Online ad campaigns are a great (and cost-effective) way to generate leads and build your business. However, there are always charlatans who will be out to scam you out of your money while providing nothing of value in return. So, lead generation fraud runs rampant in many online campaigns.
These fraudsters bring one major problem with them: bad leads. What are bad leads? How do they hurt your business? Most importantly, what can you do about bad leads in your ad campaigns?
What Makes a Lead Bad?
The term “bad lead” can have a few different connotations for different people. In this post, we’re mostly concerned with leads that were fraudulently generated and won’t convert because of that. However, that isn’t the only way to define a bad lead.
Some examples of bad leads include:
- When a lead uses fake information to register for an offer on your website. Here, the lead may have wanted something (a deal, resource, etc.) that required them to submit information, but didn’t want to give you their real contact info. So, they use fake information or throwaway accounts to get what they want without exposing themselves to unwanted marketing communications.
- The prospective lead simply isn’t a good fit for your business, despite their interest in your products or services. For example, a customer who lives in the desert browsing boating hobby items. They may be interested, but they aren’t in a position to actually use or benefit from your company’s offerings.
- The “lead” is the product of a lead generation fraud scheme targeting your business. Here, bots (or real people in human fraud farms). This is the worst kind of bad lead, since it’s part of an active fraud scheme targeting your company—and the fraudsters doing this often use real data from real people to make their fake form fills look legitimate.
Although not all bad leads are the product of ad fraud, the worst impacts do tend to come from fraudsters providing you with bad leads on a massive scale. This is where you’re most likely to see large losses of ad revenue and drastic reductions in your marketing performance.
How Lead Generation Fraud Affects Your Business
There are a few different ways that bad leads can hurt your business—especially when fraudsters purposefully use illicitly-obtained data from real consumers to commit lead gen fraud.
1. Wasting Your Ad Spend
The most obvious consequence of bad leads is that they waste your advertising budget. Even when consumers simply put in incorrect information, the money spent on the advertising needed to get those consumers there will have been wasted since your sales team won’t be able to follow up with them.
This drives up your cost-per-customer even as your total leads increase. When bad leads are coming from fraudulent activity, this problem becomes much worse. A reasonably competent fraudster can steal hundreds of thousands, if not millions, of dollars from you before you realize that your contact database is full of fake leads. By the time you realize you’ve been had, they’ll be long gone (with your money).
2. Wasting Sales Team Time
Your sales team doesn’t have unlimited time and resources to pursue every lead that hits your website. Yet, time-to-response is one of the most important factors in securing a new customer—the faster you can reach out to someone once they’ve shown an interest in your products or services, the better.
For example, if you can respond in less than 30 minutes, you’re 21 times more likely to qualify the lead and move them further along your sales pipeline (Source: Chili Piper). However, when your database is clogged with bad leads, your sales team runs the risk of wasting time with bad leads instead of reaching out to good ones—which can keep you from achieving that rapid response time you need to capture the interest of genuine leads.
3. TCPA Violations
The Telephone Consumer Protection Act of 1991 (TCPA) is a Federal Communications Commission (FCC) rule that is designed to prevent nuisance calls. Originally designed to thwart unwanted calls to consumers’ landline phones, the rule has since been adapted and expanded to account for changes in telecommunications technology.
The TCPA has rules specifically forbidding the use of “automatic telephone dialing systems or prerecorded voice messages” to reach out to consumers if your business doesn’t already have the individual’s express written consent to contact them that way. Each call that goes out to a consumer without their permission runs the risk of becoming a TCPA violation. Such violations can cost between $500 and $1,500 in fines per incident.
Bad leads—particularly ones that are created as part of a lead generation fraud scheme—increase your risk of TCPA violations. This is because the false data used in a bad lead might actually go to a real person who never consented to contact with your company. Fraudsters often use data harvested from real people to make their fake leads look more real. So, if you rely on those leads, you could be in for a world of hurt.
Even just reaching out to 1,000 bad leads using someone else’s real contact info could result in TCPA violation fines ranging between $500,000 and $1,500,000!
4. Skewing Your Marketing Metrics
Data is crucial for optimizing your marketing efforts. With solid performance data from your campaigns, it’s easy to see what is or isn’t working and adjust your marketing to improve performance.
But, what if the data you’re relying on is flawed? Bad leads from ad fraud activity can skew your metrics and make you think that a particular ad campaign is working well when it really isn’t. This can cause you to double down on bad campaigns or marketing channels that aren’t working—wasting your ad spend.
In fact, one of the early warning signs of ad fraud is low conversions—when you bring in a lot of leads but hardly any of them convert into customers.
What You Should Do About Bad Leads NOW!
So, what can you do about bad leads in your marketing campaigns? Here are a few things you can do to protect your company from the effects of bad leads:
1. Clean Up Your Contact Database
Scrubbing your leads list to eliminate inactive leads or leads that have been positively identified as fake is an excellent way to avoid wasting time, money, and effort on bad leads. How can you spot fake leads? Here are a few potential indicators:
- Multiple leads with the same contact information despite having different names or being from different companies.
- Leads with “out-of-geo” IP addresses. If you’re marketing primarily to customers in the USA, but most of your leads are coming from Guangzhou, China or some other foreign location, then a few of those leads may be fake.
- Complaints from leads when you call them. If your sales team reaches out to a lead and gets a complaint about not opting in to receive sales communications, there’s a strong chance that the lead was bad and whoever (or whatever) created it used fake information.
It can also help to check the National Do-Not-Call registry to see if the contacts from your ad campaigns appear on the list. This not only helps you identify leads that might be bad, it’s a basic TCPA compliance measure that can protect your company from violation fines.
2. Keep Track of Your Bad Leads and Where They Came From
When you identify bad leads, do you know where they came from? Being able to trace fake leads back to a particular campaign or even a specific marketing partner can be crucial for protecting your business.
For example, if you know that the majority of your bad leads are all coming from a particular marketing network or affiliate, then you’ll know who to cut ties with. By removing bad affiliates and advertising networks from your marketing campaigns, you can protect your ad budget and avoid getting your contact database stuffed with more bad leads.
3. Keep Track of Your Customer Conversions Compared to Total Leads Generated
When you see a large increase in leads generated, it stands to reason that you should see a proportionate increase in your customer acquisition. So, if you see a big increase in your leads generated without any growth in conversions, that’s a pretty major indication that you’re getting bad leads.
For example, say you normally generate one new customer for every ten leads—a 10:1 lead-to-customer ratio. You launch an ad campaign with a new affiliate who brings in ten times as many leads as normal, but now you’re only generating one new customer per one hundred leads—a 100:1 lead-to-customer ratio. Your customer acquisition is stagnant, but your costs are higher because you’ve been paying for ten times as many leads as normal.
This kind of increase in lead acquisition while your new customer growth remains stagnant is a major indicator that you’re getting bad leads.
4. Use an Ad Fraud Solution
It’s hard to be positive about whether you’re getting fed bad leads or if you’re just having bad luck with leads if you don’t have a means of checking every lead that visits your website. Thankfully, there is a way to examine all of your leads in real time by using Anura’s ad fraud solution.
With Anura, you can collect hundreds of data points about each website visitor in real time as they browse your site and fill out forms. Anura’s software takes this data and compares it to a database containing decades of real conversion data to identify fraudsters and bots in real time. By flagging fraudulent conversions immediately, you can avoid having to deal with bad leads or paying fraudsters for fake “opportunities” that won’t help your business.
Better yet, Anura puts the evidence in your hands so you can confront fraudsters directly if you need to. It’s your marketing data—so you should keep control of it!
Are you ready to stop bad leads from harming your marketing efforts? Reach out to Anura today to get started!