In an on-line environment that revolves around clicking on Web links, how can businesses without their own websites benefit from search-engine advertising?
The answer is a new Internet advertising system designed to connect marketers and companies lacking websites with the consumers they seek -- by phone.
Like pay-per-click advertising (sometimes called paid search), Pay Per Call allows marketers to advertise on a "pay for performance" basis on Internet search engines. In other words, they only pay when someone actually reads an ad and actively seeks more information on the products or services listed in it. Instead of the usual method of tallying up how many times potential customers click on an on-line ad, however, the Pay Per Call ad-placement company tracks the calls consumers make to phone numbers listed in on-line ads and bills the advertiser accordingly.
The product is the brainchild of U.S.-based Ingenio Inc., a company that specializes in merging the Internet and telephone to create e-commerce applications. Pay Per Call was officially launched late last year in the United States, and is gaining momentum in North America.
The company plans to launch a formal service in Canada before the end of the year, it says.
"Every day, millions of calls are made to businesses -- it's the most common way to reach out and get in touch," says Marc Barach, chief marketing officer at San Francisco-based Ingenio. "We've taken that existing consumer behaviour and melded it with local [Web]search."
When a consumer types in a term that implies a local search, such as "Detroit Mortgage Loans," the search engine passes those key words on to Ingenio, which sends back the most relevant ads. Advertisers can decide if they want to target people locally, regionally or nationally.
Ingenio sets up, tracks and reports on the campaigns, but doesn't field the calls for advertisers, that's the responsibility of the businesses placing the ads. The phone number used in the on-line adds is set up to lead callers to the same place that, say, a Yellow Pages listing would take them -- the advertiser's main office phone number, a member of their sales team, and so on. Because Pay Per Call is primarily used by local businesses seeking local customers, the call volume isn't expected to be too overwhelming even for smaller companies.
Ad rates, which vary from $2 (U.S.) to $20 a call, are determined by the popularity of each search term. As with standard paid search ads, advertisers bid against each other for their desired terms.
So far, the ads are appearing on search engine FindWhat, and as of mid-April, AOL Search. FindWhat has a relatively small audience, but market-watchers say now that the service is available through AOL as well, they expect considerable engine traffic.
Based on the new AOL campaigns that have just kicked off, advertisers will be able to better gauge the new advertising model's return on investment. And while advertisers are also able to obtain more traditional pay-per-click ads on both search engines, Ingenio isn't worried about competing with the more established on-line advertising model.
"If you're an efficient on-line transactor, or don't have people who can take calls, then pay-per-click [search engine advertising]is for you. If you don't have a site or can't support on-line transactions, the Pay Per Call product is ideal," Mr. Barach says. "It's just a new product within the realm of pay-for-performance advertising choices."
Pay Per Call isn't just for businesses that don't have a site (there are nearly 14 million of them in the U.S. alone), though. Those whose services don't lend themselves to being sold on-line are making use of the service as well. Frank Frasier, a third-generation personal injury attorney in Tulsa, Okla., has been using Pay Per Call since its inception. His motivation? "Interpersonal communication."
"So much of what I do is on the phone, so it's important to have that first telephone conversation with somebody," he says. "You can pay a lot of money [for click-based advertising] but that doesn't mean you're going to get a phone call. As a small business person, I'm more comfortable paying for results than aspirations."
While it's still too early to quantify those results, the Pay Per Call model has human behaviour on its side, experts say. According to Mr. Barach, about 35 per cent of consumers who call a business are ready to make a transaction when they pick up the phone. That means a potentially higher return on investment when compared with pay-per-click Web ads that tend to attract more idle visitors who click a link out of curiosity.
When it comes to usability, however, some experts say the Pay Per Call model isn't as perfect as it might appear. They see some inherent problems that could hinder ad performance.
For example, Ingenio's system requires advertisers to feature a unique toll-free number in their ads for tracking purposes. Even if it were to allow local numbers, there would likely not be enough unassigned numbers to go around if the service takes off.
"People don't want to dial a long-distance number for a local service," says Dane Madsen, co-founder and former chief executive officer of on-line directory YellowPages.com. "If you want to dial a local plumber and you're given a choice between a local or 1-800 number, you'll probably go to the local number."
Still, Mr. Madsen expects Pay Per Call to leave a mark on on-line advertising. "Advertisers are tired of paying for browsers and click fraud, and not buyers," he says.
Pricing for a Canadian service has not yet been announced, but the company is laying the groundwork now for its expansion outside the United States.
"From a technical perspective we are already set up for it," Mr. Barach says, adding that Ingenio plans to partner with Canadian search engines before the end of the year.