Pay Per Call: A Multichannel Ad Strategy for Marketers and Agencies of All Sizes Overview It s obvious that paid search advertising better known to many as pay-per-click advertising has revolutionized online marketing. No doubt, its unique pay-for-performance value proposition will continue to attract advertisers for years to come. However, as pay-per-click enters its teen years, new paid search advertising models, like Pay Per Call, are extending the benefits of pay-for-performance advertising to the millions of search marketers who desire direct response in the form of phone calls rather than clicks to a website. What s more, as consumers begin to migrate away from their desktop computers as the solo access point for search, and move to new channels, like mobile search, text messaging and free directory assistance, Pay Per Call advertising will provide even greater utility. This is because phone calls can be tracked as a response mechanism across both online and offline media. This paper takes a look at how Pay Per Call advertising works and how the model is being leveraged by national marketers today. It will also examine how consumer search behavior, and, subsequently search marketing, is evolving to encompass media channels both old and new, and how today s direct marketers can take advantage. Pay Per Call Advertising: The Value of a Phone Call Lead One aspect most service-based businesses have in common is the phone 85 percent of businesses know their customer close rates from telephone conversations. And most businesses (in a variety of verticals from professional services to auto repair) prefer phone leads over website clicks by a ratio of 2 to 1, and would pay as much as 5-15 times more for a phone call than a click to a website 1. Clearly, the phone plays a critical customer acquisition function for these businesses. Enter Pay Per Call the model that enables these businesses to purchase phone call leads from the Internet on a performance basis. But how does a Pay Per Call ad system work, both from the perspective of an individual advertiser and an agency looking to offer Pay Per Call solutions to its client base? The Pay Per Call Advertiser Experience From an advertiser perspective, getting started with Pay Per Call is a simple 10 minute process that entails: Creating an ad by filling in simple business information Choosing a geography or location they want to service Selecting a business category Setting callable hours 1 Ingenio/Jupiter Research Executive Survey, 3/04 1
Establishing a price per phone call, based on what the competitive bid environment is like in their particular category and location The bidding on categories (versus key words) is a key difference between traditional clickbased advertising and the leading Pay Per Call products of today. Keyword management is a huge headache for businesses - a recent survey from emarketer claims that 40 percent of the respondents reported they manage more than 5,000 keywords per campaign. Category bidding simplifies the process for advertisers, many of whom don t have the time or the resources to manage complex combinations of key words. The categories are not unlike what you would find in the Yellow Pages today, and map to a behind-the-scenes library of key word search terms. All advertisers have to do is select the categories that best describe their business. Another key point is that Pay Per Call allows marketers the benefit of day-parting a benefit unavailable to online advertisers until Google introduced the feature in AdWords in late 2006. By pre-selecting the hours they are available to take calls, Pay Per Call advertisers are able to choose which times of day their ad will run. Advertisers can also direct calls to whatever number they choose be it home, office or mobile to ensure that no matter where they are, they can always interact with a potential customer. This helps guarantee advertisers only receive and pay for calls when they are ready to do business. After the set up process is complete, the Pay Per Call ad is displayed on the search results page after a consumer has entered a relevant query on a search engine or a mobile device. In some cases, audio versions of Pay Per Call listings may also be served through free directory assistance providers, such as 1-800-FREE-411 in response to a consumer query. The highest-bidding advertiser in a particular category gets showcased at the top of the list, with the others following in bid order. In addition to providing 1,000 characters of descriptive text, maps, coupons and hours, the ad displays a specialized, toll-free phone number, unique to the advertiser-publisher pairing. Advertisers pay only when a consumer calls that phone number as a result of seeing or hearing the Pay Per Call ad. Behind the scenes, the call is first routed through the Pay Per Call system for billing and reporting purposes, and then forwarded to the advertiser a process that is completed in a matter of milliseconds. To the consumer, the phone call is completely seamless. A Word About Click-to-Call Click-to-call and Pay Per Call are often used interchangeably in the media, which creates confusion. Here are some solid definitions to refer to moving forward. Pay Per Call: An end-to-end paid search advertising system that generates calls from a variety of online and offline media channels on a performance-basis. Click-to-Call: A technology feature that initiates a telephone call (via VOIP or regular phone lines) from a computer. The key point here is that click-to-call is an online-only connectivity method. Historically, clickto-call implementations have been used as online customer service tools, with no charge to either consumer or business to connect. However, with the rise of the Pay Per Call model, the traditional context around click-to-call has changed. Simply put, click-to-call refers to a consumer clicking to call a merchant, while Pay Per Call refers to an advertiser paying for a phone call from a consumer. Of course, a Pay Per Call system can use multiple options enabling the consumer to call the advertiser. Consumers can simply pick up the phone and dial a number in the ad, or they can connect via a click-to-call 2
button, which prompts the consumer to enter his or her own telephone number into the computer, then wait for the phone to ring with the merchant on the other line. Which is right for your business? If you re already driving sufficient customer traffic to your website, then click-to-call could provide an additional way for consumers to contact you (it is recommended, however, to feature a traditional phone number alongside a click-to-call link). Alternatively, if you re seeking to acquire new customers from paid search and prefer receiving leads in the form of phone calls rather than clicks, a Pay Per Call advertising system with visible phone numbers can help achieve that goal. While inserting a click-to-call link in a sponsored Pay Per Call listing is possible, side-by-side experience has shown that consumers still prefer to utilize the regular phone numbers by a wide margin. This was underscored by a recent Pike & Fischer report which concluded that several factors including privacy concerns and lack of industry support could hinder consumer adoption of click-to-call. Since the goal of Pay Per Call is to grow your customer base (rather than provide a connectivity experience), deploying an approach that reduces friction between buyers and sellers is critical. Advertiser Value Proposition In summary, Pay Per Call Advertising enables advertisers to: Pay only for leads as they come in. Pay the amount they determine a phone lead is worth for their particular business. No website required any business, online or offline, can benefit. Receive results in the traditional manner to which they are accustomed by phone. Because a phone number in a Pay Per Call ad can be syndicated via online, offline and mobile media, Pay Per Call offers advertisers a central place to manage one campaign and reach millions consumers via a variety of media channels in one fell swoop. Case Studies Several kinds of businesses are using Pay Per Call today; from national brand retailers to local mom and pop businesses. Key characteristics shared by successful Pay Per Call advertisers typically include: Highly-developed culture of customer acquisition Relationship-based/consultative sale Complex sale; Q&A prior to purchase Nathan Belcher is Vice President of Operations in charge of sales, marketing, and recruiting at Staffing Medical USA, a healthcare staffing company offering travel contracts for registered nurses. Nathan began managing the company s Ingenio Pay Per Call campaign in early 2005. The approach initially appealed to StaffingMedical USA due to its cost-effective nature. Pay Per Call allows granular budget control; because Nathan only pays for calls coming in, he is able to track his spend on a daily and weekly basis. Given the nature of the staffing industry, the majority of StaffingMedical USA s business is driven by phone leads, which is another reason why Ingenio Pay Per Call has made such an impact on the company. The phone, unlike the website form, enables StaffingMedical USA to develop an interactive, tailored sales pitch to each prospective client while engaging them in 3
a live conversation to establish a relationship. Nathan estimates that his conversions with Pay Per Call average 3.3 percent compared to pay-per-click conversions, which average 0.66 percent. Many national brands, such as 1-800-DENTIST, are discovering that Pay Per Call can drive traffic to call centers directly from the Internet. It enables direct response in the form of a phone call from an online ad, with complete visibility into how that online spend culminated in an offline conversion. While it varies based on the type of business and the amount of sale, across the board, advertiser feedback is that calls do convert better than clicks to a website. For example, a provider of cellular phones and plans finds that using Pay Per Call advertising generates three times better leads than clicks and a national floral service converts approximately 1 in 3 calls compared to 1 in 25 clicks. It s important to note these are industries where phone calls are a preferred method of interaction because, often times, the purchase is complex, or there is a question and answer period needed before the customer is ready to buy. You can imagine online retailers like Amazon for example being less interested in driving phone calls, while other retailers who run both e-commerce websites and support call centers seek to drive traffic to both. American Incorporators Ltd (AIL), one of the nation's top providers of incorporation services, has been running a Pay Per Call campaign for more than a year, but still estimates it spends about $10,000 a month on its pay-per-click campaign, which the marketing manager, David Clarke, deems moderately successful. He has no intention of scaling back on his pay-per-click programs, and instead is happy to supplement those leads with calls, especially because there are plenty of potential customers who prefer to pick up the phone to call his business. The Next Frontier: A Multi-channel Approach An added value of the Pay Per Call model is its ability to function in an offline world. As consumer search behavior evolves, new channels like mobile search, free directory assistance services, and podcasts are all tapping into pay-for-performance, ad-supported, monetization models. The potential for mobile advertising is an especially compelling opportunity for today s multichannel marketers. According to Jupiter Research, US mobile advertising spend will grow from $1.4 billion in 2006 to $2.9 billion in 2011. Specifically, Pay Per Call is emerging as the primary monetization model for mobile search, since phone calls make so much sense in a mobile environment. Why Pay Per Call advertising for mobile? It makes sense for mobile consumers, who already have the power to make a phone call in the palm of their hand. It makes sense for advertisers, who don't need to mess with WAP-enabled web sites or optimizing a web presence for a mobile screen. Pay Per Call s hybrid nature is also a plus when it comes to mobile advertising. When it comes to mobile search, it s important to make the distinction between mobile search (as in the mobile Web) and the act of searching for business information using mobile devices. As noted at MediaPost s recent Search Insider Summit, 80 percent of all mobile search and content interaction in the U.S. takes place "on deck" (within a handset application) as opposed to "off deck" (within the mobile Web or WAP environment). A consumer can search for a local Starbucks and circumvent the Web entirely by using any number of free directory assistance text messaging services. 4
Similarly, a consumer is searching for a local business on a mobile phone when she calls a free directory assistance provider looking for a nearby hotel from her cell phone. Regardless of whether the query comes through text or voice, advertisers can today purchase phone calls from these searching mobile consumers via the Pay Per Call model. As media continue to fragment and new consumer behavior takes hold, the definition of search will continue to broaden and advertisers will need simple, effective ways to buy leads from these new channels. Ad networks able syndicate listings across multiple environments and in different formats (both text and audio), while at the same time allowing advertisers to manage campaigns via a single account and online dashboard, will become critical. Given this shift in consumer behavior, it s important to consider a multimodal strategy when developing a search campaign. Outside of the Web, how are consumers looking for your business? What other channels or platforms are they using to find you? And, most importantly, how can you effectively reach these consumers in a way that s cost effective and trackable? Is Pay Per Call Advertising Right For You/Your Clients? As paid search advertising continues to mature, the emergence of new ad models and more channels - means more marketing options for advertisers. The one size fits all mentality won t work in some cases a particular advertiser might opt for clicks, another for calls, and even another might choose to leverage both. That said, Pay Per Call Advertising is ideal for: National accounts interested in generating phone leads to call centers or to regional branches Any business (large or small) looking to drive targeted, incoming phone leads from a variety of sources Service-based businesses who don t operate transactional websites Small businesses/merchants with limited budgets and marketing resources ### About Ingenio Founded in 1999, Ingenio empowers service-oriented businesses and individuals to maximize Internet commerce through the power of voice. Ingenio's suite of voice-commerce applications, including Pay Per Call, Live!Advice and Ether, are all designed to help the services economy flourish online, and have connected millions of buyers and sellers around the world. A profitable company, Ingenio produces 20 million minutes in v-commerce transactions each quarter, and works with top-tier customers and partners in both America and Europe, including AOL, InfoSpace, Microsoft, YellowPages.com and MIVA, Inc. For more information, please visit www.ingenio.com. Contact : Ross Weinstein, Director of Sales and Business Development ross@ingenio.com 5