Agencies and Pay-per-call: A Perfect Match?

  |  February 22, 2006   |  Comments

Pay-per-call advertising players are aggressively courting SEMs and media agencies.

Vendors and publishers who stand to benefit from pay-per-call advertising are pushing its benefits to SEMs and media buyers, hoping to tap into budgets larger than individual local marketers may command.

According to the latest Kelsey Group research, performance-based phone leads or "pay-per-call" revenues in the U.S.' are expected to grow to $3.7 billion, in both online and offline media, by 2010. Providers in the space are gaining distribution partners for their listings -- Ingenio has AOL, Miva, and Local.com; eStara has SuperPages.com and Amazon's A9; and Jambo has Infospace.

While much of the growth is expected to be driven by local advertisers, more and more agencies, both media buyers and SEMs, are getting into the game. Ingenio works with more than 30 agencies, including Performics, Range Online Media, Carat Fusion and Wahlstrom Interactive. eStara lists Ogilvy, Digitas, and Carat among its agency partners.

"Lots of agencies are being challenged to constantly move the bar for ROI. By incorporating a 'click-to-call' button into creative, we're able to create a quantifiable ROI that can increase conversions by as much as 25 to 50 times," John Federman, CEO of eStara, told ClickZ News. In eStara's parlance, "click-to-call" is the infrastructure that allows a call to be initiated online and completed on a telephone, while "pay-per-call" is one business model of click-to-call.

For the providers, benefits to working with agencies clearly include access to key national advertisers and a quicker path to critical mass, because agencies can deliver repeat business from multiple clients.

"More than half of the spending for pay-per-click advertising comes from agencies. The growth of Google and Yahoo is in part a result of their ability to reach out and work with agencies. That lesson was not lost on us," Marc Barach, Ingenio's CMO, told ClickZ News.

As part of its push to be more attractive to agencies, Ingenio in August developed an API (application programming interface) to enable SEMs with their own bid management tools to manage Ingenio's pay-per-call listings through it. DoubleClick's Performics unit has integrated Ingenio into its DART Search and DART for Advertisers platforms, and manages pay-per-call campaigns as part of its full-service offerings.

"Pay-per-call appeals to online advertisers with a call center, national brands that want to meet their audience locally," Cam Balzer, director of search strategy at Performics, told ClickZ News. "They're typically in lead-based businesses like financial services or home services, and they're looking to extend and grow. Our clients have seen the value of search, and many are now in an expansion and innovation stage."

Ingenio's push to media buyers also includes the provisioning of account teams to assist in the legwork, from pitching a client to creating and revising ads. Though the company provides optimization services to all of its clients, Barach said the level of service for agencies is higher and more interactive.

Pay-per-call provider Jambo, which offers agency-like services itself and also works with agencies, has found the service agencies provide to be key to pay-per-call's growth, according to Rick Rosen, Jambo's VP of marketing and business development. "Merchants large and small want to be served by someone. They don't want to have to deal with a self-service auction model where they have to sit and watch all day," Rosen said.

Besides generating volume, agencies can also help clients understand the value of a phone call. According to Rosen, most merchants who try to estimate the value of a phone call will usually over-estimate their average sale and the number of calls it takes to close a sale. If they end up paying too much for the calls, they would not continue advertising, so it's in the vendor's best interest to find the price that makes sense, he said.

"You can get a lot of people to say 'yes' once. Every merchant wants to find new business," Rosen said. "But if you don't deliver, the merchant will figure it out and not renew. So many sellers of advertising depend on the lack of transparency of return, but eventually the merchants figure it out, and it rears its head as churn. It doesn't make sense not to prove what you're delivering."

Dave Meirowitch, sales manager at performance marketing firm SendTraffic, agrees that managing client expectations is critical at this early stage in the format's development.

"There's some education to be done. It often has that 'too good to be true' novelty. We make sure we have a very detailed contract to set the right expectations about how many calls to expect and how much they'll likely pay," Meirowitch said. "We make sure not to exaggerate the volume and be realistic about goals. At this point, it's not going to replace other kinds of advertising, but it can work great as an add-on."

SendTraffic has managed a few pay-per-call campaigns for clients through Ingenio, mostly for B2B clients looking for more volume, he said.

Pay-per-call vendors are trying to sell agencies on the idea that pay-per-call will help them expand relationships with clients and bring in those new to online advertising.

"It brings a very different and sizeable audience into the online advertising fold, one that may not have been motivated by buying clicks or banners," said Barach.

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ABOUT THE AUTHOR

Kevin Newcomb

Kevin Newcomb joined ClickZ in August 2004, covering search marketing and other online marketing topics. He has been reporting on web-based businesses since 2000.

Before the bubble burst, Kevin was a marketing manager for an online computer reseller, handling copywriting, e-mail marketing, search marketing and running the affiliate program.

With a combination of real-world marketing experience and years of business journalism, Kevin brings to ClickZ a unique ability to deliver news and training materials that help online marketers do their jobs better.

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