision and values. All in all, it was a great day and we will be blogging more about what we learned in the coming weeks. Owen - thanks for the invite and we tip our hat to you for putting this event together. And another hat tip to the all of the lenders in attendance who had the courage to share best practices with each other. Business is way more fun when you work with smart, trustworthy people.

Lead Provider Assets

Jamie McDonald — Tue, 13 May 2008 15:31:57 +0000

At Sparkroom, we spend a lot of time working with our lead provider partners. At the end of last month, we spent a few days visiting with some of the lead providers in Los Angeles and the Bay Area. After the series of meetings, we started trying to recognize the patterns that differentiate the lead providers. On the buy side, lead provider differentiation is driven by a pretty simple equation. Lead provider value = volume x quality x consistency x price. But this got us to thinking, what assets are important to be a great lead provider. How do they create value? What are the core assets of a lead provider?

Lead provider core skills = customer acquisition + monetization

Customer acquisition is pretty simple. How does a lead provider generate leads? An incomplete list of lead gen methods would include search engine optimization, search engine marketing (PPC), brand (see LendingTree), domain names (www.mortages.com), online display ads, affiliate marketing, and email lists.

Monetization is also pretty simple. For the small guys, they can monetize through an exchange like Leadpoint. This is a good news/bad news story. The good news is that you don’t have the cost of developing a sales force. The bad news is that you give up some of your economics in exchange for not having a sales force. For everyone but the small guys, there is the cost of a direct sales force and an account team. But monetization is about more than having a customer list, it is also about lead distribution. You want your leads to go to buyers who will convert them. Why? Those buyers will pay more for your leads. So what you see is that the top providers have reasonably complex algorithms that deliver the leads to the buyer based on volume needed, price per lead and ability to convert.

This boils the lead provider business down to pretty simple terms. Why isn’t everyone doing it? Mostly because doing it well and doing it at scale is very difficult. And it requires a deep expertise in technology. LendingTree is the only provider that successfully scaled without great technology; they did it with brand and a differentiated lead. LowerMyBills, NexTag, QuinStreet, and Adchemy all have technology expertise at the core of their business.

Why does Sparkroom care? No, we don’t want to be a lead provider. But we do think it is really important to understand the business of your partners.

Sparkroom Ships Lead IQ

Jamie McDonald — Sun, 04 May 2008 23:02:17 +0000

We announced on Tuesday at Finovate in San Francisco that we shipped Sparkroom Lead IQ. Read the release here. Our platform has been in the hands of our customers for a few months now and our team of rock star developers has been busy adding functionality, stability and scalability. Lead IQ is ready for prime-time now.

Like any announcement, there needs to be an appropriate Oscar speech. We want to say a big thank you to all of our customers who have provided invaluable feedback and direction on how we can make the product better. And we wouldn’t be where we are today without the hard work, dedication and creativity of the best development team I have ever worked with building product. Keep up the amazing work folks!

Why is Sparkroom Lead IQ important? It provides transparency into the performance of their leads so that lenders can know that they are making the right optimization decisions. It is a very simple and powerful concept.

Sparkroom to Present at Finovate Startup in San Francisco

Jamie McDonald — Mon, 21 Apr 2008 22:35:06 +0000

Just a heads up that we are going to be presenting at Finovate Startup in San Francisco on Tuesday, April 30th. You won’t see our logo or data on the website as of today but that is only because we were just invited on Friday. Thanks to Ken Lin at CreditKarma for pointing us to Eric and the gang organizing the show. We will be presenting in the afternoon. Come watch our demo and swing by our table after the demo.

If you are looking to connect at Finovate, email me at jmcdonald at sparkroom dot com and/or Jamie Shulman at jshulman at sparkroom dot com.

Three Things We Like about Zillow Mortgage

Jamie McDonald — Fri, 18 Apr 2008 01:36:04 +0000

1. Power to the people. The consumer lead generation experience on the Internet is broken. Not many consumers want their phone to ring three times a day for seven days in a row from four different lenders when they submit their information on LendingTree or LowerMyBills. By making the lead anonymous to the lender, Zillow does a great thing by putting the power to request contact or to pick up the phone in the hands of the consumer. When the consumer does call a lender, you can bet that will be a very valuable phone call.

2. Transparency. We love, love, love the Loan Request Search. The ability to see what quotes consumers are requesting and how lenders are responding to those quotes is so smart. For our lender customers, we can easily see the lead flow in their sweets spots and see how much competition there is against those leads. Why doesn’t LendingTree do this? It would be valuable for both consumers and lenders.

3. Free leads. That is a very low cost trial for lenders and a very good strategy by Zillow to drive liquidity in their marketplace and to inflict pain on all the established lead providers in the industry. All it costs lenders is the time and energy required to quote the leads.

We haven’t read all the lender feedback on Zillow but Owen Raun from RMC has positive things to say. Read it here. I particularly like Owen’s suggestions for how to make the service better. Look for Zillow to provide an API to automate the submission of quotes for large lenders in the coming months.

Disclosure: I used to work with Rich and Lloyd at Expedia and I have a huge amount of respect for them and their team. Also, I have a very small investment in Zillow.

Celebrating Being Different

Jamie McDonald — Fri, 18 Apr 2008 00:41:14 +0000

A bunch of folks on the Sparkroom team spent the last few days traveling to see customers and to talk with some potential customers. The pattern that we have been recognizing recently is that every lender we meet is good at something different. The lenders who are doing the best in this tough market are the ones who recognize what they are good at and commit to being the best at what they do. They don’t try to do everything well.

I like sports metaphors because everybody understands them. There are companies in every industry who “follow the puck” and there are those who skate to where the puck is going to be. Following the puck in a commodity business that is going through a downturn is a recipe for mediocre results or worse. So our advice to our customers, and to our future customers, is to try to figure out what you are good at and make sure you are better at doing those one or two things than anybody else in your industry. Yes to best practices. Yes to innovation. And yes to measuring everything. But remember that you have to be great at something. Figuring out what that is drives business success.

Thanks to all the bright people we met with this week who inspired this post. Great conversations this week.

Tying it all together is hard

Jamie McDonald — Mon, 14 Apr 2008 11:42:09 +0000

Some Insider posted the last entry in his opus on the “ever-elusive ROI” on LeadCritic last night. Read the full post here. He has this to say about Sparkroom:

“If you are not good with data, or don’t have the time to do the mining yourself, LeadCritic did a write-up on new company, Sparkroom, that can actually do this for you (this is an unsolicited endorsement, for the record. I have clients that are currently using the product and so far I have liked what I have seen). Not only can their product mine the lead data and bridge the gap between costs and income, but they make that data actionable and tell you what to do with it via a consultative approach. Now, it still remains to be seen if their advice will be good, but I certainly am in favor of the concept.”

First of all, thanks to Some Insider for the unsolicited endorsement. Our only bone of contention with the endorsement is the qualification that “if you are not good with data”, use Sparkroom. While we do have clients who ask us to do everything for them, we also work with highly quantitative customers who really get data and the power of quantitative decision making. Those customers understand the power of having end-to-end reporting on the entire lead lifecycle and optimizing against the metric that matters. These customers also have amazing feedback on how to make Sparkroom Lead IQ better as well as the account management service that supports it.

One of the key themes for us coming out of LeadsCon is that what we do is hard. Doing hard things is a good thing — in business and in life. Some Insider talks about the difficulty that the Lead Management Systems have in delivering income data back to their customers, but it is also hard to accurately track cost data and to assign it to the right lead and the right filter. Add in the challenges around LendingTree CLO fees and it is no wonder that lenders don’t do a great job of accurately tracking cost or income.

The final problem is that once you have an accurate end-to-end view on cost and income of your lead buying program, you have to figure out what to do. This is hard too. More good news.