Part II.

Analogizing vertical lead generation sites to retail shopping malls.

To understand more clearly why it is in the interest of both the Concept and the VLGA to allow for the end-user to inquire about as many Concepts as possible, it may be helpful to view the VLGA as a retail shopping mall. The VLGS owner purchases and develops a website where it plans to advertise other company’s products in order to generate interest in said companies. Similar to stores that choose to rent space in a mall, Concepts rent space on the VLGS. In both instances, both Concept and storeowner are free to choose not to enter into a contract with either the VLGS or the mall owner. People go to a mall exactly because there are many stores to choose from and that is exactly what is attractive to the consumer – the ability to go to one destination and investigate the quality, type and price of many different products with the opportunity to ultimately purchase one or more items. Each shop owner could find its own retail space and hope that its location is sufficient to garner enough traffic to stay in business. Similarly, Concepts can advertise only their product on the Internet through either SEO and/or SEM efforts. But by doing so the Concept forgoes the chance to be found by consumers who might not have been interested or been able to find its product initially.

To analogize back to the mall example, people may not have known that they were going to buy a shirt from Store A when they decided to go shopping; in fact, they may have set-out to buy a pair of shoes at Store B. But upon seeing the shirt at Store A realized that they would rather have the shoes instead. This transaction likely would not have occurred had it not been for the dynamics of the retail mall. Of course, the owner of Store A will complain that it lost a sale precisely because of the retail mall – or more precisely because Store B and by extension, the owner of the mall and his decision to rent to Store B. What this analysis fails to understand is that but for the mall, Store A might never have had the opportunity for the sale in the first instance. This would be the case if Store A was a less well capitalized company and/or one that sold products that were not as well known such that being in the mall was the only way Store A could have remained either profitable or the way that it maintained its greatest profitability. Whereas both Store A and Store B would like to have the event of the sale without any competition from the other, the only reason for the sale was competition that resulted from the dynamics of the retail mall. Neither the mall owner or Store A or Store B could remain in business if Store A got an “exclusive” right to sell its wares in the retail mall environment.

Similarly, a VLGS must allow for further the options available for the end-user as that is the way that the most amount of traffic is driven to the site. This in turn drives the most interest to the individual Concepts advertised on the sites. Whether an individual Concept can affect a sale is dependent on its sales efforts and the attractiveness of the product. That an individual Concept may ultimately lose a sale to another Concept is simply the “cost” of doing business. If a Concept can purchase a significant amount of traffic to supply sales leads needs, and get a ROI that is greater than the VLGS then it should do so. But for most that is simply not the case. As in the case of the storeowner who is more profitable being a tenant of the retail mall as opposed to a stand-alone retail location, the ROI on leads purchased through a VLGS is greater for the vast majority of Concepts because of the time, cost, and complexity of generating leads on the Internet.

W.C. Garth Snider

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