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Pay-per-lead may save ad networks

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At a time when advertisers are cutting back spending and ad networks are struggling to survive, pay-per-lead networks are delivering results for advertisers—for now.

The failures in the ad network space are piling up, with Phase2Media recently going out of business, cost-per-action network Impower Inc. filing for bankruptcy and CMGI Inc. pulling its funding of ad network Engage.

So, many networks, including Get-Relevant, ValueClick Inc. and L90 Inc., are focusing on more targeted, justifiable programs for advertisers, and pay-per-lead is emerging as a solid model.

Relevant leads

One network that gets more than half its business from lead generation is GetRelevant, San Francisco, which recently upgraded its services with geo-targeting, dynamic co-registration and targeting by demographic.

The company, founded in 1999, has a straightforward business model. Advertisers with an offer or promotion specify the number of leads they want to generate, and pay only for those that are delivered. Cost per lead ranges from 25 cents to $2.50, with b-to-b pricing at the high end because of higher-priced products and higher quality leads, said Mitchel Harad, CEO of GetRelevant.

Clients include Hewlett-Packard Co., Dell Computer Corp. and PC World. The model seems to be working. GetRelevant is a privately owned business and declined to disclose revenues, but Harad said the company is meeting its quarterly projections this year and picking up new business.

GetRelevant uses proprietary technology for lead generation, including partnering with e-mail providers and Web hosting services to build an opt-in database of users. The company then works with a network of more than 150 sites to distribute the offer or promotion.

PC World has used GetRelevant to acquire subscribers for a variety of e-mail newsletters, and said it has gotten good results.

"I like being able to control the production quantities," said Rafael Sosa, member acquisition marketing manager for PCWorld.com. "If I need 5,000 leads, they can produce them. If I was doing banner advertising, I’d have to back into them," he said. However, while PC World has used GetRelevant in the past, as well as other networks including Topica Inc. and MightySeven.com, it is pulling back on most of its lead-generation partnerships for now because of budgets, Sosa said.

ValueClick, Westlake Village, Calif., is another ad network that’s offering lead generation to advertisers, at prices ranging from 40 cents a lead to a few dollars, said Elise Arthurs, VP-marketing at ValueClick, which until late last year focused primarily on the pay-per-click model.

"We as a business decided not to be a one-product company," Arthurs said, pointing to the need to offer a full suite of products to advertisers. "We are basically doing everything."

Getting what you pay for

Earlier this year, ValueClick acquired lead-generation company Z Media Inc., and it now offers a program called UltraLeads with single opt-in, double opt-in and other offerings. Advertisers pay less if they are just looking for an e-mail address, and more for targeting by gender and other demographics.

This year, ValueClick has signed new business from advertisers including American Express Co., Capital One Financial Corp. and FleetBoston Financial Corp. In July, ValueClick reported revenue of $9.7 million for the second quarter of 2001, compared with $16.5 million for the same period last year, although it said it met its revenue target for the quarter.

Another media company that’s doing lead-generation is L90, through its L90 Direct business and Zonfire Inc., an e-mail marketing company it acquired earlier this year. It offers advertisers pay-per-lead and other pay-per-action packages. B-to-b clients include Visa USA, Microsoft Corp. and Business.com.

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