Following the pay-per trail

In little more than a year, pay-per-call has invigorated the UK search marketing sector, enhancing the lead-generating capabilities of the internet with the power of the telephone. By Martin Croft

Search marketing is a growth sector of the online advert-ising industry at the moment, and the most exciting recent dev-elopment in search marketing, from the point of view of marketers, must be the launch of pay-per-call – or click-to-call – advertising.

Internet start-up Callgen began testing its service in April 2005, with a full-scale launch five months later. Miva launched its pay-per-call service in the UK last September, while Google is currently beta testing its pay-per-click service both here and in the US. Kelkoo, the online shopping comparison service owned by Yahoo!, is also trialling a form of pay-per-call. Overture, the search engine company also owned by Yahoo!, says it is “currently testing pay-per-call technology solutions for its search marketing advertisers in Europe and the US.”

Initially, the biggest users of pay-per-call are going to be companies that are already heavily involved in search marketing – such as the bigger financial services companies and the mobile phone industry.

Smaller firms will gain

However, over the longer term, most experts agree that the real impact of pay-per-call search advertising will open search marketing to the UK’s estimated 3.4 million small to medium-sized enterprises (SMEs). It is estimated that only around 15 per cent have websites, and most of these are little more than static brochures or price lists, not in any way set up for e-commerce or even any real interactivity with potential customers.

Pay-per-call allows even companies that have no web presence to get on the search marketing bandwagon.

But some experts go further, and argue that SMEs will desert their traditional advertising media of choice – paper-based directories and local newspapers – in favour of pay-per-call online search advertising.

Not so, argues Mike Kerans, senior vice president and general manager for pay-per-call at Miva. He suggests that, far from sounding the death knell for paper-based directories and local paper classified ads, pay-per-call is being enthusiastically welcomed by directory companies and newspaper publishers as another weapon in their armoury.

Kerans’ view is echoed by Philip Lowther, marketing manager at AP Information Services, one of the UK’s biggest directory publishers. He argues/ “To suggest that one new online advertising channel will completely wipe out print directories is akin to suggesting online news providers will see the death of the newspaper and magazine sectors. Advertisers will always look for the best advertising channel to suit the budgets, size, scope and operations of their company. In this respect, while pay-per-call may well offer a tempting advertising solution it will not necessarily suit every business.”

Miva has been a significant player in bringing pay-per-call to the UK, and has signed up a number of major advertisers and media owners – notably Express Newspapers, Trinity Mirror, Alliance & Leicester and the online price comparison service uSwitch.

Kerans points out that the conversion rate for inbound calls generated by advertising in traditional directories is around 40 per cent, and says that Miva is looking to deliver a similar percentage.

He stresses that pay-per-call offers two major advantages. It is effectively instant – the internet user sees a search result and can immediately contact the advertiser by phone – and the internet user is in control.

He argues that systems where you have to input your number and wait for a call back offer neither immediacy nor consumer control – just another telemarketing experience.

Real money maker

James Barrington-Brown, of rival pay-per-call company Callgen, disagrees. “We’ve found that between 40 per cent and 60 per cent of all the calls made are call backs. Consumers like them because they can set up multiple call backs, so, for example, if they are looking for an insurance quote, they can get five companies to ring them back and compare the quotes. We see call backs as the real money maker.”

Bruce Fair, commercial director of Kelkoo, says that his company’s site has been testing what he calls cost-per-call for the past two months, with results that have been so encouraging that the service is being further developed and expanded. “Cost-per-call takes us to the next level.”

While they might disagree on the merits of different variations of ⢠pay-per-call, Barrington-Brown, Kerans and Fair agree that the potential is huge – and experts from the online advertising world endorse that view.

Nigel Muir, managing director of independent search marketing agency DBD Media, says: “Pay-per-call will become a serious revenue driver for our clients in 2006.” He believes that it is particularly attractive for companies with existing call centre capability, for example in the travel, financial services and retail sectors.

He says: “In these highly competitive industries, it can be used to drive traffic during peaks and troughs. Conversion rates for telephone business are typically ten times the conversion rates on the internet, and average sale values are higher as companies have better opportunities to up-sell and cross-sell. Pay-per-call also allows companies with no website to take advantage of the power of internet advertising.”

David Hughes is a strategic marketing consultant and a digital marketing lecturer at the Institute of Direct Marketing. He says: “Pay-per-call is attractive because it harnesses the reach and cost-efficiency of the internet but delivers leads through a channel that many marketers prefer to manage leads through. Organisations that have not yet been able to adapt to internet-based lead generation can now, through pay-per-call, tap into the huge on-line lead generation market.”

And for the consumer, he adds: “A phone call to an organisation is a much higher level of commitment than an anonymous click to a website. This should yield greater conversion rates.”

Search marketing has already proved to be a phenomenally successful form of advertising for marketers from all sizes and types of company.

If pay-per-call or click-to-call is half as good as its fans say it will be, then the growth in the amount spent on search marketing over the new few years is going to be phenomenal.

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