Pay Per Call

NYTimes writes:

Herding customers of local businesses to the telephone is the latest effort of search engines to attract small and medium-size advertisers, which represent a huge, and as yet untapped, market. According to Greg Sterling, an analyst with the Kelsey Group, only about 350,000 small businesses worldwide are using paid search advertising.

In recent weeks, technology companies have begun unveiling new services to further the effort. The idea behind the services is, simply enough, to direct customers from search engines to off-line businesses, where most commerce is actually conducted. The problem is not only that small businesses typically lack Web sites they can direct Internet searchers to, but they often lack the expertise or the will to prospect for customers online.

Sites could encourage calls by highlighting phone numbers with the ads that run atop or alongside search results, but since Google, Yahoo, FindWhat and others have no way to track a customer’s call to the advertiser, they cannot prove they deserve a fee for helping make the connection.

As an alternative, search engines could adopt the Yellow Pages approach, where advertisers pay a monthly fee to display a phone number. But one reason these sites have been so popular with Internet advertisers is that they charge fees only when a customer engages with the advertiser. (In online parlance, this is the “pay for performance,” or “pay per click” model.)

New offerings from companies like Ingenio and eStara, though, offer the search sites a way to tabulate calls generated by searches. Ingenio was the first to announce an agreement with a search marketing company of significance, when it signed a deal with FindWhat in April.

The Ingenio service, which is to begin this summer, relies on old technology: toll-free numbers. When a user types in a search for, say, plumbers in Tucson, FindWhat’s advertisers will display a dedicated toll-free phone number that Ingenio has secured on the advertiser’s behalf. (Advertisers will eschew Web addresses in their ads.)

When the customer calls the number, Ingenio registers the event and charges the advertiser whatever fee the advertiser had bid for the right to appear near the top of the search listings. Ingenio and FindWhat then share that fee according to a revenue split that neither company would disclose.

The buck does not stop there. FindWhat then shares its fee with the search engine on whose site the ads actually appear.

Published by

Rajesh Jain

An Entrepreneur based in Mumbai, India.