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I’ve Recently Switched from Entrails

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I love a good argument. I’m still waiting for one.

The Insider keeps insisting they’re right about the coming online ad implosion that the mortgage crisis will cause. But they can’t cite a shred of evidence. Their latest post says that the online ad slowdown of the first half of the year is evidence that Countrywide’s current liquidity problems are having an effect. Because, you know, online media buyers can time-travel.

Here’s some real data. My friends over at the top SEM firm in the country, who know more about CPC than anyone outside of some dimly lit basement room in the Googleplex, tell me that mortgage-related keyword CPCs are essentially unchanged from the beginning of the year through last week.

I’ll also note that the top sponsored result when I type “mortgage” into Google is Countrywide.

Another friend in the mortgage lead generation business tells me that business is booming for him, although in purchase leads, not subprime or refi.

What does this mean? To me it says that ad spending in mortgage has remained constant but that there’s a shift away from the high-margin mortgage products to the vanilla. Countrywide will suffer, as will the other mortgage purveyors, from reduced profit margins, but Google et al will not.

The Insider prefers to look at the big picture, while I prefer to read tea leaves. Time will tell.

2 Comments

  1. To be fair, if you look at the lead prices, then this tea leaf would defeat your argument no? “Another friend in the mortgage lead generation business tells me that business is booming for him, although in purchase leads, not subprime or refi.”

    I hadn’t checked but up until recently purchase leads were a lot cheaper to buy than refi?

  2. Depends on whose revenue you’re thinking of. I agree that purchase leads sell for less than refi leads did and so lead generators’ revenue may be down.

    But if you’re looking at the revenue to the search engines, then I think this shows it is relatively constant. If demand were down, then keyword prices would be down (because of the way Google works.)

    Since the keyword index Reprise told me about is a bundle of mortgage-related keywords, and since refi keywords have gone down in price, this actually seems to indicate a rise in the price of purchase keywords, the result of more demand for them than previously.

    The wildcard is click rates, since demand for keywords can remain constant but clicks go down. I don’t know how to gauge that, though, except for the purely circumstantial evidence of a month-old mortgage lead gen business generating a ton of leads, meaning that there were excess clicks waiting to be captured.

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