Automotive Lead Arbitrage: Good or Bad?
Posted by admin | Filed under Lead Arbitrage
For some reading this post you may have never heard the term “arbitrage”. Many lead providers today are engaged in the process of arbitraging leads throughout various networks. Simply put, arbitrage is the making of profit or margin between two markets.
While on one level I don’t see a problem with arbitrageurs making some margin selling leads, I think it is a completely different story when it becomes rampant or abusive. When lead arbitrage becomes abusive everyone looses except for the arbitrageur.
For exemple, many companies or individuals that arbitrage automotive leads may add some value to the equation such as a validation or quality checks, others simply apply the shot-gun principle. Take as many leads as you can grab or “post reject”, throw them out into the marketplace and see what sticks.
For “pure lead” generators such as Lead Dispatch and a few others in the automotive industry that actually generate leads, it’s a loosing proposition for everyone involved to a certain degree. Here’s why:
- Leads that are post rejected or “stolen” may never get placed. The auto dealer loses and the potential customer loses.
- Auto dealers pay more for leads with no inherent value added to the lead.
- Lead overlap - I was told by one lead exchange that there can be as much as 80% overlap on leads that are arbitraged. By the time a lead is broadcast a thousand times no one can tell who actually generated the lead.
- A post rejected lead typically becomes a duplicate across the lead network when it never got placed
- Many engaged in lead arbitrage flat out “steal” by offering a high bid or price for a lead and then once the data is posted, they post reject the lead keeping and selling the data. While many may say they don’t engage in this our research proves the contrary.
- As an industry, we are doing a disservice to the consumer. We seem to forget that at the end of each application or quote is a “real” person looking for our help to solve a problem, not just a piece of data to be traded.
So what can be done?
Until the industry cleans itself up, “pure lead” generators need to stick together and find some interim solutions. Lead Dispatch is looking to offer a few creative solutions for auto dealers and lead providers with retail customers:
- Lead Providers - we can become an extension of your marketing and lead generation efforts by offering enhanced marketing for you in key geographic areas or zip codes. Additionally, we can offer a fixed contract price for leads in specific zip codes. You get exclusivity at a potentially lower cost than leads that go through the bidding process.
- Auto Dealers - We can become your direct lead provider, putting our knowledge and expertise to work for your dealership by sending leads directly to your CRM while saving you money on your Internet advertising.
What are your thoughts on lead arbitrage in the auto industry? Share your thoughts with our visitors by registering for a free account today.
Give us a call today to discuss your Internet lead needs:
Lead Dispatch International
Coppell, Texas
214-432-0613
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