Google is like Xerox - a brand so recognizable it's become a verb. So when it dips its toes into the lead generation and rate aggregation waters occupied by firms such as LendingTree, the splash is likely to be major.

"[Google] controls so much of Web advertising, they can place themselves in almost any Web business," says Rob Enderle, an analyst for the Enderle Group. "And Google already has advertising relationships with lenders. LendingTree has good reason to be concerned."

Web search bloggers have been buzzing for weeks about Google's potential entry into loan lead aggregation, a move that could allow financial institutions to combine Web advertising, online branding and customer acquisition, as well as prompt a pricing war between the major players that could drive lead generation costs down.

"Google would be leveraging their revenue stream into another market," says Enderle. "[Google] could undercut LendingTree dramatically."

Google could also expand beyond home lending into other areas of financial services. "Mortgage leads may be just the tip of the iceberg," says Ali Raza, an executive vice president with Speer & Associates. "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 analyst Rod Nelsestuen says the number of leads generated through online aggregation is increasing, as are conversions, though not always at the same rate. Google could certainly bring value to the table. "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 cost of acquisition," he says.

What's working in Google's favor is the fact that many lenders' survival depends on pulling through consumers from external Web sites. "Consumers of financial services products already go to search engines to start their search processes," says Annette Tirabasso, a principal for Deloitte Consulting, who says originating loans online can reduce costs by as much as 80 percent.

Google has dabbled in aggregation already. In 2008, Google Merchant Search reportedly launched a test program in the UK allowing users to compare product and services in a comparison engine. 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, a Celent analyst, says a launch of 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 that's used by many financial institutions to reach Google search-engine users. "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," the Celent analyst says. "In effect, Google sees more revenue in generating leads to lenders than having them promote their products using Adwords."

The speculation about Google's plan emerged when Lending Tree filed a lawsuit against software vendor Mortech (no affiliation to mortgage research firm Mortech LLC in Guilford, Conn.), alleging that the mortgage technology provider was selling its technology to Google in defiance of a contract between LendingTree and Mortech.

Both parties settled the suit in September, with no terms of the settlement disclosed.


John Adams is the executive editor of Bank Technology News.

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