Google’s entry into online loan lead aggregation could drive down costs and reduce margin for existing players.

With Google’s domination and control in online advertising, a move by Google to offer a lead generation model could seriously affect the shape of things to come.

There has been blog coverage for weeks in the USA about Google’s potential entry into loan lead aggregation, as this would enable finance companies to combine online advertising, branding and customer acquisition in one. However, the effect to other lead generation aggregators, as Google leverages its’ revenue stream to enter the lead market, could be dramatic and could harm competition especially if it uses its’ power to undercut competitors.

Of course, Google could also look beyond homeowner lending and expand a lead generation model into other areas of financial services. Mortgage leads could just be the start of new things to come.

Potentially, Google would be entering the market at a time of growth and quality improvement for online lead generation.

Gary Collins, CEO at Status Media, a UK based specialist in online lead generation, said, “The number of leads supplied through online aggregation is increasing, and conversions rates are improving as companies learn to handle different sources of sales leads. Lead generation companies are experiencing rapid growth as online marketing managers look for more accountability for their online marketing spend. When times are hard major corporations seek least risk sales strategies, pay on performance and risk reward deals become more attractive when budgets are tight.”

Google could potentially bring value to the table for advertisers but whether this makes for a healthy competitive market is another question.

In Google’s favor is the fact that consumers of financial services products already go to search engines to start their search for the best offers and deals. Annette Tirabasso, Deloitte consulting, confirms that online research pays dividends for consumers and is reported as saying, “Originating loans online can reduce cost by as much as 80 percent compared to a branch or call center”.

In 2008, Google Merchant Search reportedly launched a test in the UK which allowed users to compare products and services in a comparison engine. In an FAQ link, Google stated, the service was “only available for secured loans from financial services providers”.

Despite all Google’s advantages there could also be challenges, especially since lead aggregation is not Google’s core business. Analysts say the launch of a Google aggregation website would require the company to switch to a “cost per lead” business model instead of its’ current “pay per click” system used on Google Adwords and worth an estimated $21 billion. Lenders could shift budget away from Adwords advertising if a CPL (cost per lead) model was available instead and this could be risky.

The speculation around Google’s plans emerged as Lending Tree, a US based loan comparison website was reported to file a lawsuit against software company Mortech, which alleged that the mortgage technology provider was selling its’ technology to Google in defiance of a contract between Lending Tree and Mortech.
Whilst it is unclear as to whether there is any official comment from Google, Google is reported to have stated it is “constantly looking for new ways to help people find what they are looking for on the Internet. As part of that effort, we are currently working on a small ad unit test that will run against a limited number of mortgage-related search queries in the U.S.”

We will have to see as things progress in the USA but if Google does enter the finance market with a cost per lead business model or a loan comparison engine, this could make things tricky for existing aggregators and online sales lead providers. It could drive down costs of acquisition for loan providers and lenders.

You can learn more at http://leadmarketwatch.com

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