So, along with the Anti-Seth Godin society, I plan to start the Auren Hoffman Appreciation Society. (Both jokes, btw, Seth as I think the irony was missed here.) I talked to Auren yesterday about a bunch of things. And even though he's been on Air Force One, he seems a very personable, approachable and down to earth guy.
We had a great conversation yesterday. As some of you know, we are trying to figure out a lot of things in regards to the business side of WhizSpark. Talking with Auren was a bit of a confidence booster. I am hoping to talk to more people that have been-there done-that... that can point us in the right direction. And instead of focussing our efforts on a CEO search (we are still open to the right senior person joining the team), we will be focussing more on building up a team of mostly local (ie Northeastern US) advisors that can steer us in the right direction.
Whenever I talk to someone new, I like to figure out a way to keep the dialog going. Incidentally, I am fascinated by one of his projects, KarmaOne. It is a job posting site which rewards people that refer the candidate that gets hired for a job. (eg. Microsoft posts a job. I logon and recommend Andy. Andy gets the job. I make $1,000 or whatever Microsoft was willing to pay.) I suggested that they have an affilate system. And Auren sent me off a link to a first generation system. I've thrown up the code on my blog and if someone clicks one of those jobs, applies and gets hired, I could make up to $3,000.
A $3,000 affiliate reward is unprecedented. But, it is also much lower than what a recruiter or staffing company would make if they placed a person into a $100k position. So, KarmaOne is damn smart. And as the title of this post reflects, the staffing and recruiting business is one of those buinesses (right next to real estate and mortgage business) that deserves a little margin erosion.
In very related news, Seth Goldstein has posted his next post in a series of posts about Internet Arbitrage, where he talks about 4 relatively unblogged-about companies that are set to lead the next hottt sector on the internet: Lead generation.
As we move further beneath the radar, there is another group of companies, mostly emerging from the online direct response agency world, that are generating significant profits by purchasing media, attracting prospects and selling leads to advertisers. Four companies in particular stand out as the leaders in this space: Adteractive, Azoogleads, Quin Street and NetBlue. Together they will generate more than $500 million in 2005 sales with 30%+ profitability. Yes, $500m. Adteractive recently sold a minority share for more than $100m to a prestigious private equity firm. In the next few months one of these will likely be bought or merged with another on the way to one of these going public in early 2006.
As I've riffed before, lead generation or cpa type deals are going to be the future of advertising. And I am still working on my series of posts on why. I had heard of these companies, but wasn't aware of their sucess. Mostly, I've been going off of antecdotal evidence encountered in my own sales adventures and through reading blogs and news.
Nonetheless, we've been creating our event marketing platform so that it enables people to manage cost per action and direct marketing for events, contests, real estate open houses and maybe even filling job positions (Watch out, Auren!). Whether the referral comes from a friend through email or an affiliate link, we've built a referral tracking system that records sources of referrals and a configurable raffle and incentive system that enables fine tuning of the reward. It can be configured so that the referrer earns chances to win (eg raffle) or direct rewards (eg incentives). Both the raffle prize system and incentives systems can be configured so that they are earned when invitations are sent, email referrals click to the site (or register at the site after clicking a refer-ers link), and or based on an action such as a ticket sale or event registration.
Unlike the lead generation companies that Seth mentions, our platform will be accessible for any savvy or wanna-be savvy internet marketer to use themselves. This changes the game of lead generation. Those companies, as Seth mentions, buy advertising inventory from other companies at low rates. Then, they make deals with companies looking to generate leads so that they get a $ reward when they generate a lead from the ads they place. They buy low and sell high. They benefit from the economies of scale since they are buying a boatload of inventory. And since they can then, in turn, deliver a boatload of leads, it works. So, it makes sense for lead generation companies to work with these networks.
For now!....
But, what happens when there are now millions of people attracting eyeballs on the net and looking for ways to monetize it? They aren't going to want to rely on networks for long, if they can make more money elsewhere. They aren't going to want to sell low to networks, so the networks can sell high. They might not be able to get a deal with University of Phoenix or other top internet advertisers. But, they'll easily get a deal with the local American Express agent.
And just like blogging tools enable millions of people to publish their thoughts to the world, they'll be a host of tools that enable these millions of people to provide direct marketing services. Most advertising networks lock up strategic advantage, campaign management tools, inventory availabilty, even prices inside of their own walls. What if those tools and that information were available to anyone to manage their own online direct marketing, affiliate lead generation campaigns on top of their own (or leased) inventory? That's where publishing tools that put the power of direct marketing into the hands of the content creators will come in. That's what we're doing. Soon, when this launches, we'll be enabling people to design, run and track their own email marketing campaigns, run their own affilate program, and track campaign success in an integrated way... all managed through a viral-invitation-enabled lead generation collection website that they publish themselves. We are targeting our tools towards events. But, I am sure people will find other creative uses of the service.
Terrible Experience with Marston Mills, Inc., Career Research Service
Marston Mills, Inc., is a Chicago-based employment research company that offers to do “reverse searches” on behalf of candidates seeking new employment. A traditional recruiter or headhunter firm will contact an employer about openings. When the traditional recruiter learns of an opening, he or she will send that employer the resumes of various candidates. If the employer ultimately hires one of the candidates submitted by the recruiter, then the recruiter gets paid a commission, which is typically one-third of the new employee’s salary.
In contrast to the traditional recruiter’s approach to employment, Marston Mills offers to conduct research on employers for their clients, who pay Marston Mills $990 each for this service. Quoting now from Marston Mills own advertisement on the Internet: “After we determine your career objective, industry and geographical preferences, we will review your resume, cover letter, and other written documents that you are using for your job search to design the most compelling and effective presentation possible.
We will then generate a list of one hundred (100) appropriate target companies, the parameters of which will be defined by your career objective, industry and geographical preferences. The researcher assigned to your search will then call each target company and ascertain precisely the person to whom you would report. You will have direct access to the researcher working on your behalf, as well as the entire project team throughout the process.
We will provide the names of these contacts along with their work addresses, phone numbers, fax numbers and/or e-mail addresses. Estimated delivery time is ten (10) business days. If you do not meet your employment objective with the first 100 targets/contacts, we will continue to generate more targets/contacts for you until you do. Although 85% of our clients meet their career objectives within the first 100 targets, we guarantee to provide this continued service to all our clients at no additional expense.”
All of that sounds wonderful, but unfortunately the reality of the service I received from Marston Mills was far below that ideal. Marston Mills was supposed to provide me with the names of the direct hiring managers for the job title that I had discussed with Marston Mills’s principal, Jim Johnston. Marston Mills was supposed to send detailed contact information including that person’s direct phone number and e-mail address. Marston Mills was supposed to call up each firm individually *after* I contracted with them and obtain that information on my behalf. We all know that sending a resume or application to the “Human Resources” department is often the kiss of death for that application.
Instead of being sent a list of 100 qualified leads, I was apparently sent a dump out of Marston Mills’ database of generally available information on firms. Yet Marston Mills’ principal Jim Johnston claimed Marston Mills had contacted various private equity firms on my behalf to locate the hiring manager for a position as “Team Leader, Mergers and Acquisitions.” Among the 100 names Marston Mills sent me were (1) Thomas Lauer, Advent International Corporation; (2) Bob Locklear, Agave Capital; (3) Leon Black, Apollo Management; (4) Tony Ressler, Ares Management LLC; and (5) Kate Mitchell, BA Venture Partners.
Instead of being sent information directly pertaining to Thomas Lauer, Marston Mills sent me the company address, company phone number, and company fax number all of which was publicly available (for free) at the following Internet URL: http://biz.yahoo.com/ic/43/43418.html. It turns out none of the information on any of the contacts was directly for those contacts; instead, Marston Mills sent me (often publicly available) information on Bob Locklear’s company that matched exactly the data on http://biz.yahoo.com/ic/108/108632.html, on Leon Black’s company from http://biz.yahoo.com/ic/40/40036.html, on Tony Ressler’s company from
http://biz.yahoo.com/ic/132/132593.html, and on Kate Mitchell’s company from
http://biz.yahoo.com/ic/108/108853.html. Even the names of these contacts are all fully disclosed on the biz.yahoo industry web pages. None of these people turned out to be hiring managers for the position I had discussed with Marston Mills. For others on the list of 100, sometimes the contact name did not match the people identified on biz.yahoo.com for a particular firm, but then the address and phone numbers and fax numbers appeared to be directly from biz.yahoo.com or some other industry database.
I contacted Marston Mills, Inc. to ask whether the company had tried to pass off publicly available information as its own proprietary product, and Jim Johnston assured me that it was merely a coincidence. Marston Mills did not merely give me a dump from the biz.yahoo directories – information that I was clever enough to find on my own before I even contacted Marston Mills.
It turns out that the sales pitch used to induce me to do business with Marston Mills was fraudulent, and the Marston Mills approach to finding work yielded a ZERO positive response rate in my opinion. Although Marston Mills re-wrote my resume, something I do periodically on my own with better editing skills than Marston Mills displayed, and prepared a hokey cover letter in small print sent out on 6.25 inch by 4.5 inch cut paper, the Marston Mills methodology of mass mailing unsolicited resumes had an entirely predictable result: a ZERO positive response rate following Marston Mills, Inc.’s guidelines to the letter. I feel deceived and cheated by the Marston Mills service. I do NOT recommend this company to any person, whether or not that person is intelligent enough to research employer names on financial databases like Hoover’s or biz.yahoo.com.
http://michaelguth.com/mgsite/prose/sitemap.html
Posted by: Michael Guth | March 18, 2006 at 11:12 PM
Thanks for the info Mike. I was sent a job rejection reccomendong Marston. Their Website is unclear about charging. I got scammed by a similar deal with a company called SASI, in Dallas. It cost me a bundle.
Posted by: Bob Franklin | August 16, 2006 at 05:44 PM
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