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Google Tests Pay-Per-Call Ads

Posted by iNext - 2005-11-29

Google has begun testing pay-per-phone-call ads, an emerging online ad model that is a twist on the popular pay-per-click ads.
While pay-per-click ads link users with advertisers' Web sites, pay-per-phone call ads link users and advertisers by phone. The Kelsey Group recently forecasted that in 2009 spending on online ads of this type could reach $1.4 billion, so it's not surprising to see Google testing the model.

Just as a pay-per-click advertiser pays only when a user clicks over to its Web site, a pay-per-phone-call advertiser pays only when the ad leads a user to contact the vendor by phone.

Just as they do with pay-per-click ads, companies typically determine the cost of pay-per-call ads via an auction process. The larger an advertiser's bid is for a search keyword or search category, the higher its ad will appear on the list of related ads that a search engine serves up in response to a user's search query.

Free Call for User

In Google's case, a phone icon has begun to appear with some ads; after clicking on it, users can enter their phone number. Google then generates a call between the user and the advertiser, according to a frequently asked questions (FAQ) page detailing aspects of the pilot program on Google's Web site.

The call is free to the Google users.

"Google is always considering new ways to provide value to its advertisers, and we frequently run tests of potential new features and products. We are currently conducting a limited test of a pay-per-call model, but we don't have any additional information to share at this time," a Google spokesperson wrote in an e-mail message to IDG News Service.

For users concerned about giving out their phone numbers, Google promises not to share the number with anyone, including the advertisers. "When you're connected with the advertiser, your number is blocked so the advertiser can't see it. In addition, we'll delete the number from our servers after a short period of time," Google's FAQ reads.

AOL, Verizon, Yahoo Also Interested

Ingenio, considered the leader in this emerging market, sells pay-per-phone-call ads to advertisers and provides the back-end technology for the ads. A network of providers that includes America Online distributes its pay-per-phone-call ads. AOL shows Ingenio ads in the sponsored search section of its search engine results and in its AOL Yellow Pages online directory.

Yahoo has been testing pay-per-phone-call ads for several months on a small portion of its search traffic, a Yahoo spokesperson said Monday. There is no ending date for the test, she said. "If it's something our advertisers want, we'll have more to say at a later date," she said.

Another big player in this market is Verizon Communications, which began offering pay-per-phone-call ads in October.

New Model, New Profits

The acknowledgment by search giants Google and Yahoo that they are dipping their toes into pay-per-call is significant news for the new online ad model, said Greg Sterling, a Kelsey Group analyst. It is also good news for companies that would rather generate calls than Web site clicks from their online ads, Sterling said.

If Google were to fully embrace pay-per-call, the benefits would include getting a higher revenue rate than from pay-per-click, because pay-per-call ads in general tend to be more expensive, he said. Typically they start at around $2 per call, average about $7, and can cost more than $30, Sterling said.

Advertisers are generally willing to pay more for a call than for a click because a prospective client who calls is presumably closer to making a buying decision than one who visits a Web site, he said.

Also, a company that gets a phone lead can tailor its message and sales pitch to the potential client, and direct conversation is a much deeper level of engagement than a Web site can usually establish with its visitors, Sterling said.

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