The Leader: December edition

The Leader is a monthly newsletter by Contact State that summarises the stories, trends and opinions for businesses that generate or buy leads. You can sign up to receive The Leader in your inbox here.

What's in this edition?

  • Your lead generation guide to December
  • Do "backend" lead generation arrangements really work?
  • The FCA, trading names and appointed reps.
  • The stories, podcasts and people you need to know about

What do you need to know about Lead Generation in December?

All those letters to Santa seem to be working... whisper it quietly but December is shaping up to be a stronger month than usual for some* businesses involved with generating and working leads.

Something has changed. 

Sales teams are reporting stronger customer intent and some lead generators are generating better lead volumes in late Nov / early Dec than they have for the previous few weeks, which is historically unusual. In the verticals that I monitor, even the effect of black friday was muted whereas in the past I’ve seen lead generation campaigns completely stall. 

With lockdown partially lifted in some parts of the country and a covid vaccine about to arrive, consumers seem to be looking to the future and making plans.

*There is a big discrepancy in both the marketing and sales performance between social and search leads. Facebook, instagram and native placements have really struggled over this period and that is consistent with previous years and the battle for christmas retail eyeballs. 

Takeaway: This could be the right time to explore a new lead supplier or propose a test to a potential buying client. I’ve always avoided setting up trials in December because what often happens is the lead seller and lead buyer both lose money and the client relationship stalls and then fails because of stats that didn’t shape up.

However, this is not a normal December and these aren’t normal trading conditions. The normal rules should be tested this year.

Do ‘backend’ deals really work?

The holy grail in performance marketing is to have a marketing company so deeply entwined into your processes and targets that they are remunerated on actual sales. I chatted about this subject with Michael Ferree on his ‘Lead Generation World podcast’, last week. 

‘Backend deals’ or revenue sharing arrangements as they are also known, generally work with a lead generator providing leads at no upfront cost to a buyer and then receiving a share of the commission that a broker or product provider receives for making a sale.

Do they work?

Yes, but only in specific circumstances where both parties: 

  • Are equally committed to advanced, real time data sharing
  • Have a watertight contract that sets out expectation and responsibilities of both sides 
  • Take the time to construct a bespoke campaign. These shouldn’t be ‘overflow’ leads from existing CPL campaigns.

The vast majority of revenue sharing arrangements generally fail because ‘free leads’ are viewed as having less or little value than paid leads. e.g. the lead generator dumps a whole load of data on a buyer because they feel they have ‘nothing to lose’ and a buyer agrees to a backend deal because “well, what have we got to lose, we’ll call this stuff when we’re quiet”.

If a campaign is constructed equally, with both sides inputting into what the marketing and landing pages should focus on, the next hurdle is real time data. Calling a lead quickly is the surest, easiest way of predicting whether a lead generation campaign will work and so the sort of metrics that both sides need to be reviewing and sharing are; time to first dial, how many dials and an accurate set of lead and case notes.

It's not enough just to send a report every now and then which tells a lead partner what the outcomes were, to truly build ‘buy in’, lead buyers should provide a real time API that allows lead sellers to check for themselves what is going and make performance adjustments accordingly.

Takeaway: Particularly for high value products and large purchases, revenue sharing deals really do make a lot of sense for a lead generator and helps buyers manage cash flow. A revenue sharing agreement is built fundamentally on trust and transparency. With exactly this topic in mind, we’ve been pioneering some standardised API reporting here at Contact State to help both seller and buyer clients use this method of lead exchange. Please do let us know if you’d like to see how ‘backend deals’ could work for you.

A word of warning: If a lead generator is receiving a commission specifically based on the outcome of a sales process, it is far more important that both sides have full transparency of the adverts and landing pages that are being used. In a regulated product, the lead generator is making a regulated introduction through the use of financial promotions and must be directly authorised or an appointed representative of the firm they are working with.

The FCA offers clarity to lead generators and lead buyers

The FCA wrote to mortgage intermediaries last month and included in that communication any directly authorised lead generator who has the ‘directly authorised to make arrangements for non-investment retail insurance and mortgages’ permission.

For the FCA, the message to lead generators was remarkably and uncharacteristically clear:
  • Mortgage fraud is an inherent risk within the sector
  • Where firms use ARs (appointed reps) to introduce mortgage consumers and business, firms should have the appropriate real time oversight
  • Some firms and lead generators are using trading names incorrectly

There’s two parts of the letter that I think is worth unpacking and analysing.

The use of appointed reps

Some financial firms who work with unauthorised lead generation firms comply with financial promotions regulations by the lead gen AR so that they can send them leads. The FCA knows this goes on and has no problem with the principal of doing it but are aware that lots of firms hand out ARs and then do very little to check and review the types of adverts that are used to generate consumers.

This is a regulatory warning that any DA firm that has appointed a lead generator to be an AR or IAR, the FCA are going to come calling and are going to want to see your levels of governance and control

The use of trading names

If a lead generation firm becomes directly authorised by the FCA, implied in that registration and authorisation is that any websites they are generating leads from will be added to as a trading name to the FCA register. There’s a further implication of authorisation and that's if for example an affiliate network is directly authorised, each one of their ‘sub affiliates or agents’ needs to be made an appointed representative of the directly authorised firm.

This is a really significant piece of due diligence that is missing from many lead generation firms and although this letter was sent to mortgage intermediaries, this is a fundamental point of how the FCA register works and should be interpreted as the rules for any regulated product.


If are directly authorised you need to prove two things:
  • You have real time oversight of adverts that your ARs and IARs are producing
  • You have properly understood and checked that the trading names of the directly authorised firms sending you leads, reflects reality.

The stories, podcasts and people you need to know about

  • Alex Curtis runs a business called the Lead Engine where he helps firms generate leads through their own brand and he also runs a very successful podcast. It's a fountain of knowledge for anyone interested in generating financial services sales online. You can listen to the ‘Advisers Assemble’ podcast here

  • Mark Taber is a tireless campaigner against fraudulent investment and pensions advertising. Featured in a number of national newspapers last week, he’s a consistent and relentless thorn in the side of the FCA and the scammers. I thoroughly recommend following him. You can find him on twitter here.

  • Andrew Penman of the Daily Mirror is taking a real lead in highlighting obviously fraudulent and misleading practice. He wrote a series of articles in November specifically targeting google ads that are well worth a read, here.

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