December 21, 2018
The Insurance Lead Ecosystem
Buyers and sellers all gain by being able to transact leads using a single, trusted currency; it creates valuable consumer experiences.
In today’s online insurance shopping environment, many lead sellers and buyers work well together toward the same goal of delivering a great customer experience. But, it hasn’t always been this way.
For example, in the mid 1990s, when InsWeb sold the first data lead produced from an online insurance quote form, our industry was a lot less focused on customer experience and a lot more focused on selling as many leads as many times as possible to anyone that would buy them.
As you might imagine, the self-interest of lead generators, lack of industry standards being adopted and increasingly complex privacy regulations meant the industry would struggle to survive. Many learned the hard way (consider the demise of Bankrate Insurance, outlined further in this article), while others developed technology and standards to drive a better customer experience and are thriving today.
The Beginning of the Lead Seller-Lead Buyer Relationship
The relationship between online lead sellers and lead buyers began as a very simple one, over 20 years ago. The lead seller was also the lead generator and dealt directly with the lead buyers. At the time, aggregators did not exist.
In the early 2000s, small and medium-sized publishers realized they could make money by generating leads. They would sell these leads to the larger lead generators who had direct relationships with the lead buyers (the insurance brands). This was the start of lead aggregation. And it appeared to be a logical business decision that was good for all parties involved: the generator, aggregator and buyer.
The problems began to emerge when buyers and sellers started to exchange leads without any central record of the activity. Without third-party certification, and no industry standards, some lead generators and aggregators were driven more by the incremental monetization opportunity than by win-win-win relationships where lead generators, lead buyers and consumers all benefited. What’s more, the ping-post process evolved to allow an unlimited number of sellers and buyers to come together. On the surface, this should have created an efficient market with a variety of options for the consumer. In reality, without any standards or third-party verification, consumer information began to travel to dozens of lead buyers, creating an overbearing, intrusive consumer experience rife with fraudulent transactions. This is when the wheels came off the bus.
See also: Insurtech Ecosystem: Who Will Eat Whom?
The End of the Beginning
By 2010, relationships between sellers and buyers became very strained. Rules were in place to protect all parties: the lead generator, aggregator, lead buyer and the consumer. Some examples included:
- no selling of leads beyond a certain number of buyers
- no manipulation of the consumer’s data (many times, manipulating data would lead to higher monetization)
- no recycling/remarketing of leads at a later date
- no fake leads
- no leads based on incentives
- no unauthorized sales to stated end buyers (i.e., no selling of the lead to a captive agent that already bought the lead)
Unfortunately, these rules were not always followed, and there was no way to effectively know who was compliant, let alone how to enforce them. As a result, many carriers and agents experienced a noticeable decline in lead quality. While some of the aggregators and generators played by the rules, a few meaningfully sized “bad actors” wreaked havoc, making it difficult for the honest providers to survive. The industry went through a period of contraction, with several acquisitions resulting in less transparency, less trust and more gaming of the rules to benefit bad actor sellers over the customer or the lead buyer. Insurance carriers (the lead buyers) lost control, and the situation became dire.
The industry tried to self-regulate. Some lead sellers discussed sharing data about the origin and history of a lead, as well as proof of compliance. In other words, each lead seller was expected to follow a set of standards loosely agreed upon by multiple parties and documented by parties like the LeadsCouncil. There were a lot of good folks trying to create valuable customer experiences, but the bad behaviors by some were making it difficult for everyone.
For example, bad actors were selling leads to multiple insurance providers or holding leads to sell again and again—in other words, recycling leads. Other sellers were aggregating leads and misrepresenting this fact, while others would acknowledge they were aggregating but would misrepresent the actual origin. Simply put, by 2010 our industry lacked transparency and accountability. Consequently, the inability to identify and eliminate old, recycled, dupe, fake and no-intent leads led to the deterioration of lead quality.
We were witnessing the beginning of a downward spiral where carriers and agents were directly affected by the decline in quality. Many carriers reallocated budget to hedge on the lead generation channel, and thousands of agents discontinued buying leads altogether.
Pushing the Reset Button
By 2011, the industry realized that self-regulation would not work. A new solution was needed. With advances in technology coupled with the widespread belief that a third party was required to certify leads, the problem certainly seemed solvable.
It was at this time that a concept called LeadiD (the company that is now Jornaya) led the effort to leverage technology and data to promote confidence, clarity and trust in the lead generation space. The concept was simple: Lead generators placed a simple script on each page of their lead funnel. Each time a consumer arrived on the website, a unique LeadiD token was created for the lead event, and key data about the lead event was captured in a privacy-friendly manner by an independent, third party. No consumer data and no proprietary lead generator data was at risk while independent third-party validation was provided to rebuild both the trust and transparency of lead generation across the industry.
The LeadiD token served like a Vehicle Identification Number (VIN) for the lead event. When a lead was presented to a prospective buyer, the LeadiD token was also included. The buyer could thus query Jornaya, an independent, third party. Similar to using a VIN with CarFax, buyers were able to validate in real time the key attributes about the origin, history and proof of TCPA compliance associated with each lead. The factual data provided by an independent observer, Jornaya, allowed the buyer to validate the lead’s value and minimize TCPA risk. The process effectively cleansed the waters made toxic by bad actors, unenforceable standards and lack of third-party certification. Lead buyers began to buy more volume programmatically, with the trust baked into the transaction. Lead aggregators used the same LeadiD technology to ensure transparency with their affiliate lead sources.
The good actors, such as All Web Leads jumped on board immediately, and many followed. For others, it took some convincing. While many eventually began creating and passing LeadiD tokens, there were a few large holdouts. Which raised the question from carriers, why hold out? Implementing LeadiD was free, and sharing LeadiD tokens was also free. With firms like All Web Leads, ReviMedia (now PX), Quinstreet, Apollo Interactive and Hometown Quotes working together to require and share LeadiDs, there was a clear movement underway. An industry course correction was beginning to happen.
A Lead Generator “Verified” Solution Fails Spectacularly
Not long after LeadiD tokens started flowing throughout the ecosystem, Bankrate Insurance, one of the largest sellers at the time, created its own “verified” solution—providing data elements such as lead age and consumer consent (for TCPA compliance purposes). For its larger lead buyer customers, the company would also provide “exclusive” access to other attributes of the lead event to make buying decisions.
I’ll never forget a meeting with senior management at a large insurance carrier alongside Bankrate executives. The carrier was listening to Bankrate discuss why the carrier did not need a third party solution, because Bankrate’s approach would solve all the problems. The vice president at the carrier asked, “Why would we trust you instead of an independent third party?” What’s more, the executive stated unequivocally: “Even if you are trustworthy, it’s very clear it’s not working for each lead provider to be self-regulating. We support a single, industry solution, with independent certification, and we’re wondering why you wouldn’t support the same.”
This executive understood that while the Bankrate Insurance “verified” solution may have been technically viable, a lead seller taking necessary steps internally to clean up and verify its own traffic was actually a terrible idea fraught with problems. This solution never gained traction and did not last very long. Here are five reasons why an in-house “verified” solution provided by a publicly traded lead generator did not work:
- Buyers had no way to independently verify the accuracy of the origin and history data contributed by the seller. “Because I said so,” simply wasn’t good enough.
- In considering a lead, buyers could not confirm consumer consent to their approved TCPA compliant language (and font size/contrast requirements) across hundreds of websites owned and operated by the seller and accessed by millions of consumers across multiple device types.
- For TCPA complaints and lawsuits, no independent, objective verification of a consumer’s consent to be contacted existed. Simply put, defense amounted to relying on attorneys or the courts to believe the lead generators, once again, “because they said so.” In contrast, independent certification has proven successful in mitigating TCPA risk time and again.
- Because they didn’t receive the “exclusive” access to certain data, smaller lead buyers were not playing on a level playing field. Exclusive data sounds good until others realize it’s not actually exclusive and that it’s not possible to identify or stop this behavior. Already rejected leads often ended up back with the buyers because the leads are aggregated and sold to them by a different lead seller, without the buyer being able to know this is occurring.
- The temptation to falsify the data was enormous in the face of revenue and profit margin guidance and expectations, and many cases of false data were identified with a third-party solution, but were very difficult to identify with self-regulation.
It quickly became apparent to lead buyers that the primary purpose of those unwilling to pass LeadiD tokens was to handicap the transparency process and increase their own revenue and profit margins. Buyers equated the approach to “the fox guarding the hen house.” Consequently, lead quality of these sellers continued to decline. Some sellers exited the business altogether, while others were acquired by companies willing to create and pass LeadiD tokens. An efficient market was starting to grow built on trust, standards and transparency.
Like a stock market, the lead generation marketplace can, and should, thrive when buyers and sellers offer transparency and both sides use independent, standard and trusted insights to make data-driven and consumer privacy-friendly decisions. As a result, everyone can win. Well, everyone willing to embrace true third-party transparency and industry standards.
Here is a checklist to help understand in-house “verified” solutions versus an independent, industry-wide, third-party solution.
Where We Are Now
Today, Jornaya witnesses the vast majority of insurance lead events. We are in this privileged position because of the forward-thinking lead generators and aggregators who have embraced Jornaya as the third-party certification source for the industry. Thousands of lead buyers (aggregators, carriers and local agents) rely on the independent transparency of lead origin and history that a LeadiD token enables. With that transparency comes trust, better lead seller/buyer relationships, stronger performance, TCPA compliance and a smarter and safer consumer experience.
See also: How to Build an Innovation Ecosystem
It’s been a fascinating journey, and we reinforce this story often with our customers. Many have experienced this journey alongside us and have witnessed the trials and tribulations of the evolution. Our partners and customers across insurance, mortgage, banking, real estate, home services, automotive and education appreciate that LeadiD tokens flow freely throughout the ecosystem and have programmed their lead bidding and buying technologies accordingly, expecting a LeadiD token just like any car evaluation system would expect a VIN.
The collective voice of lead buyers and like-minded, collaborative lead sellers will assure we maintain an ecosystem with trust and transparency. I don’t say that just as GM of insurance at Jornaya, I say it as someone who has cared deeply about improving the insurance consumer experience and insurance provider productivity since we all started creating and exchanging leads over 20 years ago.
Frans van Hulle, CEO and co-founder of PX (formerly ReviMedia), sums it up nicely in his recent article: “If you have something to hide, you’ll fear transparency. If you don’t, you won’t.”
Most lead sellers have benefited by participating in this journey with us, and many insurance carriers have helped us get to this point. We all gain by being able to transact leads using a single, trusted currency (LeadiD tokens) that ultimately creates valuable consumer experiences. As such, we also enjoy playing the role of connecting like-minded lead sellers and buyers because we know how beneficial it is for all involved.