Perhaps one of the most precious resources in any enterprise is a lead. A bona fide prospect for the product or service you sell. Generating leads is a core competency for any enterprise. And the ability to generate better leads than your competition is one of those enteprise traits that separate winners from losers. Seth Goldstein is the founder and CEO of Root Markets a start-up attempting to change the way leads are generated. This is how Seth describes his concept:

    1     Wall Street Meets Madison Avenue
    2     Problem: Marketing is Inefficient
    3     Solution: /ROOT Markets is a Financial Exchange for Consumer Leads
    4     How the Securitization of Mortgages Opened Up the Housing Market for Consumers
    5     How the Securitization of Internet Leads Will Open up the Attention Market for Consumers

So what Seth is trying to do is set up an "exchange" allowing marketers to bid for leads. His pitch seems to focus on the notions that marketers will be willing to hand-off this core competency to a third party and that marketers will be willing to enter into a auction environment in order to compete against their adversaries for these leads. This how Seth defines a lead:

A lead is generated when a consumer clicks on an ad and is directed to
a landing page—a web site that collects information critical to
determining how valuable a potential customer is—and fills out a form.
This form includes both contact and intention information about the
consumer.  This lead is then sold to an advertiser, who contacts the
consumer to close the sale.

And this is the "exchange" Seth envisions for selling these leads:

An exchange provides a context for giving and receiving.  It is a
simple concept that solves hard problems, frequently in financial
contexts: stocks, bonds, commodities, currencies, etc.  In these
markets, exchanges provide price data and quality information about the
underlying commodity.  Successful exchanges work hard to stay out of
the way of market participants.  This means encouraging liquidity
without providing any:  jujitsu not sumo.  With access to this data,
traders with many different agendas can meet on the same, level playing
field and compete.

The Root Markets folks are hoping that marketers will be willing to hand-off lead generation to them based upon the following rationalization:

Similarly, companies (ie the buy-side) can concentrate entirely on developing better products and service.  Their marketing groups can focus on creating and communicating their brand images, while their sales organizations can simply specify the kinds of customers they are looking for and the prices they are willing to pay; the Media Futures market will take care of the rest.

Lewis S. Ranieri the controversial bond trader who turned turned home loans into tradable securities in the 70’s and 80’s is part of the Root Market brain trust. I am skeptical of most attempts to use technology or financial engineering to improve the efficiency of sales and marketing processes. At this point call me a skeptic on Root Markets for two reasons: we’ll never turn over lead generation to a third party, and we’ll never enter into an auction evironment against our competitors to bid for leads. In fact we see substantial competitive vulnerabilities resulting from marketers participating in the exchange. We’ll be following their progress.

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