AQuantive Buys Into Lead-Generation Mart

NEW YORK AQuantive said it would look to play a leading role in the online lead-generation industry, which provides prospects’ contact information to marketers.

The Seattle-based Internet company, which owns Avenue A/Razorfish, said it bought Franchise Gator, a 10-person Atlanta lead-generation company for the franchise business. AQuantive said it paid $21.5 million in cash for the business, which expects to generate $7.5-$8 million in revenue this year.

Franchise Gator uses its Web site, www.franchisegator.com, to attract prospects interested in owning franchises. The site carries information on the franchise business and different opportunities in the business. It is paid by franchises each time a visitor fills out a contact form expressing interest in owning a franchise. A majority of its traffic comes from search engines, where the Franchise Gator site shows up prominently on many franchise-related searches.

“Search is incredibly powerful tool of finding pathways to go down,” said Mike Galgon, aQuantive’s chief strategy officer. “What’s missing in the search ecosystem is something to organize the second step in the [conversion] process.”

He said aQuantive planned to use Franchise Gator as a platform to enter other sectors of the lead-generation business, such as financial services.

Franchise Gator will operate as a separate entity in aQuantive’s performance-marketing unit, which includes DrivePM. DrivePM provides cost-per-acquisition marketing programs, using behavioral and other data to target ads to likely customers. Unlike those campaigns, where an online transaction takes place at a marketer’s Web venue, lead-generation sites handle the entire process, with marketers paying only for leads that are converted offline.

Galgon said aQuantive saw a need for a trusted player with scale in the online lead-generation business, which generated $750 million in 2005, according to the Interactive Advertising Bureau. Many players in the space are small outfits, while the collection of leads online produced some questionable tactics with the use of spam. The key, according to Galgon, is aQuantive will strive to provide value to the user and the marketer, rather than using incentives to collect leads like many companies, which end up producing unqualified contacts more interested in a free product than the service.

“That’s not a long-term way to do business,” he said. “In the long term, a marketer will get the most value out of leads from someone who is actively looking for their product.”