Generating Customers: Pay Per Click or Pay Per
Lead?
All mortgage web site owners
have come to realize that the Internet is not free, especially
in the competitive industry of home loans and mortgages. For the
most part, mortgage companies are going to have to invest in
Internet advertising in order to receive mortgage leads. The two
most common alternatives for the acquisition of new customers,
are via a Pay Per Click (PPC) program or via a Pay Per Lead (PPL)
program. Pay Per Click Considerations Many mortgage web site owners are evaluating whether or not to
invest in, and manage, a Pay Per Click campaign in order to
acquire visitors with the hope of converting them into
customers. In most scenarios, except for mortgages, the Pay Per Click
program typically outperforms the Pay Per Lead program. However,
due to the high cost of clicks at various Pay Per Click services
such as Overture.com, the Pay Per Lead option is generally a
more cost effective alternative. For example: if a normal product acquisition, such as cell
phones or books, has a cost per click of $0.40 and it takes 10
clicks to produce a customer, then the cost per lead is $4.00.
With cost per click typically running anywhere from $2-$15 per
click (at both Overture.com and Google.com) having to generate
10 visitors before you produce a lead can result in a cost per
acquisition of $20 - $150 per lead. Current Pay Per Click Bids
Here are current Pay Per Click amounts for selected keywords:
California home loan:
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$7.98 to $8.13 for the top eight bidders |
Dallas mortgage: |
$4.00 to $6.03 for the top six bidders |
Exclusive mortgage lead:
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$4.13 to $5.10 for the top four bidders |
Texas home loan: |
$5.20 to $6.02 for the top four bidders |
Chicago mortgage: |
$2.00 to $5.00 for the top four bidders |
Denver mortgage:
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$4.00 to $6.97 for the top four bidders |
Florida home loan: |
$10.20 to $10.45 for the top five bidders |
$50-$100 Per Lead via Pay Per Click? As you can see the top bidders for key mortgage related words
are in generally between $5 and $10 per click. If it takes 10
visitors to produce a lead, then it is costing you $50-$100 per
lead for major keyword combinations. You should compare this to
your Pay Per Lead program options. Also, as you might expect, bids after the top three to five
spots drop in price, but also it has been demonstrated that
listings below the number five position are about 5% as likely
to clicked on as the first position. In short, you get what you
pay for. Just One Keyword Equals $2M+ Per Month In Expense Additionally, please note that the top 11 bidders for the
generic term "home loans" each pay over $3.00 per click. And
knowing that there are almost 350,000 monthly searches for the
term "home loans" at Overture.com, you can see how bidding on
this keyword is arguably a $1 million per month revenue
generator for this major Pay Per Click engine, generated
predominantly by the mortgage lending industry. We can expect
another $1 million is spent using the Google.com Pay Per Click
program.
Cost Effective Pay Per Lead? For the mortgage industry, due to the high cost of Pay Per Click
programs, the Pay Per Lead often proves to be more
cost-effective, allowing your staff to focus predominantly on
lead servicing rather than lead generation.
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Currently most shared mortgage lead programs cost approximately
$25-$35 per lead. For an exclusive mortgage lead the cost can
run between $50 and $75. Many mortgage owners realize that just
a year ago that the costs for a shared lead was in the $15-$25
range and the cost for an exclusive mortgage lead was in the
$40-$50 range. Unfortunately, we anticipate that the cost per
lead will continue to increase due to the high worth of each
closed mortgage. When evaluating your own Internet marketing strategy and
determining whether or not Pay Per Click is an effective method
it to acquire new customers, be sure to factor in the total Pay
Per Click campaign cost (the costs of the bids plus the labor
factor of managing your bids) to achieve an actual cost per
lead. Factors To Consider When Buying Leads
Expires on: Just like milk, mortgage leads have a relatively
short life span. Be sure that leads are fresh from the time that
they are secured until the time they are delivered to you. The
delivery mechanism is critical to your success. The mortgage
leads should be delivered in a prompt format; never later than
24 hours after the lead has been received. Ideally the mortgage
leads should be delivered either instantly via a confirming
e-mail or in some type of spreadsheet format so that they can be
integrated into your database.
Have it your way:
Any good Pay Per Lead company should be able
to filter and prescreen for various factors, i.e., only bad
credit loans or only loans from people in Wisconsin.
Bounty: Some Pay Per Lead providers charge an additional fee has
a bonus in the event the lead turns into a closed sale. Do you know where the lead has been generated? What is the
source and origin of your lead? Was the lead gathered off of a
web site or via a phone call or via unsolicited e-mail? There
are many horror stories of people filling out Spam email
inquiries just to find out your company name, then trying to
hack your site in retaliation.
Incentive leads: Take the time to confirm that the lead is the
true lead and not part of a method just to generate an expense
for you. Many incentive web sites will use a reward system in
order to have their members complete various forms, including
mortgage applications, to generate revenue.
Close Enough: The accuracy of the lead, specifically how much
information is obtained; and whether or not any of that
information is verified needs to be considered. Be sure you
obtain an accurate phone number and accurate e-mail address. You
should expect to have at least an 85% accuracy of data received
for leads. Lead Returned Policy: Negotiate up front as to what constitutes
a bad lead, and whether you are credited money or additional
leads for bad leads. If bad leads account for greater than 10%
of total leads; you are probably going to have a problem with
the mortgage lead provider.
“You Get What You Pay For” The free lunch on the Internet ended a few years ago. It now
costs marketing dollars to generate new business. And the old
saying still goes, “You get what you pay for”. This quote is
especially true when buying mortgage leads. But remember that
all leads are not the same. Each lead generation company has
different response rates, based upon the way they generate their
leads. Just make sure you spending your hard earned marketing
dollars at the right company.
Rod Aries and Robert Farris are co-founders of MortgagePromote.com, a leading Internet marketing provider to corporate mortgage clients. On request, they conduct nationwide training seminars covering Internet marketing strategies, lead generation, web site development techniques and more. Web site: www.mortgagepromote.com
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