Pay-per-call Breaks Out

No firm results to speak of yet about advertisers’ take-up of pay-per-call and click-to-call solutions, but there can be no doubt that on the supply side of the equation, making a direct phone connection between marketers and the audiences they want to reach is going great guns.

Just in the last few weeks, we’ve seen both Jambo and Ingenio strike deals to add pay-per-call connectivity in mobile directory services; separately, Ingenio partnered with the Podbridge podcast network to add pay-per-call ads to audio downloads.

And while some of these deals are natural moves to increase pay-per-call’s appeal for its root market—the small local businesses who value phone leads more than Web clicks—some others indicate that pay-per-call platforms are looking beyond that original market to broader media possibilities.

The latest news is that eStara will add click-to-call features to the lead-generation programs AzoogleAds network. Azoogle runs a network of vertical Web sites on topics such as mortgages, payday loans, debt consolidation and online education, and also manages an affiliate ad distribution network that numbers more than 14,000 partner sites, including those run by United Airlines, Netflix, Chase Manhattan Bank and matchmaking site True.com.

While the eStara service offered through Azoogle will be performance-based—in other words, advertisers won’t pay unless customers contact them—it’s “click-to-call”, which means that Web visitors click a button to notify the advertiser of their interest and leave a phone number. In most cases, that prompts a landline callback from the advertiser, although customers also have the option of initiating a call via IP voice from their computer.

EStara also offers call-tracking services and a capability to link the customer’s desktop to the marketer’s PC, so that sellers (or their call-center reps) can see what the customer has seen on their site and start the call knowing what products or services they’ve shown interest in.

Meanwhile, Jambo has opened the airwaves for pay-per-call with a test deal to buy radio time from Bid4Spots.com. Bid4Spots aggregate unsold or “remnant” airtime from some 2,000 stations and sells that time at arbitrage to clients.

Jambo, which broke the online barrier earlier this year by placing pay-per-call ads for local businesses in print with the L.A. Weekly, will use the time to distribute ads for selected business categories that also feature a Jambo pay-per-call phone number.

The Jambo spots will initially target categories that typically require a phone call to do business: satellite dish installers, mortgage brokers, and lawyers in the bankruptcy, criminal and personal injury specialties. When the consumer calls that number, he or she will cycle through relevant business matches in the area until a merchant answers the call and accepts the lead—at which point a charge appears on the advertiser’s regular phone bill, if the marketer has opted for that convenience.

And Ingenio, which provides both a platform for pay-per-call advertising and a network of affiliated sites for those ads, last week unveiled Ether, a pay-per-call service that lets consultants, therapists and other service professionals monetize their knowledge by charging to receive calls.

Ingenio handles the back end of the service, managing the billing process and setting up scheduling to permit calls at selected times. It has already tested the service with a handful of bloggers with a strong tech following. There’s no wider marketing angle to it at the moment; it’s just a test of the waters for drawing customers with expertise rather than products. But it could be yet another indication that the pay-per-call model has applications beyond location-based advertising of small enterprise.

What’s led all these performance-based call providers to look further afield than the traditional local mom-and-pop stores and service providers? For one thing, says eStara CEO John Federman, it’s that marketers recognize that voice calling around a transaction has grown from a customer service function into a sales conversion tool.

“Merchants get the opportunity to respond to questions and concerns in real time and close the sale,” he said, speaking before the eStara-Azoogle announcement. He pointed to the example of the Chrysler Group, which incorporated eStara Click to Call into its brand and dealer Web sites, originally to smooth the transition of high-value leads from the brand sites to the local dealerships. But the result was a bottom-line improvement in phone conversions: Up to 20% of Click to Callers bought a vehicle, compared to 10% conversions for traditional inbound calls. And those sales happened faster, too: three to five days for a Click to Call contact versus 35 to 40 days for a standard phone call.

“Voice is an effective catalyst for selling,” Federman says. “It takes a cold, generic Web experience and makes it a more personable, actionable one.”

When merchants see voice calls having that kind of effect on sales conversions, they begin to realize that while click-to-call and pay-per-call may have gotten their start among the Web-disadvantaged, those technologies may also have something to contribute to expert online merchants too. That’s something Ingenio is counting on to drive pay-per-call penetration into the realm of national marketers with a local presence, such as large retail chains that have plenty of Web expertise but are looking for the sales boost that the phone can impart.

Pay-per-call “targets small businesses, local businesses, high-ticket items and complex sales,” Ingenio CMO Marc Barach told an audience at DM Days New York last week. “It’s also great for national businesses, because after all, everyone’s interested in capturing the customer who is motivated to buy.” He pointed out that one out of three people who call a business are ready to transact, compared to only 1% to 2% who go to the average Web site.

Barach also predicted that call monetization would grow in importance as consumers opened up to the search possibilities that exist beyond the PC—most immediately on their Web-enabled mobile phones, but also on mobile directories via SMS messages or audio ads, and on MP3 devices via downloads. Ingenio is already involved in serving pay-per-call ads in those media, and the company has plans to move its product into print, not long from now, and more distantly into radio and TV.

“This represents the ultimate in convenience for agencies and advertisers, because they need only sign up and buy this ad product in one place at one time,” Barach said. “Advertisers are demanding simplicity of buy and ubiquity across a network of different devices. We’ll manipulate their ads behind the scenes to suit each particular environment. This keeps them out of the technology business and in the business of getting and closing on their customers.”

“It’s all about the paradigm shift from static advertising on the Web—spec advertising, if you will—to performance-based advertising,” said John Melideo, Jambo CEO, in a conversation before the Jambo-Bid4Spots announcement.

When will pay-per-call hit the big time? If you listen to the providers, it’s just about there already. But the average consumer can look a long time on the Web before finding a “call this merchant” icon next to a paid listing. A report last year by The Kelsey Group forecast that pay-per-call advertising would hit $4 billion by 2009. This year, the estimate is that performance-based phone ads may amount to $60 million.

To Melideo, it’s a matter of getting a critical mass of merchants who can evangelize the business model. “Phone calls are happening today, and they have value,” he said. “We all know that—there’s a hundred-year-old Yellow Page business. I say it will take [the pay-per-call industry] another year to get in front of those merchants.”

One factor that may energize pay-per-call takeup is the interest of big Web brand names such as Google, eBay and MSN in adding the ability to connect advertisers and buyers directly to their bag of online marketing tools. Google and Yahoo! Both started running pay-per-call tests late last year, but so far have held off even putting the technology into even a beta test. MSN made noise with its purchase of IP voice tech company Teleo last summer, but has mostly opted to integrate calling into its instant messaging and collaboration products.

But eBay, since September 2005 the proud owner of the Skype IP voice service, announced mid-month that it will encourage its auction sellers to add a “Skype Me” icon to their listings and give prospective customers the chance to reach them via voice or text message as well as the traditional e-mail. The Skype trials are taking place on selected business categories that usually involve high consideration, including real estate, automotive, diamond jewelry and collectibles.

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