The following guest post was contributed by Michael Bovee at Consumer Recovery Network, an expert in DIY debt settlement help and a member of the AACC.

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Advertising & lead costs are the largest expense for many companies in the debt relief space.

The other day I was talking with a friend who has been working in the debt relief arena for longer than most. While discussing the high costs of pay per click marketing his company has, we reminisced about the days when you could get real time fresh internet form fill leads for $2.00 a piece (some ten and more years ago). The cost for those same and similar leads rose to $30.00 per form fill (some even higher). For debt settlement service providers, this raised cost per acquisition measures 1500% – just for an internet form fill!

TV and radio commercial live transfer leads could exceed $100.00 per call.

Lead gen profits went through the roof. As most debt settlement affiliate marketers and call centers were able to charge upfront fees, they plowed their commissions back into more marketing.

High marketing costs placed companies who actually provide a debt settlement service, but rely on outside sales, at the mercy of their affiliate marketing partners (who demanded ever higher commissions) as they were the source of the majority of paying clients.

The marketing of debt settlement increased on the airwaves and the internet became littered with splash and landing pages short on substance and tall on hype . The message and claims made through advertising were often false and misleading in order to generate consumer responses.

Consumers responding to garbage ads were frequently enrolled into a program they were ill suited to find success with in order for lead generators, affiliate marketers and back end service providers to feed the beast.

Actual debt relief providers performing the work to settle consumer debts that delegate sales, service representations and suitability measures to affiliates and call centers have paid, and continue to pay, high commissions because they don’t have to risk capital for advertising and acquisition.

Even with the advance fee ban enacted by the Federal Trade Commission in October of 2010, the marketing problem still persists. Why? The money and profit generated is just too good for lead gen and marketers to let go of the old ways of doing business. I mean, why innovate and create successful methods to better market and attract the right customers when there are people and companies willing to take risks in circumventing federal and state laws representing tens and hundreds of millions of profits to be made?

What is the future for lead gen in the debt relief space?

If building for longevity and not to turn quick profits, lead generators should look to partner with established and reputable companies offering debt settlement services in full observance of all laws and limitations in a rev share capacity.

Er… umm… huh? What did you just say?

My company does no paid advertising and does not purchase leads. This is one of the reasons Consumer Recovery Network has remained relatively obscure. I get calls from lead gen companies who want me to try their product. There were times I would get several calls a day. When I mention my company does not purchase leads and ask whether they would be interested in working together in a rev share capacity, the phone calls always end abruptly with “have a nice day” & “if your in the market for leads in the future”…

The problem with lead gen embracing rev share partnerships in the past is that they cannot see past the value they have been able to place on selling a fresh lead the moment it comes in. The problem with business as usual in the new advance fee ban regime is that lead providers and affiliates are on the compliance hook if they are found to have provided substantial assistance to a less than compliant service provider.

The lead gen vertical for debt settlement has shrunk and will continue to get smaller. The price for fresh leads will get lower while the compliance hook will remain constant. Lead providers who want to maximize their returns should now be more open to exploring rev share relationships with performance fee debt settlement service providers with a proven track record in delivering success to their customers. The leads should be referred direct to the service provider and skip the high commissioned middle man/call center/affiliate marketer who often use sales tactics known to be problematic.

Service providers can then use suitability measures that are consistent with whom they deliver their service to, only enrolling customers with the right profile. Rather than paying commissioned 3rd party sales people, the service provider will be able to split performance fee revenue at the time it is earned with their lead gen partners. The rev share for lead gen can be set at a level proportionate to past lead gen revenue targets and could even exceed past revenue. Lead gen just has to be willing to wait 3 to 6 months to see a return on the rev share relationships. After 6 months, the partnership could prove to be better than any past efforts during the debt settlement heyday.

How likely are rev share relationships between lead gen and settlement service providers to occur? Not very, and that is unfortunate. High output lead gen may just move on to other verticals where they can generate quick dollars (Though they are running out of debt related products to promote). Maybe at that point the worthless lead gen web pages optimized for debt settlement that make up probably 90% of current web content will disappear, or be less relevant in search results.

I am okay with either outcome.