Bronte Media

I know it is a countless example of substitute-in-firm sponsors independent study that finds substitute-in-firm’s product is great. But real estate lead generation offers a unique way to track effectiveness by virtue of the county records and the article sparked an experiment on cost per lead versus cost per acquisition pricing in my mind.

The creatively named e-agent.biz, commissioned a research firm to look at 100,000 of its leads and found that one in five bought or sold in the six months after they filled in a lead form. No mention is made as to whether the lead used the recommended e-agent.biz agent or not.

From the article: “Real IQ then determined the validity of the leads by comparing names and addresses on those leads with residential property transactions subsequently recorded in public county records.”

I wont say one in five is a good number or not, but if you assume that half of the time the consumer goes with the recommended agent, then the conversion rate is 1 in 10. e-Agent’s web site says the average lead is $15. So they get effectively get $150 per transaction (again generous assumption about 1 in 2 engaging an e-agent may skew analysis).

Consider the average referal fee by the likes of realestate.com is ~$2000 (one quarter to one third of the agent’s commission), then even if the conversion rate is 1 in a 100, the CPA referral model is still more financial rewarding.

It is something I am pondering intensely at the moment, and I am sure lowermybills and Nextag are too - why not simply take more risk on and get a bigger cut (if they are confident in their audience)?