Pay-per-call (PPC) marketing isn t new, but demand for it as a lead generator for

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2 2 Introduction: Higher Quality Leads, More Customers, Better Metrics for SMBs Pay-per-call (PPC) marketing isn t new, but demand for it as a lead generator for paying advertisers has accelerated ever since smartphones added click-to-call functionality in 2010, 1 thereby marrying search with mobile devices. According to BIA/Kelsey, $64.6 billion is spent annually across various types of media on local ads from merchants as well as ad agencies, networks and major retailers to generate calls to businesses. 2 Considering that worldwide mobile phone penetration is projected to reach 70% in 2014, with nearly two-fifths (1.75 billion) owning a smartphone, 3 and with the proliferation of mobile phone use for searches, pay-per-call demand is poised to increase. Additionally, call volume to businesses through mobile search is projected to explode from about 30 billion calls per year in 2013 to 73 billion by 2018 (see Figure 1). 4 Calls Driven to Businesses from Search (Figure 1) 80,000 Paid Search Organic Search Mobile Search 70,000 60,000 50,000 40,000 30,000 20,000 10, Go Mobile! Series: Introducing click-to-call phone numbers in local ads on mobile devices, Google Inside AdWords (Jan. 28, 2010) 2 Michael Boland, Phone Calls: The New Ad Currency of the Smartphone Era, BIA/Kelsey (May 2014) 3 Smartphone Users Worldwide Will Total 1.75 Billion in 2014, emarketer (Jan. 16, 2014) 4 Michael Boland, Phone Calls: The New Ad Currency of the Smartphone Era, BIA/Kelsey (May 2014)

3 3 Small and midsize businesses (SMB) have long known the importance of phone leads: 66% of SMB advertisers say a phone call is the single most important lead they can receive up from 61% a few years ago. 5 And about 70% of mobile searchers have used the click-to-call button to reach merchants directly from search results (see Figure 2). 6 Click to call is used frequently by mobile searchers (Figure 2) 70% of mobile searchers have used the call button Frequency of needing to directly call a business from the mobile search result Always Frequently 12% 39% Sometimes Rarely Never 35% 12% 2% Source: Google An effective PPC solution takes a mobile search, analyzes the consumer s needs based on factors such as location and search words or the type of service sought. 7 It then matches them to the most relevant results. It is especially effective for high-value categories where a phone call is necessary to qualify purchase decisions such as insurance (e.g., home, auto, medical), financial services (e.g., mortgage lenders, accountants), home services (e.g., plumbing, locksmith, security systems), and appointment-based professional services (e.g., salons, lawyers, auto repair). 5 Ibid. 6 The Role of Click to Call In the Path to Purchase, Google (September 2013) 7 Call Transfer Services, Soleo

4 4 Consumers call more frequently when they are ready to make a purchase (Figure 3) 31% Call Frequently % who call a business when specifically looking to make a purchase or transaction Frequently (NET): 39% Always Frequently 8% 31% Sometimes Rarely Never 41% 17% 4% Nearly two out of five consumers say they always or frequently call a business when looking to make a purchase Source: Soleo Marketers are willing to pay more for these leads because the callers have high buyer intent. According to a September 2013 Google report, nearly two out of five consumers say they always or frequently call a business when looking to make a purchase or transaction (see Figure 3). 8 As a result, pay-per-call conversion rates average between 10-15% compared to just 2-3% for online conversions. 9 Another reason for pay-per-call s value: metrics. Vendors in this market are providing both local and national businesses with decision-making analytics that they can use to measure ROI and gather insights about incoming calls from prospective leads. This enables businesses to see which marketing campaigns are driving the most traffic and what they could be doing to turn more leads into sales The Role of Click to Call In the Path to Purchase, Google (September 2013) 9 Geno Prussakov, Drew Thorne-Thomsen Pay Per Call and 2014 Opportunities #AMDays, Small Business Trends (March 12, 2014) 10 Stephanie Miles, 6 Call Monetization Platforms for SMBs, Street Fight (March 4, 2014)

5 5 A pay-per-call program also improves ROI by deploying advertising budgets more effectively. For example, if a client has a budget of $100 per lead, they might spread that money around i.e., $20 on SEM/CPM, $20 on an ad in a Yellow Pages directory, $60 elsewhere with the hope that one or more avenues will provide the desired customers. Using pay-per-call, the advertiser bids only what they want to pay for that call, and then pays only when they receive that call. It s a much more targeted approach that doesn t eat into margins. ROI metrics and program analytics are more important than ever, as the share of overall mobile ad revenue attributed to location-based campaigns is expected to grow from 37% ($1.4 billion) in 2012 to 52% ($10.8 billion) in The Consumer Pay-Per-Call Path (Figure 4) SORRY WE RE CLOSED Vendors in this market are giving local and national businesses powerful insights through new forms of analytics. Press 1 to hear more about this business 11 Mike Boland, Location Targeted Mobile Revs to Reach $10.8B by 2017, BIA/Kelsey Local Media Watch (Nov. 19, 2013)

6 6 Not All Ads Are Equal Just as call integrity depends on strong sourcing and data analysis, ad effectiveness relies upon identifying information that will deliver appropriate ads. Instead of valuing quantity over quality and revenue over relevance, an effective pay-per-call strategy needs to be much more targeted. Information about the services being offered by the advertiser, including target location and the time(s) of day the services are provided, will help providers craft relevant campaigns and place ads in the environment that will yield the best results. Matching relevancy to merchants specifications, as well as maintaining transparency around the ad s details, is essential. For example, if a caller is searching for auto insurance, presenting an agency for homeowners insurance or health insurance isn t going to result in a useful connection. Similarly, if a caller is searching for a local plumber, an ad for Home Depot, where they may have plumbing supplies but no plumbers, will not lead to a connection. The most effective pay-per-call campaigns are those where our ad partners share their category terms and identify what type of ad they ll be returning for those categories, says Rob Deming, Vice President of Product Management, Soleo Communications. Ideally, the provider s taxonomy, or ad categorization structure, will include subcategories, which almost equates to a keyword level with SEO that helps identify performance results. Category data can also be used to focus a campaign on categories with a history of high performance or that are underserved, and away from those that may be saturated or have poor results. For instance, an ad partner might want to put windows and blinds treatment in the home improvement category, but data might show it doesn t perform well in that category; rather, the subcategory for windows and blinds might return a If a caller is searching for a local plumber, an ad for Home Depot, where they may have plumbing supplies but no plumbers, will not lead to a connection.

7 7 much higher selection rate. If ad partners share more data, the filters for the search will improve leading to better results. Location data is even more powerful. The latitude and longitude of a caller s intended search can be matched with the radial service area of a merchant, delivering locally relevant ads to callers. For example, a search for a plumber in Brooklyn should not return an ad for a plumber in Queens, even if both services list address of New York, NY. Likewise, callers in rural areas may need a larger search radius than those in a major metro. 8am-7pm Another important piece of information is open hours data, both time of day and day of the week. Any call-based leads program is highly dependent on the merchant answering the phone. For example, if a prospect is looking to reach an auto insurance company at 2pm on a Saturday, that call will not be directed to an office that is closed at that time. As long as advertisers provide accurate location and service information, calls have a high probability of resulting in strong leads. The most effective pay-per-call campaigns are those where our ad partners share their category terms and identify what type of ad they ll be returning for those categories. Rob Deming, Soleo Communications Monitor, Evaluate, Modify One of the chief advantages of pay-per-call is measurability. The resulting data can be analyzed and applied to enhance a campaign in progress. A pay-per-call provider will monitor the performance, review and share reports, and adjust the strategy until each compo-

8 8 nent is in alignment on maximizing revenue. For example: in one category, an advertiser might be the highest bidder, but their ad is not frequently selected; the consumer may go to the second or third option instead. In this case, the provider has the ability to finetune their campaign. Adds Deming, Through our Call Generation Portal, the provider can view past metrics and adjust the categories being served, and for certain calls how it s announced, such as a pre-recorded business name or sales pitch (i.e., Select Joe s Plumbing for 10% off ), and monitor the performance. The types of metrics and analytics providers might employ include: Measuring caller sentiment Analyzing conversations with real customers Tracking leads before and during telephone calls Identifying which ad campaigns are driving the most calls Tying calls to specific marketing campaigns 12 This is where clear communication between ad partners and pay-per-call providers ties in with relevancy to ensure search results include only the most relevant ads for prospective callers. 12 Stephanie Miles, 6 Call Monetization Platforms for SMBs, Street Fight (March 4, 2014)

9 9 Evaluating a Pay-per-Call Provider A PPC provider can provide your business with the foundation for setting up and optimizing pay-per-call campaigns. Understanding how pay-per-call is a driving force in revenue generation and what goes into making an effective campaign is the key to finding the right partner to execute a call campaign. The following five areas are fundamental factors in making a decision: 1. Transparency in Sourcing Data and Calls Ask prospective PPC providers how they source their data and calls, and how they meet a client s target criteria. 13 It s best to select one that works directly with its merchants and ad partners, and not third parties or middlemen; this helps to maintain data integrity, noted Kristen Erickson, Marketing Manager, Soleo Communications. Some ad partners like to control the information rather than share it, or it goes down several chains of command before reaching the end merchant. Such a grapevine causes data to decrease in specificity, context, and accuracy, which lead to a decline in overall data quality, she added. The more a PPC provider knows about its data and where it comes from, the more it will be able to match searches with relevant ads. 2. Data Tools and Analytics Ask a potential pay-per-call provider detailed questions about what measures they employ to ensure lead quality, how they monitor calls, how they determine call chargeability, and what metrics are used to determine whether or not calls are relevant leads. Some of these metrics should include average call duration, originating number, and, at times, the actual content and words used in the phone conversation Calls: The New Clicks, Soleo blog 14 Ibid.

10 10 3. Market Expertise A good pay-per-call partner will know where the best opportunities are for their clients.. Spending on areas that are over-saturated may not yield successful results. Instead, they should focus on categories that have a history of high performance and are underserved, i.e., where there is a high volume of calls, but not many advertisers. 4. Call Volume For merchant-direct relationships, an advertiser should make sure the provider has the volume of calls needed to meet the specific criteria for the merchant s service area. The way the local business fits into the provider system should also make sense for the type of category the advertiser wants to participate in. Sometimes a merchant might have too small of a footprint or budget to be effective in a competitive environment. 5. Matching Campaigns to the Customer Business Goals An effective pay-per-call strategy comes down to how much an advertiser is willing to pay for a call, and that depends on the potential revenue and margin per sale. The cost per call should match the goals of a merchant marketing campaign. This goal might be to drive an increase in sales or to build awareness. If a pizza shop sells pizzas at an average of $10 each, with gross profit of $6 per pizza, it s unlikely it will pay $5 for each call received to increase sales, but they may pay $5 as a part of a short-term campaign to get people to try their pizza. On the other hand, a local low-margin business may be willing to pay a seemingly high rate per call if the conversion rate is high enough, or the business is highly repeated. Likewise, a lawyer charging clients $250 per hour may be willing to pay in excess of $50 per call because for every client gained, the gross margin received is substantially higher. 15 Selecting a pay-per-call partner that can fine-tune and implement a local business s strategy efficiently and effectively is equally essential. Quality and costs vary significantly, but these five points will help to guide the selection. 15 Ibid.

11 11 How Soleo Powers the Best PPC Partners Soleo s Call Generation Platform provides improved search, merchant matching and data for PPC partners, which result in better ROI. Better Search: Knowing useful information about the calling customer their intent, what kind of business they are searching for and their location typically results in calls with a higher chance of conversion. Better Merchant Matching: Soleo built out its category taxonomy and the data around the calls it has to help ad partners return more relevant ads and matches for the consumer. Better Data: Transparency with partners on both ends data collection from advertisers and strategy performance reports ensures more successful results. It s a well-known fact that call durations are longer when there are good ad matches. The Call Generation Platform tracks all of the calls that come in for a specific category and the ads that get placed on those calls. If any of the ad providers are returning ads that do not match the category being searched, ads from that provider will be moved down in priority in favor of playing ads with a higher selection rate. A higher selection rate means that good ads are being played and the caller wants to be connected to the merchant, which means that call duration may increase depending on the category. Figure 5 shows that as the company makes better ad matches, we see the number of calls with higher call duration increase, which is a good indication of a happy caller.

12 12 Ad Relevancy and Duration Relationship (Figure 5) Number of calls Call Duration (seconds) Source: Soleo Overall, the average cost per call for a good lead can vary greatly, depending on the category and the total number of competing ads. Soleo s ad providers have constantly been increasing their ad volumes. Figure 6 shows the largest growth in number of ads for three of its providers over a six month period. These increases were a result of using the metrics and reporting from the Call Generation Platform to improve the performance of subsequent campaigns. These are not the only providers with substantial growth, which allows Soleo to forecast a future of many more relevant ads across all providers.

13 13 Providers with the Greatest Growth in Ad Volume (Figure 6) 1200% Ad Growth (%) 1000% 800% 600% 400% Jan, 2014 Jun, % 0% Ad Partner A Ad Partner B Ad Partner C Source: Soleo Relevant ads and selections go hand in hand. Figure 7 below shows three providers with the greatest increase in selections during the first six months of When comparing these results to the previous graph, there is slightly different growth in selections compared to ad count due to the relevancy of ads. When ads are more relevant to the customer they will be played more, and ultimately selected over irrelevant ads. Providers with the Greatest Growth in Selections (Figure 7) 1600% 1400% Selection Growth (%) 1200% 1000% 800% 600% 400% Jan, 2014 Jun, % 0% Ad Partner A Ad Partner B Ad Partner C Source: Soleo

14 14 Figure 8 shows the ad providers with the greatest revenue growth over the past year. The top ad providers ability to generate more relevant ads has increased selections, which has ultimately caused revenue to grow. Providers with the Greatest Revenue Growth (Figure 8) 400% 350% Revenue Growth (%) 300% 250% 200% 150% 100% Jan, 2014 Jun, % 0% Ad Partner A Ad Partner B Ad Partner C Ad Partner D Source: Soleo

15 15 About Soleo Soleo provides call-based performance marketing products for national and local advertisers throughout the U.S. and around the globe. The company operates a callbased leads exchange that was expressly built with local businesses in mind - it handles billions of calls each year that represent consumer searches for information and services. Soleo sorts and filters the calls that enter the Call Generation Platform and matches the intent of the searcher with the most relevant ads in the ad network. With those matches, the company is able to make useful connections between local merchants and consumers. The company offers a database of over 100 million listings in the U.S. that produce quality phone leads to millions of local advertisers every year. It also publishes reports on a variety of topics including call volumes for various categories, and predictions for which categories will be growing in the immediate future. For additional information, visit Soleo.com or contact: Soleo Communications, Inc WillowBrook Office Park 300 WillowBrook Drive Fairport, NY (585) Soleo Communications, Inc 6301 NW Fifth Way, #5200 Fort Lauderdale, FL

16 16 About this Report Pay-per-Call s Role in Improving Marketing ROI was written and produced for Soleo Communications by Street Fight Insights. About Street Fight Insights Street Fight Insights is the research arm of Street Fight, the leading resource for insights into the constantly evolving local marketing landscape. Every day, Street Fight publishes news and commentary on its website and in its newsletter. Hundreds of decision making executives attend Street Fight Summit conferences in New York, San Francisco and Denver. And Street Fight white papers and webinars produced independently or for partners offer deep-dive intelligence into key trends in the industry. Go to streetfightmag.com for more information.

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