Bronte Media

With the ‘mortgage mess’ falling over to online advertising, I had always thought that said mess was the result of 1) companies that were huge spenders like Ameriquest blowing up and thus 2) lead prices plummeting due to less demand from lenders.

Turns out I was half right from listening to people at Leadscon but the shorter term, more pressing problem is a media buying mess.

Basically subprime lenders went to the lead generators last year and said they wanted to significantly raise their spending in the coming months. That is, they wanted to buy a lot more leads than they did in the past.

The lead generators knowing this, then went out and bought huge amounts of inventory in anticipation of needing more to satisfy the increased customer demand.

Then the subprime lenders blew up, and the lead generators were left with huge commitments, mainly to the large portals whose buying cycles are months in advance. Search wasn’t a problem because like a tap, they could turn it off the same day. But larger display buys don’t work like that.

The mood was sufficiently serious that this phenomenon may have crippled a lot of the larger mortgage lead gen firms.

So what you ask? Well lead gen has a high second order effect. That is, when they’re fucked, so to are the media sources they buy ads on. Read: Google, Yahoo, MSN et al.

I wouldn’t be surprised to see significant doubtful accounts emerge from Yahoo, MSN and AOL this quarter from hastily canceled/non-paid deals from mortgage lead gen companies who were crippled.

I don’t think Google is affected so much as you pre-pay, it’s granular and search had become too expensive a venue for many of the lead gen players last year. That seems to have reversed this year, but the short term temporary mess is a function of what happened last year. Will be interesting to see what emerges this quarter and next.