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Pay Per Call vs. Call Tracking: Walk Before You Run

  |  August 3, 2006   |  Comments

There's a problem in the current pay-per-call model. There's also a solution.

There's been a tremendous amount of talk about the pay-per-call model as of late.

Many of us are closely watching this local search sideshow. We wonder whether paying for a more tangible phone call will help to encourage SMEs (define) to adopt Internet advertising. We wonder if this advertising model will be more affordable and yield greater returns for local businesses.

After all, thanks to the Yellow Pages' rich history, a phone call is the lead generation unit most SMEs are familiar and comfortable with. So why are so many of those who are intimately familiar with the current pay-per-call models quietly shaking their heads? Because pricing variances, product complexities, and ad-serving unpredictability don't mix well with small business advertising.

Though PPC (define) does share some of these characteristics, pay-per-call further exacerbates the issues and compounds an already complex problem associated with small businesses adopting Internet advertising, a problem many have spent years working to overcome.

One could argue the few providers that offer local ad inventory on a pay-per-call basis currently don't have a solution for small, local businesses. This is due to a complex, open-market bidding system that lacks consolidation tools and inventory and has rigid keyword-to-category mapping and a national ad-serving bias.

Many who service small businesses are attempting to reconcile the complex pay-per-call landscape and translate it for their clients. Let's not forget it took years of innovation, including the creation of new intermediaries, cross-platform application development, automated and consolidated bid and performance management, and simplified pricing solutions to simply start adoption of PPC advertising for small businesses.

So despite recent fanfare, pay-per-call is years behind its pricing model predecessors. In a recent column, my colleague Pamela Parker points out several challenges associated with pay per call. She questions whether it has "jumped the shark," meaning "the acquisitions and related hype have nowhere left to go."

She hit the nail right on the head.

Currently, pay per call's opportunity cost is far too high for those who manage small business marketing budgets. When an SME marketing budget is secured, the budget must be used, spend must be predictable, and delivery must be fluid. None of this is possible with the currently available pay-per-call models.

Yet phone calls are a fundamental measure of advertising success, particularly, as Pamela points out, for "local businesses, service businesses, those selling high-consideration purchases, or any combination of the three."

So, how do you walk before you run? Adoption starts by tracking phone calls.

Call tracking and pay-per-call are very different concepts. But in today's gold rush, the market place does an extremely poor job at differentiating between the two.

Call tracking has been around for decades. But when we struggle to help small businesses understand the value of migrating their ad dollars to the Internet, we must be equipped with every available tool to prove value. Call tracking is a simple, cost-effective, scalable, intuitive method for accomplishing this. It also raises small business awareness of phone calls as a potential method for paying for future ads.

Using a unique local or toll-free number, an advertiser can track all phone calls associated with his interactive marketing efforts. In this way, the SME can understand the relative cost associated with paying for advertising on the basis of a call, without being confined by the pay-per-call model's limitations.

Ironically, those who currently push call tracking in interactive campaigns aren't really the bastions of innovation; they're the present owners of the SME relationships. For these Yellow Page and directory publishers, demonstrating local ad return is fundamental to advertising. Yellow Pages publishers understand the most important aspect of small business advertising is the SME relationship. Call tracking is an obvious way to help small businesses understand their ad campaigns' performance and thus help ensure that relationship remains intact for years to come.

Currently, pay per call is just a new payment method for the same local search inventory we've been purchasing for years without the same supporting infrastructure. The idea of talking with small businesses about bidding on a call basis, within the confines of a finite budget and no assurances of volume, isn't a conversation most Yellow Pages sales reps want to have with their prospects.

Regardless of how a local business pays for Internet advertising, it's in everyone's best interest to provide call tracking as part of performance monitoring efforts. It's the obvious first step in the convergence of Internet advertising and phone calls, especially for local businesses.

Want more search information? ClickZ SEM Archives contain all our search columns, organized by topic.

Phil is off this week. Today's column ran earlier on ClickZ.

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ABOUT THE AUTHOR

Justin Sanger Justin Sanger is founder and president of LocalLaunch!, a Chicago-based marketing firm recognized as a premier local Internet marketing company for small- and medium-sized businesses. Justin launched that business in 2003, six years after founding Internet marketing strategy firm Pulsity. An expert in local Internet marketing, Justin has over a decade of Internet marketing leadership experience. He's frequently a featured speaker on the topic of local search at industry events, including Search Engine Strategies. He's written on Internet marketing for multiple media and news outlets, including Investor's Business Daily. Justin was an Ernst and Young Entrepreneur of the Year Award nominee.

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