Pricing And Costs Of Banner Ad Marketing
Business-to-business banner ad pricing will experience rapid growth over the next 24 months. Many of the lenders responding to our survey indicated they would like the ability to communicate with vendors over the Internet and order appraisals, credit reports, flood certifications and other reports.
Respondents stressed the need for an industry XML (extensible markup language) standard, the creation of online EDI (electronic data interchange) networks and the acceptance of electronic signatures to help streamline the transaction.
Other industry business-to-business e-commerce sites like IMX Exchange, which lets brokers put their borrowers’ loans up for bid to participating lenders, are seeing increased usage as more and more mortgage companies embrace the use of the Internet. Use of the Internet is beginning to lower margins, which may force the industry to become even more efficient and cut costs by using technology. New business-to-business e-commerce sites are expected to mushroom over the next 24 months to help the mortgage industry become more efficient.
Use of intranets and extranets is on the rise. Companies are starting to build intranets to facilitate communication within the company. Twenty-six percent of companies surveyed reported that they use an intranet, up from the 18 percent indicated in our findings last year. Additionally, many lenders are building extranets for brokers and correspondents. Countrywide’s extranet, at http://www.cwbc.com/, resulted in $ 501 million in closed loans in 2006. The company is currently offering online automated underwriting to its correspondents and brokers.
All in all, survey respondents closed an aggregate amount of $ 1.55 billion on the Internet in 2006. In addition, three of the top Internet originators – E-LOAN, Countrywide and mortgage.com – did not respond to the survey at all, but revealed figures in public documents or in interviews accounting for an additional $ 2.09 billion in 2006 online originations.
If we wanted to approximate total online origination volume last year we can make some estimations that might come up with a reasonable number. If we take into account that there are more than 3,000 mortgage companies on the Internet today, we can extrapolate that companies that did not respond closed between $ 20 billion and $ 30 billion, assuming that they did at least 20 to 30 percent of the average volume of Internet originations. This would indicate that 2006 Internet originations were between $ 24 billion and $ 34 billion, which would represent between 1.6 percent and 2.26 percent of the $ 1.5 trillion in mortgage originations for 2006. This is lower than the 2.5 percent that was predicted for online origination volume by Myers Internet Services in a report released in January 2007.
However, these numbers do not take into account loans that were simply influenced by the Internet or loans that originated at sites like LendingTree, that act as intermediaries for borrowers on the Web. In fact, many consumers shop for rates and information on the Internet before choosing a lender. A report released by Sacramento, California-based Transamerica Intellitech revealed that only 22 percent of borrowers who used the Internet to comparison shop actually applied online. This would indicate that the Internet influenced more than 7 percent of all transactions.