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$47 Per Lead… No Problem – NOT!

Today I got a business associate who said he was solicited by an Internet Marketing firm with an offer that seemed a bit out of sorts. As much as I’d love to expose it all, I will just say that the generous offer to generate about 200 leads per month at the cost of nearly $10,000 per month ($47 per lead) was a bit more – actually exponentially more – than this site needed to spend. Especially when you consider this person runs a successful business already without doing hardly any online marketing.

I discussed things like organic search and effective web design with him and how that could help his business, for a fraction of that cost and produce far more leads. There is the up front cost for site re-design and the ongoing search engine marketing activities, but again, the cost for a small business should not be anywhere close to $10,000 per month as most cannot afford this. So you may be asking “is this one of those clients where the top position in Google costs like $30-$40 per month?”. The answer is no and in fact, I have done lead generation for this company on a contingency basis in the past, so I already have the numbers. For paid search, this client would do very well for well under $8.00 per click. So even if we used $8.00 per lead figure AND marked it up by 25%, he would still see 800 leads for his $9,600 MONTHLY spend, not the proposed 203.

As in all things – BUYER BEWARE. If something seems a bit out of range, get a second opinion. Sadly, I am sure this company exists because they are able to find people who are willing to over pay for search marketing for the promise of a few leads and then sold on the fact that they will close “x” percent of them, even without addressing usability – and that could be no further than the truth. Or they sell them on the fact that they are going to offer a deep discount (if their manager approves it).

If you are looking at a search marketing proposal and you are unsure of it’s legitimacy or cost, contact us and we will gladly review it for you at no charge.

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4 Responses to “$47 Per Lead… No Problem – NOT!”

  • Anthony,
    I understand that you don’t want to share a lot of details, but this is a bit inflammatory. When you say leads do you mean visits?

    I think there are plenty of businesses that $47 per LEAD is well within margin. Under the scenario above you are saying PPC $8 per click so $47 lead is about 13% conversion — thats pretty good in some verticals.

  • oldschool:

    @ Carlos – You make a very good point. I don’t have all of the figures they used for their PPC and yes there is a clear difference between a site visit and a true lead. I just know what I could produce lead for. The even bigger problem is that the site would NEVER convert near 13% and the proposal also quoted ROI based on closing 80% of their “leads” which I thought was very overstated.

    My primary point was to make sure people are aware of what they are paying for, especially when “investing” nearly $10,000 per month in an online marketing campaign with little knowledge of the process. I am a huge advocate of consumers being educated in SEM so they know how to make the right decisions. That thought scares some SEM providers because it makes them accountable, but I believe it builds better client relationships.

    Thanks for your input.

  • Jimmy Trimmel:

    This is silly. QUALITY matters. As does price.

    $47 per lead for a child who might want a matchbox car…

    $47 per lead for an wealthy person interested in spending over $10 million on a boat…

    Clearly a difference, reducing this to clicks or whatnot reveals your ignorance of sales. Go back to programming.

  • oldschool:

    Jimmy,

    A great way to make your point is to educate, not try and insult. I am not sure you made a point other than that you don’t understand the intended message.

    This was simply a discussion of the difference in spending money on leads vs generating your own leads vs. PPC. Sure, you can spend $47 to generate leads to make large sales – I get that, although I would be curious to know how many people search the web to find a vendor for a $10 Million boat – those are usually relationship based sales.

    Trust me, a high percentage of the people that sell leads are generating them online. I know because I have been one of them in the past. People who get on board with generating their own leads through SEO and PPC will have margins – always.

    Take a deep breathe and enjoy life.

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