What Is a Ping Tree and How Can It Help Your Company?
By: Michelle S. Monteiro, Thursday, September 01, 2011
What is it?
The ping tree has become a principal technology within the lead industry in the last several years, and for good reason. It permits a variety of companies to interact that would not have been able to form effective, much less profitable, working relationships prior to the prevalence of this technology because participants with different levels of technical proficiency are able to interact and work together. The ping tree provides a centralized marketplace for multiple companies ranging from lead generators and wholesalers to retail recipients. It effectively matches providers and buyers in regards to transaction type, field requirements, and pricing – all within milliseconds. Sellers benefit from access to premium pricing and more leads sold. Buyers benefit from access to multiple sources and competitive pricing.
Technology of how it works
Pricing and Partner Viability
The sophistication level and exact specifications of the ping tree varies from company to company. The more advanced platforms allow for multiple approach pricing. Leads can be sold in dynamic, tiered or static formats. These options provide price control for a free market approach, a clearly defined pricing structure, or a combination of the two.
Dynamic Price Structure
Dynamic pricing is sometimes also termed the "bid" or "market" ping-post or ping tree system. Leads that come in from sources are matched against recipients' required fields and filters and subsequently sold to the highest bidder that meets or exceeds the built-in margin structure. Certain verticals are more appropriate for this model of pricing, such as those with volatile or sensitive market pricing. For instance, auto finance applications can vary dramatically according to the location, time of day, time of month and how many companies are purchasing them in a particular region.
Static
Static pricing is a set price for a lead type regardless of extenuating factors. Static can be applied at either end of the sell/buy process or both. This type of pricing can protect the margins of the leads but may limit accessibility to leads and partners if it is the only type of pricing available to the company.
Tiers
Tiered pricing is a hybrid between the dynamic and static models. It provides various tier prices per vertical so the company can take advantage of more profitable pricing without having to manage a true dynamic bid system.
Combined Pricing
Some ping trees are able to accommodate a combination of these pricing structures. This is the ideal model because it permits the addition of partners from all pricing structures to work together on one platform. This method will also enable interaction with companies that do not have ping tree or ping-post capabilities, such as Host & Post, Accept-Reject, Direct Post etc. while still maintaining the ping-tree's own internal methodology.
Ping versus Post
The "ping" part of the process is where certain header information is passed to the platform so the potential buyers can ascertain interest or "match" level for the lead. If the ping is "accepted" as viable, the "post" passes the full data set for the lead to the system at which point the buyers compete to purchase the lead in full. There are "timeouts" between the companies that permit the lead to be available for a set period of time (ranging from milliseconds to multiple seconds). The timeouts should be coordinated so as to avoid multiple purchases of the lead.
Other Technical Aspects
A ping tree can be very costly to design and build. There are multiple reputable platforms available for a company wanting access to this process without directly taking on the physical infrastructure of it themselves. Ping trees permit intricate traffic direction; for instance it can monitor filters with one partner while using others to purchase more generalized leads. As long as reporting is clear, the historical and live metrics provide excellent visibility into the business.
Who uses it?
A variety of companies use these systems to process real-time live transactions. Ping trees are effective for retail networks, wholesale relationships, organic generators, call center lead recipients or any combination of these networks. The verticals that can be integrated into a ping tree are unlimited as long as the correct lead specifications are in place – individual filters are also managed by the system. Ping trees can manage both exclusive and shared leads (sometimes simultaneously if the system is sufficiently sophisticated) on a relatively automated basis.
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