fintech, social media and entrepreneurship
George Favvas
George is the co-founder of Reflexity, Inc., a company which provides online marketing and lead generation services for the financial services industry. He lives in Montreal, Canada.
Homepage: http://www.reflexity.com
Posts by George Favvas
Mortgage, debt lead aggregators now selling leads five times
Dec 21st
Over the course of the past few months, financial lead aggregators such as LowerMyBills and NexTag have quietly switched from a 1:4 to a 1:5 model. This means that they are now selling the same lead to five different banks or brokers at the same time.
Prompted by stagnant traffic and an overall tightening of the mortgage refinance market, lead aggregators are looking to grab onto anything that will improve their margins, or at least keep them from eroding.
Theoretically, the total value of a realtime mortgage lead should be the same no matter how many times it is sold. Let’s say a bank is willing to budget $3,000 to acquire a $300,000 refinance loan. If a lead has a 1 in 10 chance of closing, that each lead is then worth $300. Since a consumer can only close a maximum of one refi loan at a time on the same house, increasing the number of lead buyers, logically, should proportionately lower the price each of those buyers pays for the lead. So you’d expect that that same lead, sold four times instead of once, would now fetch $75 per buyer.
But that’s theory. In practice, other factors come into play. Having two offers instead of one increases the chances of the consumer converting, since there is a greater likelihood that one will interest them. But having, say, ten would be overwhelming, and likely turn the consumer off entirely and drive down to zero the chance of any of the lead buyers converting.
The balancing act is finding the optimum number of times a lead can be sold in order to maximize their revenue without ticking off the consumers or lead buyers too much. Is 5 too much, or just right? By moving to 1:5, lead aggregators are betting on the latter.
Are they right? Time will tell. In a future post I’ll discuss why this may all be irrelevant, plus what the implications are for affiliate marketers who target the financial services sector.
Google AdWords to implement quality score “update” on content network
Nov 7th
Google’s at it (again). An ominous warning on the Inside AdWords tells us Google is on the verge of implenting its use of “quality score” to set minimum bids on web sites in its content network. The post reads in part:
In the next few days, we will be making two changes to how AdWords evaluates landing page quality. First, we’ll begin incorporating landing page quality into the Quality Score for your contextually-targeted ads, using the same evaluation process as we do for ads showing on Google.com and the search network. Advertisers who may be providing a poor experience on their site will notice that their traffic across the content network decreases as a result of this change. Second, we’re improving our algorithm for evaluating landing page quality and incorporating landing page content retrieved by the AdWords system.
Last July, Google wreaked havoc on search marketers by setting new minimum bids for advertisers whose landing pages it deemed to be of low quality. Though the notorious Made For AdSense sites and friends deserved, in my view, what they had coming, Google’s actions didn’t pass the smell test.
For one, the timing was suspicious as it came on the heels of Google’s testing of a cost per action model, to the detriment of many of the affiliate marketers their update was squeezing out of the market. And if Google was really concerned about landing page quality then why allow these advertisers to pay a ransom and have their ads remain active? And why deactivate the offenders on Google’s site only but allow the ads to be syndicated across Google’s network of third party content sites?
This week’s upcoming update addressed at least the last point, by treating ads on both networks in the same manner. How you been affected by the quality score update? What, if any, changes did you make to your site as a result?
Can mmmzr realistically be the next million dollar home page?
Oct 29th
Mmmzr.com‘s concept is relatively straightforward: selling 50×50 pixel ad buttons in columns in the site for twice the amount someone paid for the spot below them. The money generated provides a kickback of up to 200% of the initial investment for previous buyers, plus a tidy profit for the site’s creator. Mmmzr was created by Tadashi, who claims to be a part-time English teacher and translator living in Tokyo who quit both jobs, lost his appartment – and hasn’t shaved in while.
The idea works for two reasons:
- The concept is brilliant, yet simple. It breaks pretty much everyone’s concept of what we call advertising, yet people are scratching their heads wondering: “Why didn’t I think of that?”
- The chance of getting one’s money back, or even doubling it, is an added incentive. The higher the prices get, the more people will be willing to invest to make the site known so they can get their money back.
Marketing guru Seth Godin called mmmzr the next Million Dollar Home Page. Since he blogged it a little over 24 hours ago, prices for a 50 x 50 pixel ad on the site have gone from $128 to $4096.
Here’s a quick spreadsheet I did up to show the profit mmmzr makes as ad prices increase:
As you can see, the profit is equal to (price paid for top spot in a column / 2) + 1. This repeats as he has seven columns of ads. Is it realistic for mmmzr to achieve the same success as the Million Dollar Home Page? The answer may hinge on if you’re looking at revenues or profits.
One million in revenue would require selling six ads for $65,536, and a seventh for $131,072, for total cumulative revenues of $1,048,569.
But hitting one million in profits is another story altogether. That would require six ads bought for $262,144, plus a seventh at $524,288, for a profit of $1,048,583.
Would anyone pay $131,072 for an ad on this site? Likely not on the basis of the site’s traffic. But there’s no telling what will happen once the site starts generating mainstream publicity and the prices start getting outrageous enough that the $131,072 buyer themselves could get enough free PR to make it worth it. (A likely candidate would be one of the online casinos.)
Would anyone top the half million dollar mark? I would venture to say no. Still, Tadashi should have no problem affording at least a razor and shaving cream. As I write this, his profit stands at $10,246, and I’m sure he has yet to upload his last ad button.
Yahoo! Search Marketing previews new goal-oriented optimization
Oct 25th
Heather Paulson today reports, with screenshots, on a preview of Yahoo!’s new search marketing platform.
For the better part of the last five years, tools made available to search marketers have been focused around the concept of managing bids and budgets.
But marketers are more concerned with goal-oriented metrics: What is my customer acquisition cost? What’s my return on investment? And what’s the volume of customers I can acquire at a given commitment level?
Yahoo!’s search marketing functionality had been sorely lagging its competition’s – they have announced they will finally start factoring ad quality into as ranking in 2007. This puts them back in the game. Expect Google and MSN to follow suit with similar functionality sooner rather than later.
A (belated) welcome to my blog
Oct 25th
I finally decided to start a blog. Why it took me this long, I’m not sure.
I’ve been watching my friend Adam Shostack nurture his blog with much enthusiam and for some time now. I emailed Adam asking for suggestions about blog software. His suggestion: Forget about the software and focus instead on developping a “message, a voice, and a reason for people to come back.” (Thanks for the inspiration and the tip, which earn you the inaugural link on my Blogroll. 
)
Thinking about “a reason for people to come back,” I found myself asking myself an even bigger question: Why am I writing? It turns out the question is harder to answer than I originally though. [So hard, in fact, that I'm posting this message almost a week after having started to write it.]
The short answer is that I’m writing because I have something to say. The long answer is, well, longer.
My first contact with the Internet was in 1993, when, at a student journalism conference, I had the chance to see a preview of Gopher. I was bored out of my mind, left the room early, and just plain didn’t get it. Some months later, I saw a live demo of Mosaic, the first graphical web browser. Many in the room couldn’t grasp the significance of watching the level of a coffee pot at a university in the UK, but I was awe-struck. I knew this was the beginning of something great, something that would change society in a fundamental way, even though I wasn’t quite sure how. And I wanted to be a part of it.
That year I jumped head-first into the fray and have been making a living off the Internet ever since. I experienced first-hand both extremes of the dot com boom and bust as employee number 11 at Zero-Knowledge Systems, only to watch from the sidelines as it rebounded. And I’ve made a lot of mistakes, but also some good moves, while co-founding three companies. My hope is that if I can share even a little bit of insight that might — just might — help someone out in a small way, then I would have given something back.
I plan to blog about issues I’m thinking about. Since I spend most of my time these days helping financial services companies attract customers online, it’s only natural that many of my posts will relate to this topic. (And I’m sure I will post articles that have no relation to anything I’ve just talked about. You may think this takes away from the blog’s focus, and you’d be right. But it’s my blog, after all.)
So welcome to my blog. I hope you enjoy your stay. Some items may have shifted during transit. Please fill out the comments card on your way out.
Google suggest
Oct 21st
In the rush to jump onto the Web 2.0 badwagon, some of the most effective uses of AJAX are still the simplest. Google suggest — which refines your query with up to ten suggestions as you type — tops my list. I’ve experimented with it as my browser default page for the past week and, despite causing the occasional IE crash, am finding it to be a remarkable time saver. Not to mention a good source for keyword variations for seach engine marketing purposes.
We pick you up (sometimes) – CJU 2006
Oct 21st
MARY: Thank you for calling Enterprise, the company that picks you up.
ME: Hi Mary. Can you pick me up? I’m at the DoubleTree.
MARY: Ummm, we don’t have anyone available to do that right now.
ME: But you said you could pick me up when you answered the phone.
MARY: Ummm, yeah. We ummm, hold on one moment, sir.
HOLD MESSAGE: (Music) Thank you for your patience. A representative will be with you shortly. (Music) At Enterprise, we pick you up.
The CJU 2006 conference was winding down, and I decided to take advatage of a lunchtime lull before the final CJ Performer event to organize for a rental car to drive us back to LAX. You’d think that at a minimum, the person on the other end of the line would have adapted her greeting to the situation. There’s no easier way to lose (captive) customers than to fail to meet expectations you yourself have set.
While the above real-world example may be the extreme, the web is full of marketing campaigns where everything from the ad copy and creative, to landing pages, to the checkout process have been carefully thought out — but where time-sensitive variables are thrown out the window. Does your site sell a product or service whose quantity is limited? Do you use the pay per click engines’ API’s to pause your campaigns when you run out of the product, or are you spending money to acquire disatisfied customers?
As for the car rental, the Hertz counter in the conference hotel lobby took care of us.
No Asss 4 U
Oct 20th
Saw this sign on the drive home yesterday, heading East on Pine Avenue. Unfortunately, the only shot I could get was from a sub-par phone camera, so you’ll have to take my word when I tell you it says “NO ASSS 4 U.” I’m not quite sure what asss is, and if I’m the U who’s not getting any, but temporary signage aside I do think the city of Montreal is doing a great job with nearly-done redesign of the Park/Pine interchange.
