• by Steve Smith , Staff Writer @popeyesm, April 18, 2006

Given the industry's obsession with search engine marketing, it's easy to forget that up to 70 percent of small businesses are service-oriented. Local businesses like plumbers and attorneys still get much more business from a phone call than via click-throughs. But after years of search engine trials, the online pay-per-call model got real for some marketers in 2005.

"It has become a viable option because of the scale it is starting to acquire," says David Roth, director of search marketing at Carat Fusion, who has one client devoting up to 5 percent of its marketing mix to pay-per-call. Verizon SuperPages.com has a program which lets marketers bid on completed calls from a directory ad. Vendor Ingenio partnered with YellowPages.com and AOL, which processes 1.3 billion searches a month. The Kelsey Group projects that the pay-per-call market will double annually to reach $3.7 billion by 2010.

"It's been a wildfire," says Mark Barach, chief marketing officer, Ingenio. "This is like pay-per-click in 1999." Ingenio's ads in the sponsored listings area of AOL Search results carry discrete phone numbers the company tracks, then charges and routes to the advertiser. The system even accounts for multiple callbacks from the same customer, so marketers pay only for unique leads, not raw dial-ins.

And it's not just for mom-and-pop stores; "high-touch" services like finance and premium travel are buying in, Barach says. Carat Fusion's Roth uses pay-per-call as part of an integrated Web strategy for satellite TV service Dish Network. "When we advertise in a medium like search," Roth says, "we need to give people the chance to convert into a customer in whatever way they are comfortable."

Google is beta testing a click-to-call feature that rings a consumer's phone with a direct connection to the vendor, so for now the pay-per-call market is wide open. "We're getting attorneys, mortgage brokers, florists, private investigators," says Robyn Rose, vice president, Internet marketing, Verizon SuperPages. Marketers bid for clicks or calls in the same system, often using both for various sides of their business.

For businesses with little or no Web presence, pay-per-call is a good way to direct local customers to advertisers. But how do you sell offline businesses on a Web-initiated solution? "It's really a consultative sale. We are trying to educate the advertisers," Rose says. SuperPages is leveraging its full-service sales and local relationships, and its print component, to counter any future search engine challenge. Some SuperPages print directory categories now carry generic ads with a phone number that SuperPages routes through to the current top bidder for the keyword online.

While there are still bargains in the young pay-per-call auction space, some calls cost up to $30 -- enough to make Google or Yahoo rethink how they monetize pages and rank ads. "If I were running a search engine, I would find some part of the real estate for call ads that are at least as profitable as search ads," Roth says. "In 2006, the engines are going to look at the data. There is strong monetization potential."