Sourced from Search Engine Watch There’s a new kid in town in the search advertising arena. No, it’s not another search ad vendor, nor a new conversion tracking tool. This innovative pay-for-performance marketing technique brings together both the internet and the phone. Say hello to pay-per-call advertising.

Pay-per-call works in much the same way as pay-per-click advertising. The fundamental difference is that the ad is designed to entice people to pick up the phone instead of clicking through to a website. A phone call is the billable event, rather than a click.

FindWhat, partnering with technology provider Ingenio, was the first search engine ad-provider to offer pay-per-call services.

Michael Kerans, FindWhat Senior Vice President, described pay-per-call as the “sweet spot between online and offline advertising.” Kerans explains, “We are marrying the power of the internet with the power of the human voice to close business over the telephone.”

This can be a huge advantage for businesses with complicated products or services that demand a high-touch or personal sales approach.

How Pay-Per-Call Works

Here’s a summary of how FindWhat’s Pay-Per-Call service works with respect to targeting, ad structure, costs and bidding.

Ad Reach and Targeting

  • Advertisers choose relevant categories for their ads, rather than individual keywords
  • Ads are displayed across the FindWhat pay-per-call distribution network
  • Geo-targeting is available
  • Ads display a toll-free phone number, not a URL
  • This toll-free number is dynamically generated by Ingenio technology, and redirects to the advertiser’s actual phone number
  • Businesses know that an incoming call is the result of a pay-per-call ad because they hear a brief introductory message before the call is connected
  • Ads link to a simple “Business Details Page” hosted by FindWhat. This page lists business name, address, phone number, and a brief description of products and services

Costs and Bidding

  • Advertisers bid for ad position
  • Advertisers pay only when someone calls
  • Current rates vary from approximately $2.00 to $15.00 per call for the first 10 minutes

Early Results

Did-It’s Kevin Ryan provided some interesting comparisons between pay-per-click and pay-per-call results. According to Ryan, current pay-per-call prices are significantly higher than the average click cost, and the volume of calls is less than the volume of clicks received (not too compelling, so far!).

But, here’s the kicker: the conversion rate is more than double that of pay-per-click advertising, and the value of the sale is typically higher. Put these together and it makes the overall return of pay-per-call superior.

Dan Russell of InfoSpace shared similar information, based on a trial program that InfoSpace is running to test pay-per-call ads on Internet Yellow Page (IYP) sites. “IYP ads cost more than search ads,” Russell said. But he went on to explain that, the higher price is justified by the fact that IYP visitors are more ready to buy then the average searcher. Furthermore, phone calls, in general, are more likely to result in sales or conversions, and are worth more than clicks.
Market Challenges

As with any new advertising opportunity, challenges exist. For example, there isn’t a tremendous amount of inventory available today. Advertisers are looking for broader distribution networks. Some good news in this area: Brendan Benzing, Executive Director, AOL Search & Directional Media, told the audience that the company recently formed a partnership with Ingenio, and that AOL will begin distributing pay-per-call ads shortly.

Editor’s note: AOL Search launched its pay-per-call program last week. Watch for a detailed overview of the new service in Thursday’s SearchDay.

Currently, pay-per-call ads display toll-free phone numbers. But many consumers and businesses would prefer local numbers. Perhaps this will be offered in the future by pay-per-call providers.

Another issue of concern is that many of the ad categories are quite broad, and advertisers are not able to be as precise as with pay-per-click keyword buys.

Last, but certainly not least, it appears the industry needs a new acronym. PPC is clearly taken. Ryan suggested PHI, or “Pay-for-Human Interaction.” Hmmm… Guess we’ll have to wait and see what sticks.

Calling All Businesses

Certainly, one of the driving factors behind pay-per-call advertising is the fact that approximately 65% of businesses do not have a website. “With pay-per-call, the barriers to entry are low. All you need is a phone,” explains Benzing. This should be good news to the nearly 14 million small businesses that don’t have eCommerce enabled websites.

Companies like Ingenio are betting that local businesses will embrace this opportunity. Marc Barach, Ingenio’s Chief Marketing Officer predicts that “local companies will be a huge driver of growth in the pay-for-performance industry. While estimating the value of a click can be difficult, local businesses clearly understand the value of a phone call.”

Most panelists described pay-per-call as a key step in the continuing integration of online and offline marketing, and anticipate that this model will move beyond the internet to become a true cross-medium platform. In the future, pay-per-call ads may appear in print directories, on TV and radio, and across other marketing channels.

The big carrot for online marketers and agencies is that pay-per-call advertising potentially provides access to a larger budget. the offline budget, which is already focused on driving people into stores and getting those phones to ring.

At a minimum, more advertising options and better online/offline integration is a good thing for marketers. Stay tuned to see if pay-per-call revolutionizes the search ad industry as some are predicting.