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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, 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 and 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:
$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:
$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:
$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, 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 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.

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, 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:


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