Our company at the very high level is focused on the performance-based marketing space, known in some circles as lead generation. There's some connotations with lead generation that makes us a little hesitant to use that terminology. Our goal is to re-imagine and reinvent the lead generation space and the first vertical we're doing that in is the insurance space.
The hallmark of that is that the users we're delivering to the insurance companies in this space are highly qualified. In over 80% of the cases, users have filled out a complete form about themselves with data that gets sent to a call center. The user has already prequalified him or herself by providing a lot of very specific structured information about themselves and their needs as an insurance consumer. It is much more qualified than a display ad, a user that comes to an advertiser site.
We started as QuoteLab.com two-and-a-half years ago; we were very adept at acquiring users through the tier one search engines like Google and Bing—generating over 1 million leads in that time. Users would fill out a form and then they would be sold as a lead to a lead buyer and then we would match them up with advertisers like Geico and Progressive for clicks. A user would fill out a form and they would be matched up with an insurance carrier and they'd click on an insurance carrier and they'd be sent to that insurance carrier's site and that carrier would then pay us. What was really groundbreaking was for all the traffic coming from QuoteLab, we allowed advertisers to bid different amounts based on the different information the user had volunteered about him or herself. That allowed the advertisers to say, if there's a woman coming through that has multiple cars, and is a homeowner and is currently insured by Farmers or All State, I want to pay X amount for that user versus a user that's a male, who's under 25, with one car and not a homeowner. That was groundbreaking in granularity and transparency -- for advertisers to bid different amounts for different types of users coming through.
How did that morph into what you're doing with MediaAlpha?
After we built the ad technologies and the campaign management infrastructure to support this, other publishers of high-value insurance ads in this space started to approach us to ask us if advertisers could leverage our platform to bid on inventory that they had on their own site. The two beta publishers we had were Esurance and All Web Leads. Esurance is a unique case because they are both an advertiser and also a publisher of these types of results because they offer comparison rates on their site.
So with those two publishers we started the Media Alpha Exchange to be a very transparent marketplace for this type of lead generation inventory connected to some major premium advertisers in this space.
How long have you been in beta and how has the transition been for the company?
In many ways, the transition on the ad technology side was seamless. We had built the ad technology to give our advertisers full control over what they were buying, and so they paid different amounts for different users.
It was easy enough to add other publishers to the technology infrastructure via the exchange?
In terms of the transition on the business side, I think it was very easy on both fronts—both advertising and publishing. On the advertiser side, all the advertisers in this space we're working with already loved using our platform to bid on inventory at QuoteLab. It was a very easy sell to get them to leverage our technology to buy another publisher's site. In fact, it's these advertisers who are referring a lot of publishers to us because they want to work with more and more publishers through the exchange because of the transparency and control it offers compared to working with publishers directly or through one or more ad networks in the space.
You mentioned an ambivalence about the term 'lead generation,' why is that?
We're ambivalent about it because there's been connotations with lead generation as being archaic, because of the traditional lack of transparency in the lead generation world. That's led to a conflict of interest with intermediaries in the space such as ad networks that have an interest in aggregating a lot of volume and selling volume to the advertisers. That is often times at odds with advertisers' best interest in making sure that they're only buying performing media. And so we're seeing how opaque the space has been, the cost-per-lead, cost-per-acquisition, even cost-per-click model. Meanwhile, advertisers have had to take those costs in exchange for being able to buy media on a qualified basis.
How are you hoping to overcome that problem?
We decided that you can buy media on a performance basis, from hgihly qualified users who have raised their hands and said that they want to be contacted by a provider.
What it took was coming up with our own real-time bidding protocols, that laid out what a bid request would look like, what a bid response would look like, what level of granularity we were going to offer, setting a standard for the data scheme and how it was going to be used. That allowed advertisers to pay different amounts for different types of users. Then we really had to get publishers and advertisers comfortable with using these protocols to bid on inventory through the exchange.
How do you plan to branch MediaAlpha out beyond auto insurance?
For the next few quarters, our focus is to really build out a robust exchange ecosystem within these other insurance verticals. Beyond that, other verticals that we see being very attractive are ones where you've seen a lot of lead generation being a predominant way to buy media. We see that in personal finance, we see that in travel, in education and automotive.