{{ searchResult.published_at | date:'d MMMM yyyy' }}

Loading ...
Loading ...

Enter a search term such as “mobile analytics” or browse our content using the filters above.

No_results

That’s not only a poor Scrabble score but we also couldn’t find any results matching “”.
Check your spelling or try broadening your search.

Logo_distressed

Sorry about this, there is a problem with our search at the moment.
Please try again later.

This week Google was sued by Lending Tree, a company whose website enables consumers looking for mortgages and other loans to connect with lenders. LendingTree alleges that Google is planning to launch an online loan exchange of its own and that it will use technology provided by one of LendingTree's vendor. The problem: LendingTree alleges the vendor is contractually forbidden from working with LendingTree competitors, which LendingTree clearly believes Google is.

For its part, Google says that it's simply "working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S." So while we don't yet have enough in the way of hard facts to evaluate the merits of LendingTree's claims, the lawsuit raises an interesting question: what if Google gets into the lead gen business?

Right now, Google's sole cash cow is pay-per-click advertising. In a sense, its AdWords program is a kind of lead generation program: Google refers potential customers to its advertisers and gets paid by the click. In some highly-competitive markets, such as those for mortgages, the amounts advertisers are willing to pay Google for each click are quite remarkable.

Even though the amounts advertisers are willing to pay for each click in markets like mortgage lending are nothing to sneeze at, Google could potentially make significantly more money by becoming a true player in the lead gen business. While it's too early to estimate what Google might realistically make with a LendingTree-like service, it's clear that Google is serious about doing whatever it can to add to the bottom line. Moving the needle isn't easy for a company of Google's size but incremental gains can add up.

In my opinion, this isn't just about the money, however. It's also about remaining competitive as online search evolves. With Bing Travel and Cashback, Microsoft has demonstrated some of the virtues of having a vertical search strategy. Bing Travel utilizes technology Microsoft obtained when it acquired Farecast in 2008 for $115m. Farecast's former CEO and now Bing Travel general manager described part of the strategy as capturing consumers "higher in the funnel". If providing a better experience for consumers dictates that Google make dedicated efforts in specific verticals and it can take advantage of a lead gen business model at the same time, it just might have to.

The question, of course, is how hard Google can step on the toes of its advertisers before they push back. In the mortgage space, many of Google's advertisers are themselves middlemen in the business of generating leads. If Google disintermediates their market by building an online loan marketplace of its own, Google would be competing head on with its own customers. Maybe this would prove to be worthwhile, but it could also backfire. It would certainly cause advertisers in other markets to raise their eyebrows. Could Google eventually turn on them too?

In the end, this all might prove to be nothing more than conjecture. But the question of how far Google can expand its tentacles without upsetting advertisers and regulators is one that I suspect will continue to keep coming up because LendingTree certainly isn't the only company out there that has fears about what Google could do to its business.

Photo credit: Casey Serin via Flickr.

Patricio Robles

Published 28 August, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2377 more posts from this author

Comments (8)

Comment
No-profile-pic
Save or Cancel
Avatar-blank-50x50

pay per click management

This is an interesting subject. It opens the doors for more questions like - what if Google gets into eComm, too? Or how Google will manage this new "Lead Gen" network ... in house our outsourced? Will PPC Management companies need to become educated in that as well to maintain certifications? Oh well, let's hope they (Google) don't screw the pooch by competing with their own advertisers paying premium prices p/ click for mortgage related keywords.

almost 7 years ago

Avatar-blank-50x50

Pro2Pro Network

This enables endless possibilities. It could be interesting to see how Google would be able to expand into new territory. I guess we'll just have to wait and see.

almost 7 years ago

David Iwanow

David Iwanow, SEO Product Manager at Marktplaats.nl

It is a fair point and one that will only attract more attention with all the angry feelings from Media companies when Google launched their free Google Maps property listing service. No business likes it when a large company like Google or Microsoft move into their niche market, but when that company has all the data/statistics it does make the advantage lean towards them.

Since there are only a few large insurance groups there would be no reason why Google couldn't also launch such a system which if a large company such as AIG spends X amount a month on Adwords that Google wouldnt allow them to be listed as a trusted supplier.

To further expand how these leads gen would work, they would still go thru the google adwords system but just be sold be CPA/CPL to the higest bidder to companies such as AIG. But if companies such as LendingTree can still make 20% margin buying CPA leads instead of 40% on CPC doesnt that still make it a profitable business and in someways a better business?

Google is already in eComm with Google Checkout, but its something they are not pushing as hard because its not yet international like Paypal.

almost 7 years ago

David Iwanow

David Iwanow, SEO Product Manager at Marktplaats.nl

It is a fair point and one that will only attract more attention with all the angry feelings from Media companies when Google launched their free Google Maps property listing service. No business likes it when a large company like Google or Microsoft move into their niche market, but when that company has all the data/statistics it does make the advantage lean towards them.

Since there are only a few large insurance groups there would be no reason why Google couldn't also launch such a system which if a large company such as AIG spends X amount a month on Adwords that Google wouldnt allow them to be listed as a trusted supplier.

To further expand how these leads gen would work, they would still go thru the google adwords system but just be sold be CPA/CPL to the higest bidder to companies such as AIG. But if companies such as LendingTree can still make 20% margin buying CPA leads instead of 40% on CPC doesnt that still make it a profitable business and in someways a better business?

Google is already in eComm with Google Checkout, but its something they are not pushing as hard because its not yet international like Paypal.

almost 7 years ago

Avatar-blank-50x50

Cecilia

This is an interesting subject. Wonder to know what google will enter into the the new territory.

almost 7 years ago

Avatar-blank-50x50

Justin Hitt

Google is already in the lead generation business, they have a huge directory of advertisers and match them with content.  You pay a finders fee per click.

At least they are doing this under their own company name out in the open, you already did the research for them by running Adsense.  No need to hide.

Google is just smarter.  No sense crying over spilled milk, it's business.

Best,

Justin

almost 7 years ago

Avatar-blank-50x50

Tenders

The thing is, Google has always maintained that they wont get into an industry where they will be copying everyone else, they will only do something if they can improve it and do it differently

almost 7 years ago

Avatar-blank-50x50

Robin Caller

Hi Patricio As a company that owns and operates sophisticated lead management software, i found your article very interesting. Indeed, a business consultant recently challenged me by asking why Google was not detailed as a competitor in my draft business plan. So, we've given your postulation some thought. First the obvious. Why would they do leadgen when they can do nuclear power? Why would they do leadgen when, if they want to disintermediate, they can buy the bank, and buy the estate agency network, and do the entire value chain? Then the obvious. Why would they have a motto "don't be evil" if they intended to be good? The idea of being evil didn't even occur to me until they put it in my mind. So, whose mind was evil in first, theirs or ours? And finally - of course, they are a competitor. They do, however, make and own the market in "cost per click" advertising. And, if they move into leadgen, they will most certainly bring of age the "cost per lead" market like nobody else has ever done. But they own the lion's share in cost per click, and there's no knowing whether they can retain the same kind of dominance if they start to lead the market towards CPL. Anyway, that's what i think today. We need also remember that online is a channel, as is mobile, and direct mail, and face to face, and google have big game to hunt if they want to own mobile, and interactive TV, and video, in the same way they own one area of online - search. PS _ Today, Google was wrong. I typed in the post code SE14 5ED - and Google showed me a map - and results for the place - but apparently that post code does not exist.

over 6 years ago

Comment
No-profile-pic
Save or Cancel
Daily_pulse_signup_wide

Enjoying this article?

Get more just like this, delivered to your inbox.

Keep up to date with the latest analysis, inspiration and learning from the Econsultancy blog with our free Daily Pulse newsletter. Each weekday, you ll receive a hand-picked digest of the latest and greatest articles, as well as snippets of new market data, best practice guides and trends research.