With the launch of the second instalment of the IAB’s Value of Online Performance Marketing study, we have a wealth of valuable new information and insight into the work and success of the sector. After establishing a concrete valuation last year, the IAB has once again upped the ante with its analysis of 2013, proving that lead generation is still growing in spend and success and that it is breathing fresh impetus into the performance marketing space.
Annual UK lead generation spend has risen by just over 14% from £114 million in 2012 to £130 million in 2013, now equating to between 1 and 1.3% of all UK digital advertising spend. The latest research goes on to provide some useful insights into how this increased spend has supported the goals of advertisers too. A total of 60 million leads were created during the period which then led to £1 billion of sales as a direct result. This means that each lead generated drove £16.667 of sales and the average cost per lead (CPL) equated to £2.167 across the period. Every pound spent on lead generation now drives £7.69 of spend into the economy. The continued innovation and evolution of the offerings in the lead generation ecosystem will help marketers to maximise the return from this increased spend.
These infographics are great way for people to navigate the complexities of such marketplaces and the IAB has done a good job of illustrating the key components of the OPM ecosystem. Though it seems the most recent infographic is slightly more simplistic than before, with a single section of ‘aggregate lead suppliers’ used to describe the lead generation ecosystem. Lead generation has evolved and expanded considerably in the past few years and a more detailed breakdown is needed, similar to the level of detail provided in Chris Johnson’s ecosystem graphic of the CPA affiliate marketing space.
Following the money
The breakdown of lead generation budgets provides some interesting insights although it is important to note the limited sample size of the study (27 companies responded). It is no surprise that email and newsletter lists continue to command the most due to their immense reach and relatively low cost. Display and content now have an equal share of performance marketing spend, a fact I would attribute more to the rise of content than the death of display, but please do let us know in the comments if you think otherwise! The addition of the new ‘content unlock websites’ category is another sign of the growth of content in online performance marketing – and also an area with great lead generation potential.
The fact that the catch-all ‘other’ category has more than halved since last year is however a little more unexpected, not least because it includes co-registration, paid search and social media amongst others. In 2013 digital giants like Twitter and Google started to scale new lead generation offerings with their Lead Generation Cards and Get Offers ad formats. This report is based on the full year 2013 spend so I look forward to IAB measuring the impact of these innovations in the next year’s report.
The report also proves something that all of us in this space have known for a while: lead generation is no longer chained to the desktop. Mobile and tablet specific campaigns are now starting to bear fruit, and therefore commanding more budget. Spend has increased from 9% to 14% across both affiliate marketing and lead generation, and while we cannot break this down and separate it out into each discipline, our experience shows a markedly increased appetite for mobile and tablet lead generation campaigns from advertisers, publishers AND the all-important consumer.
Defining the space
While the report’s definitions of lead generation and affiliate marketing are sound it is worth noting that, as with every element of digital marketing, there’s a certain amount of cross-over. Mature lead generation technologies now drive customer acquisition not just leads. For example, a lead generation process can directly log a customer into an advertiser’s website and sophisticated data analysis can feed detailed sales data about customer actions and purchases back into a campaign to optimise performance. The core of lead generation remains the collection and transfer of prospect data, but the possibilities for innovation and advancement through technology are enormous.
The report rightly identifies the strength of lead generation for products with a complicated sales cycle such as life insurance. However, the value of lead generation extends much further than that. At Magnetise we have run lead generation campaigns for the full gamut of advertisers from oven chips to luxury cars and have seen the positive impact it can have across the entire spectrum. Lead generation at its most fundamental level is about engaging new sales prospects in direct communication and this can be as valuable for a consumer product delivering a voucher promotion as it is for an insurance company.
The consumer perspective
In addition to all the ‘big picture’ financial data, there are some fascinating consumer insights drawn from a survey that quizzed people on their interaction with typical performance marketing mechanisms. Over the last six months for example, 58% entered a competition, 37% signed up to a newsletter and 22% provided personal details. The most telling statistic perhaps is that 90% of people have engaged with OPM tactics (due to the fact only 10% reported they hadn’t).
These figures show performance marketing is now firmly woven into the fabric of the web. When we look back on the year ahead in the third edition of the IAB’s Value of Online Performance Marketing study in January 2015, I very much hope that we will be seeing these findings as the catalyst that propelled performance marketing and lead generation deeper into the heart of the mainstream marketing mix.