Bronte Media

Pamela Parker of ClickZ has a very good profile of Root Markets and the lead generation space overall. Pamela reports that Root Markets have acquired Leadfilter.com, a mortgage lead ad network founded by Robert Wilson who also founded Lendingtree. Lewis Ranieri, the (in)famous star of Liar’s Poker, is the lead investor of the firm.

In Seth Goldstein’s (Root Markets’s CEO) coming out post he describes how Ranieri created the mortgage backed securities market. He re-writes history a little with securitization but the points are still nonetheless powerful. Securitization allowed competition in the mortgage market, which before was impossible to enter because of the balance sheet needed and the regulated banking industry. What securitization allowed was the mortgage industry to splinter into specialized parts, splitting the marketing and acquisition from the financing and risk management. And of course, consumers won in the end with lower rates.

I am not sure that lead generation is directly akin to securitization - the analogy is stretched. The price of entry is not high and it is not exactly a hard business to get into (it is a hard business to make money in, don’t get me wrong). There is a danger that it will turn into just-another-ad-network.

But that doesn’t mean Seth will fail. The lead generation industry is borderline black market and there is a huge opportunity to be had in cleaning it up with transparency.

I still have a hard time how this has anything to do with the consumer though, who fills out a form and from there the black magic happens. Even if you clean it up they are still filling out a form where they are contacted by an unknown amount of unknown people. That’s a pretty tough basic premise and why I believe that pay per call is the ultimate natural cleanser for the lead generation industry. We shall see. This is one of the most interesting subset of online advertising industry at the moment.