• by Shankar Gupta , April 11, 2005

Ingenio this week will begin providing pay-per-call ads on America Online's search results pages, marking the culmination of a deal inked in January between Ingenio and AOL.

Pay-per-call ads, a recent innovation in online ads, look roughly like the pay-per-click ads that the search world has grown accustomed to--but in place of a referring URL, there is a specially assigned "800" telephone number, which connects the prospective customer to the business, and logs the call for billing.

The pay-per-call listings appear at the very top of AOL's search results page, above the other sponsored listings--provided by Google--and the organic results.

Pay-per-call is particularly appealing to marketers who don't have Web sites, or rely on personal contact to close sales. "The key strengths are that there are certain business types that have trouble valuing a click to a Web site, or don't have a Web site," said Marc Barach, Ingenio's chief marketing officer. "They're not running online shopping carts. For those types of businesses, they've been precluded from using advertising on the Web."

At Jupiter Research's Search Engine Strategies conference in New York City last month, AOL's Executive Director for Search and Navigation, Brendan Benzing, said AOL was "quite bullish" on pay-per-call ads. "AOL's stepping up because we have a lot of confidence in the model," Benzing said at a panel discussion about pay-per-call. "At the end of the day, businesses know the value of a call, and they're willing to pay."

Some of Ingenio's customers also say they welcome the prospect of pay-per-call ads. Stacey Fleece, a mortgage broker based in San Francisco, said she can establish relationships with clients much more easily by phone than by directing prospects to a Web site. "If I can get them on the phone, then I have the ability to discuss with them my history, my experience, and what I can do for them, and that's what closes the deal," Fleece said.

Pay-per-click ads, on the other hand, didn't allow her to distinguish herself from other area mortgage brokers.

"As a mortgage broker, my business is really built on very deep client relationships, and the pay-per-click model is not very effective for a business that's so relationship-driven," Fleece said. "It's very difficult to differentiate yourself in a pay-per-click model when you don't have a distinct product to sell."

Ingenio's pay-per-call model works similarly to the bid-based system favored by the major search engine's sponsored links. With Ingenio, however, advertisers bid on categories of business rather than keywords; Ingenio has defined 1,200 different business categories open for bidding. The minimum bid for a listing is $2 per call, which is between 10 and 20 times more than the minimum bid for sponsored pay-per-click links on the major search engines. Barach said that many categories of businesses are going for more than $20 per call--and that, on average, businesses appear to be willing to pay between five and 15 times more for a call than for a click.

He said that some of the most hotly contested categories before the launch included finance and real estate, automotive, health, and various home improvement trades. Barach declined to disclose the total number of businesses that have signed up for pay-per-call for "competitive reasons."

Ingenio has already been distributing pay-per-call ads through FindWhat.com since October.