More than half of marketers admit that they are not using lead generation effectively, according to new research from the Internet Advertising Bureau (IAB).

The IAB says that the lead generation sector grew by 20% in the first half of 2011, faster than the industry’s understanding of the discipline.

The survey polled 125 marketers from advertisers, agencies, networks and suppliers, and found that although the majority of respondents understand how lead generation can increase a customer base, 52% said they weren’t using it in the most effective way.

Trine Buus, chair of the IAB’s lead generation council, said, “There is still a lack of understanding on what it is. Lead generation is a discipline that advertisers haven’t looked into and traditionally there’s a lack of transparency from suppliers.”

Buus, who is also international product director for ad pepper, said that lead generation is essentially about customer acquisition.

Prospective customers are taken to a landing page where they give permission to be contacted – the data from customers who opt in is then passed on to marketers to contact them and convert into sales.

The benefit of lead generation is that because the customers are opted in, you own the data and the permissions. That data is very valuable.”

The IAB says that a large part of the process is educating people on how to evaluate ROI.

Yet despite a lack of clarity, 33% of respondents to the survey said they allocated more than £100,000 to lead generation in 2011, while 40% will increase the budget in 2012.

However, 29% pointed out that expensive CPAs could prevent higher spending, while 28% cited difficulties moving budget from other marketing channels as a challenge.

According to the IAB, email (49%), natural search (46%), pay per click (44%) and affiliate marketing (30%) provide the most leads, but there is a knowledge gap between sectors.