Pay
Per Call Explained
This segment focuses on defining Pay Per Call
advertising, how it works and what the opportunity
is.
Pay Per Call: Who is Using
it?
This segment will cover the different kinds
of businesses using Pay Per Call and the results
they are seeing.
Pay Per Call and Click
Fraud
Click fraud is a growing concern among paid search
advertisers, especially smaller businesses who
don’t have the deep pockets to weather click
fraud scams. Pay Per Call has emerged as a way
to advertise online, without click fraud risk.
Ingenio
distribution partner, AOL
Marc Barach joined Ingenio in 2002, bringing
to the company a 20-year career in consumer services,
technology and Internet marketing and served as
a speaker on the SES San Jose 2006 panel titled,
"Search & Phone Calls".
The Pay Per Call Opportunity Explained with Marc
Barach Chief Marketing Officer, Ingenio, Inc.
What is Pay per Call and why may it be more beneficial
for small businesses than Pay per Click? In the
11th August 2006 edition of e marketing talk show,
Cindy Turrietta and Brooke Schumacher talked about
this fast moving young industry with Marc Barach
of Ingenio. Marc brought 20 years of experience
in the consumer services, technology and internet
marketing industry to Ingenio and gave a very
informative talk at SES 2006 in San Jose.
Pay Per Call Explained
In the first segment Marc talked about what is
Pay per Call and how it works. Even though there
are 70 to 80 million internet users in the US,
less than 2% of all US businesses advertise online.
The total advertising spend on the Internet was
11 billion dollars in 2005; whereas the total
advertising spend in the US during the same year
was 270 billion dollars. So why are a large number
of businesses avoiding online advertising?
Marc explained that about 70% of US businesses
do not have a website, or if they do have a website
it is non transactional i.e. there online ad is
like a brochure rather than a proper website.
Many small businesses don’t have the marketing
budget that would allow them to optimize or to
create a really nice looking website that is going
to convert visitors.
Businesses that do have a website could opt for
the Pay per Click service offered by Google and
Yahoo, but this service does present some problems.
It is very hard to track business when using the
Pay per Click service. The marketers need to purchase
special software to track clicks. There is only
an approximately 4% transaction rate for Pay per
Clicks i.e. when people click into your website,
4% turn into some kind of transaction and a lot
of people just read and click.
Apart from this, the complexity of keyword bidding
is a turn off for many businesses, especially
small businesses. In order to be an effective
pay per click advertiser you need to have 20 or
50 or even 500 different keywords that you bid
on and you bid on each keyword separately. Each
keyword has a different price and even though
Google has tried to streamline the pay per click
process, the complexity of keyword bidding is
still the number one problem.
These issues led Ingenio to realize that there
is this huge opportunity to service this segment
of businesses who want to be found online but
don’t just want to have a sole choice of
buying a click and that is why they created a
fast moving young industry called the ‘pay
per call’ product. As the name suggests,
instead of buying a click to their website the
advertiser is able to buy a call to their business
from a listing that runs online in response to
a specific query that someone does on a search
engine. So the advertiser’s ad runs for
free and they only pay when their phone rings.
This enables businesses to get potential customers
on the phone with their telemarketers or their
sales force and really sell to them at a more
personal level. Marc pointed out that at the end
of the day what businesses really want is to grow.
“They don’t really care whether you
drive consumers to their website or to their phone.
Businesses want good customers coming in at the
right price so that they can convert them to business.
Almost all businesses are very telephone oriented
and are very used to receiving calls, turning
those calls into customers and then building long
term relationships with them.”
Ingenio hired Jupiter to study this market for
them. A key finding of this research was that
85% of businesses, particularly small businesses,
know what their close rates are from phone calls
that come into their business. This is critical
for businesses that have the confidence and knowledge
that when someone rings them they can turn that
call into a sale. As a result, such businesses
prefer to “buy advertising to get that phone
to ring” rather than using Pay per Click.
Pay Per Call: Who Is Using It?
In the second segment, Marc talked about how
Pay per Call works and who is using it.
Replying to Brooke’s question about how
the Pay per Call pricing compares to the Pay per
Click pricing, Marc replied that depending on
the business category, Pay per Call pricing is
the same or lower that the Pay per Click pricing.
Pay per Call provides you with “the value
of having that consumer in real time talking to
you on the phone with the attendant higher close
rates. The close rates in this business are generally
in the 1 out of 3 range and that compares very
favorably with what happens on the web (i.e. the
Pay per Click campaigns) where you have a 2% close
rate.” The conversion rate of Pay per Call
is much higher than the rate for Pay per Click.
Pay per Call has been extremely popular with financial
services businesses like insurance, real estate
and mortgage loans. Home improvement became a
very big category and covered a whole spectrum
of activities, like kitchen remodeling, driveway
resurfacing and general construction. The travel
industry has also been a big user of Pay per Call,
especially for complicated travel sales like cruises,
vacations and other package vacations etc. which
are consultative sales. Real Estate businesses
are also seeking Ingenio’s services. Apart
from this, some medical businesses are also starting
to use Pay per Call. Currently, Ingenio is serving
over 1200 different business categories.
One of the things that advertisers do when they
sign up is that they set a fixed and recurring
time schedule in their system and their ads are
only served during the call windows that they
specify. For example, if you shut your office
at 7 pm sharp and if someone (i.e. the potential
customer) does a search at 6:59, finds your company
in the listing and calls you at 7:01, Ingenio
puts the call through but it is an unbilled call.
So you may end up answering the phone or the customer
will leave a message but you’ll never need
to pay after your call window closes.
Marc went on to give a few more details about
how the Pay per Call system works. He informed
listeners that Ingenio lists the actual phone
numbers of all businesses so that they are visible
to the consumers. This system works much better
than a click to call button because research has
shown that consumers are much more comfortable
just dialing phone numbers. In controlled test
cases you actually get more consumers calling
businesses when they can see the number as opposed
to clicking on a click to call button.
Marc explained that “the numbers come from
a bank of numbers that Ingenio holds, that we
age like fine wine to make sure that they are
clean and then are no prior calls coming on them.
They sit in a database and when we serve an ad
out to one of our partners like AOL- when the
consumer is actually doing the search- we append
a unique number to that ad that represents the
merchant and the partner (e.g. AOL) where it is
running. That number sticks with the advertiser
and that becomes the tracking mechanism.”
This is necessary because Ingenio needs to let
AOL know that a call was made to e.g. “Joe
the Business Architect” as opposed to a
different partner like Infospace, “where
when someone were to call the same advertiser
we would need to track that separately so that
Infospace can know and share in the revenue generator
from that call”.
When an advertiser joins Ingenio they get their
account, they log in and they can see the call
records i.e. they can see all the calls that came
in through their Pay per Call listings and whether
they were answered, the duration of the call,
the phone number of the caller and the repeat
call behavior of a given caller. Ingenio charges
on the lead and not the call so if the same customer
i.e. the same phone number dials back anytime
within a 72 hour period, it is considered to be
the original lead and is charged only once. In
addition to this advertisers get a report e mailed
to them at the end of the day that shows all the
activity of that day in case they don’t
feel like logging in to their account to see it.
At the end of this segment, Cindy questioned
Marc about how Pay per Call campaigns are optimized
and whether a creative is designed and AB testing
is done. Marc told listeners that optimization
comes to play in the creative itself and in the
offers that are made within the creative. Many
of Ingenio’s customers set up multiple listings
and multiple ads and then they track each one
to get a sense of what is working best for them.
Pay per Click and Click Fraud
Did you know that 14% of click revenue is fraudulent?
This figure was released by a company called Outsell
(a market research firm) after very in depth research
and this actually the smallest figure suggested
about the degree of the click fraud going on in
the industry. So click fraud is quite rampant
and it strikes the very heart of the value proposition
you pay where someone has the action of clicking
into your website and it some of those clicks
are fraudulent it is very discouraging. Click
fraud is particularly damaging for small businesses.
Click fraud is what happens when people click
on your ad (that appears on the search engine’s
results page) without having any intention of
doing business with you. They click on your ad
to draw down your budget e.g. a competitor might
repeatedly click on your ad to draw down your
budget and therefore bump you out or waste your
money or the crime is committed by affiliate marketers
who earn money through these clicks. As a result,
they create false clicks to generate revenue for
themselves.
Google and Yahoo have been working very hard
to develop better fraud detecting algorithms,
but it is not fool proof. The recent court cases
involving Google and Yahoo has resulted in the
industry being much more open about click fraud
and are involving the advertiser much more in
the solutions around it such as better credit
policies, better customer services related to
it and better communications etc.
The benefit of Pay per Call is that:
• When you’re talking on the phone
it is very easy to detect whether or not the caller
had any genuine intention of doing business with
you or “a call comes in from some far away
place and you can just smell that something was
wrong with it”. According to Marc, the main
problem with Pay per click is that the advertisers
are not able to be engaged with customers in real
time. At the end of the month they get a report
that shows all the clicks they paid for and that
is it.
• Since Ingenio doesn’t bill on every
call, the whole concept of drawing down your competitor’s
budget goes out the window because of the way
we have set up our system and this removes a giant
incentive for fraudsters.
• Ingenio has been able to build very strong
pattern and fraud detection algorithms from day
one since they were well aware of the issue. When
Pay per click started 7 to 8 years back they weren’t
prepared to deal with these fraud issues. So whereas
Pay per click has to play catch up, Pay per call
has been able to build strong defenses from the
get go.
Marc was very proud to announce that since this
Pay per Call product was released 2 years back,
there hasn’t been a single incident of problematic
fraud. Ingenio’s service department helps
advertisers’ tweak their ads to make them
more effective.
Pay per Call can benefit search marketing firms
and Ad agencies. Ingenio is doing business with
almost 50 different interactive agencies (agencies
that serve advertisers) at the moment and provides
them with the “Agency API” i.e. the
Automated Program Interface. This allows an Agency
to tap directly into Ingenios system and do it
in their application environment. It makes their
lives a lot easier because they can do business
in the way they like- using a reporting format
that their customers are used to. So Ingenio basically
provides them with raw data which the agencies
then use in their own reports etc.
You can identify a Pay per Call ad because typically,
e.g. in the case of AOL, the number one listing
on the page comes from Ingenio Pay per Call, and
even though it looks kind of similar to a Pay
per click, what makes it unique is a little green
phone icon and a phone number prominently placed
in the listing. If you click on the link on the
ad, it opens up a details page about the business
that has up to a thousand words of text, coupons,
maps, hours when staff is available etc. This
page is hosted by Ingenio and the advertisers
build this page when they sign up. This page in
effect becomes a one page website for many companies.
The company is never charged when the consumer
clicks on the link. They are only charged when
a consumer calls them up.
Marc encouraged listeners to visit Ingenio.com,
experiment and find the correct marketing mix.
As is the case with most success stories, he happily
remembered how when he “used to speak about
this idea (i.e. Pay per Call) at conferences e.g.
at SES people used to think we are crazy –
they thought it was insane, and then we ploughed
ahead and launched this product at the end of
2004 and it really took off in 2005”. As
a result, in the words of Brooke “we’re
not so crazy any more”.
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