Google Inc.'s brand is so recognizable that if it decides to venture into the lead generation and rate aggregation market, companies like LendingTree LLC could feel a chill.
Google "controls so much of Web advertising, they can place themselves in almost any Web business," said Rob Enderle, an analyst at the San Jose research firm Enderle Group. "And Google already has advertising relationships with lenders. LendingTree has good reason to be concerned."
Bloggers have been buzzing for weeks about Google's potential entry into loan-lead aggregation, a move that could let financial companies combine Web advertising, online branding and customer acquisition, as well as prompt a pricing war among the major players that could drive down lead generation costs.
"Google would be leveraging their revenue stream into another market," said Enderle, and "could undercut LendingTree dramatically."
The search company could also expand beyond home lending into other areas of financial services. "Mortgage leads may be just the tip of the iceberg," said Ali Raza, an executive vice president at Speer & Associates Inc., an Alpharetta, Ga., research firm. "If you can leverage search capabilities, provide customers with offers and then pipe into the bank to complete a transaction, that makes a whole advertising platform that much more robust."
Google would be entering the game at a time of growth and quality improvement for lead generation. TowerGroup Inc. analyst Rod Nelsestuen said the number of leads generated through online aggregation is growing, as are conversions.
A Google entry could certainly bring value. "For Google, there is a definite opportunity in focusing on targeting approaches through search engine analytics that improve the pull side of the messaging to create leads, lead volume generation and lead quality evaluation, all of which can result in more closings and in lowering [the] cost of acquisition," he said.
What is working in Google's favor is the fact that many lenders' survival depends on pulling consumers from external Web sites. "Consumers of financial services products already go to search engines to start their search processes," said Annette Tirabasso, a principal at Deloitte Consulting LLP, who said originating loans online can reduce costs by as much as 80%.
Google has dabbled in aggregation. In 2008, Google Merchant Search reportedly began a test program in the United Kingdom to let users compare products and services. In a frequently-asked-questions link, Google said the service was only available for secured loans from financial services providers.
Yet there would also be challenges, particularly since lead aggregation is not Google's core business. Rajesh M R, an analyst at the Boston research company Celent, said a Google aggregation site would require the company to switch to a pay-per-lead model instead of its standard pay-per-click model for Adwords — Google's $21 billion targeted keyword online advertising service — which is used by many banks to reach people when they submit queries through Google's search engine.
"While lenders could still advertise using Adwords in Google search, the initial reports suggest that Google promotes its own Google Merchant Search site at the top over other sponsored sites," he said. "In effect, Google sees more revenue in generating leads to lenders than having them promote their products using Adwords."
Speculation about Google's plan emerged when LendingTree sued the software vendor Mortech (not affiliated with the Mortech LLC mortgage research firm in Guilford, Conn.), alleging that the vendor was selling its technology to Google in defiance of its LendingTree contract.
The suit was settled in September on undisclosed terms.
