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Can pay-per-call search really ring up sales?

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Pay-per-call search advertising, whereby advertisers buy ads that appear in search results that drive customers to a phone number rather than a Web site, continues to gain momentum, with several companies now vying for position.

This week, Verizon Superpages.com will announce it is launching a pay-per-call advertising service. Verizon's news comes on the heels of AOL's entry into the space in April, when it teamed up with pay-per-call pioneer Ingenio and began offering the technology on AOL Search.

Late last year, MIVA (formerly FindWhat) launched a pay-per-call product; now the company says it is getting ready to announce high-profile Web publishing partners.

Pay-per-call potential

Pay-per-call has the potential to generate at least $1.4 billion in sales by 2009, according to the Kelsey Group, a research company, in a June report titled, "Calls, Clicks & SMEs: Driving Leads From Web to Phone." "There's an interest in pay-per-call, and a potential for great opportunity," said Greg Sterling, local media analyst at Kelsey Group.

MIVA's Michael Kerans, senior VP-general manager, Pay-Per-Call, agreed. "There are lots of businesses out there-many b-to-b-who would like to have more people call them. And the only way they can do that is the Yellow Pages." Kerans said a phone call generated by pay-per-call search advertising is more targeted but less expensive than a Yellow Pages ad.

Verizon said its announcement is part of its bid to provide advertisers with leads quickly and easily.

"The approach we've taken is one of simplified search marketing," said Darrin Rayner, VP-e-commerce sales and online marketing at Verizon SuperPages. The new platform, called Pay for Calls, is primarily targeting small businesses with the new service. A dedicated toll-free or local telephone number appears in the ad and rings through to the advertiser's regular phone line. The ads appear on the same results page as-and alongside-SuperPages' pay-per-click ads.

The company said calls will be priced between $2 and $6 , comparable to other pay-per-call services' pricing. One distinction between pay-per-call and pay-per-click models is the use of categories rather than keywords. Advertisers select the business categories where they want their ad to appear and bid a certain price per category.

Nevertheless, few marketers have tried pay-per-call to date, according to many in the industry. But that could change.

"I think in 2006, we'll see some pretty widespread adoption," said Kelsey Group's Sterling. "It will certainly become much more available in the third and fourth quarters, and the early part of 2006."

Others agreed there's great potential in pay-per-call, even if it's still largely conceptual.

"We've been experimenting with it," said Bryan Wiener, president of 360i, a search engine marketing firm. "There's potential, but it's in the testing stage of marketers' budgets." A handful of SEMs, including iCrossing and Fathom Online, have also dabbled with pay-per-call as another channel to offer advertisers alongside pay-per-click.

"The whole pay-per-call industry is really in its infancy," said D.C. Cullinane, founder and CEO of thinkingVOICE Network, a pay-per-click provider. ThinkingVOICE currently distributes pay-per-call ads through affiliate networks such as LinkShare and Revenue.net, as well as marketplaces such as Overstock.com and RSS feeds, but it will also serve ads over its own ad server, which Cullinane said will launch in the next several weeks.

"That means any publisher site interested in getting a share of revenue by getting leads by phone will be able to log into our system and select ads to insert into their Web site," Cullinane said. "We are focused on building our own network, where we control distribution of the ads into a network of sites. We want to share revenue with every site that drives a phone call."

Industry watchers argue pay-per-call may be more relevant to small business advertisers because, unlike pay-per-click, it does not require a company to have a Web site.

Indeed, Verizon's Rayner said that is a big driver of its pay-per-call strategy. "A lot of [the small-business customers] are doing business within a 50-mile radius, and 70% of them do not have Web sites," he said, noting that these are typically service-based companies that lack a significant e-commerce business. "What they try to do in their marketing efforts is drive people to their call centers," Rayner said.

Some marketers are already finding pay-per-call an easy, low-risk avenue to generate additional leads.

Sanjay Gupta, business development manager for Answer Financial, a nationwide insurance company, has been using pay-per-call advertising for three months and said he sees promise. However, he cautioned that it is too early to predict just how successful it will be.

"We have big expectations, but it's taking time to pick up," Gupta said. He said the phone is ringing as a result of pay-per-call ads. "Their program picked up in the last three or four weeks," he said. On a weekly basis, it delivers about 100 calls to the company's call center.

But the jury is also still out on pay-per-call's ROI, Gupta said. "We'll have to see how it performs by measuring the conversions."

Bob Brink, president-CEO of Tower Tech, a manufacturer of high-technology water cooling towers, is more bullish. A Superpages b-to-b advertiser, Brink was invited to test the pay-per-call product launched today.

It wasn't until the last few months that he and his team took notice. "I think we got about 16 to 18 calls in March; April, 15 or 20; and by June it was up around 30," Brink said. "I didn't look at them seriously until they started generating serious call activity for us."

Tower Tech uses search engine pay-per-click advertising, along with more traditional marketing and lead generation tools. With $6 million to $8 million in sales, it invests $150,000 to $160,000 per year in advertising and marketing. Brink said he will spend 5% of that on Superpages.com marketing in the next year and "it will double our lead generation," he added.

This is something that will definitely emerge, especially for service-oriented businesses," Gupta said.

"Someone calling in is always a more significant lead than an application filled out on the Internet." Rayner agreed. "The conversions are much higher," he said. "Our advertisers tell us we convert a lot higher than Google or Yahoo!"

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