Pay-Per-Call Advertising: Is It The Next Big Thing?

Is a phone call better than a click? Pretty soon advertisers
will be able to make the final call on that question.

Advertising developers are pushing a new type of paid search ad dubbed "pay-per-call."

The technology for pay-per-call was actually introduced in
April by Ingenio, a San Francisco-based company that
develops technology for delivering online ads.

Five-year-old, privately held Ingenio has 90 employees and
expects 2004 revenue of $65 million to $70 million, says
Marc Barach, chief marketing officer. He says it's been
profitable the last seven quarters.

Barach says Ingenio has received a patent for the main
technology that enables pay-per-call. It deals with call-
switching software and hardware that track and route 1-800
calls made by consumers to advertisers.

In paid search, advertisers pay companies like Google to
place their ads prominently on their results pages for
specific search terms.

The main type of paid search involves pay-per-click ads.
That's where advertisers pay a certain amount each time
someone clicks on their ad.

Pay-per-call takes that idea one step further. Here's how it
works: Advertisers pay a certain amount only after a user
dials the 1-800 number that appears with the ad. In theory,
advertisers will be getting an even more interactive
response than if someone merely clicks on their ad.

Pay-per-call ads are currently in the process of being
tested. The target market appears to be mostly small businesses. The ads will be programmed to appear in local searches, which target a specific ZIP code. Local search is a quickly developing market.

Advertisers will have to pay more per call than per click,
but if the pay-per-call ads provide a better lead than the
pay-per-click ads, developers and analysts alike expect the
market to really take off.

Jupiter Research says U.S. advertisers will spend $3.2
billion on paid searches in 2005, up 23% from an expected
$2.6 billion this year, so a lot of advertising dollars
could be at stake.

Developers think bigger companies will also use pay-per-
call, if they see small businesses having success.

"The customer sees the ad, calls in and the call is routed
through our software and hardware to the advertiser's
phone," Barach said.

Advertisers know who called, where they called from and how
many calls were made by any caller.

Ingenio has just completed most of the testing on its pay-
per-call technology, and the first big distributor is signed
up.

Barach says Internet marketing company FindWhat.com of Fort
Myers, FL., is promoting the ads with clients.

FindWhat runs online ad campaigns and places ads for clients
on search engine networks.

Spokeswoman Karen Yagnesak says FindWhat is starting to
distribute pay-per-call ads on hundreds of search engine and
portals, including Terra Lycos and Verizon SuperPages.com.

FindWhat says interest is "strong," but it won't say how
many advertisers it's signed up for pay-per-call.

Barach says pay-per-call gives small companies a "bigger bang for their buck." These companies can't afford to waste
advertising dollars trying to get clicks that don't lead to
sales, he says.

Phone calls give companies a much better chance of making a
sale, Barach says.

Another plus for small companies is that pay-per-call
doesn't require that they have a website.

According to researcher Kelsey Group, 70% of small and
midsize U.S. businesses don't have a website.

"Pay-per-call opens Internet advertising to millions of
businesses that wouldn't otherwise participate in it,"
Barach said.

In the case of FindWhat, advertisers will bid to get placed
in the results of certain search terms.

That's a method commonly used with pay-per-click as well.
FindWhat expects that the minimum price will be about $2 per
call, much higher than the pennies, that advertisers pay per
click.

FindWhat says there will be no extra charges for multiple
calls from the same consumer made within a 10-day window.

In addition to paying $2 per call from a consumer, FindWhat
might charge advertisers up to 10 cents for each minute they
talk after the first, free 10 minutes.

FindWhat is waiving the 10-cent charge for now to encourage
advertisers to try pay-per-call.

Personally, I love the pay-per-call idea! If someone is
willing to pay $2 for a telephone call, I would consider that a pretty solid lead.