• by Mark Naples , May 19, 2006

It was the hottest thing two years ago, wasn't it? Pay-per-call was all the rage long before anyone made a dime on it.

One of the funny things about our business is that, what's hot before it makes a dollar usually cools down in terms of buzz during the ramp up to the first annualized billion dollars in revenue, before becoming hot again. This is what we're experiencing with e-mail, which I recently predicted is about to really take off in the next 18 months, from its 2005 level of roughly $850 million to well maybe $2 billion in 2007. It's also true about Pay-per-call.

Huh? Pay-per-call? I'll bet you thought that pay-per-call proved too difficult to implement to ever gain critical mass, didn't you? Well, if you think of e-mail as gaining the foothold that will soon take it to loftier heights, you'd better begin thinking about pay-per-call, because it suddenly comprises two percent of all interactive spending, according to the Kelsey Group. Kelsey predicts that it will surge to 10 percent of total interactive spending in 2010, which translates to more than $3 billion, if you believe some recent keynoter VCs.

If ours is presently an industry with $16 billion in transactions, just to pick a number, by my math, that makes pay-per-call a $320 million business today. So, let's call it a third of e-mail. See? It's larger than you thought already, isn't it?

Of course, pay-per-call is really only suited to local merchants that have little business with the Web. You know--dry cleaners, plumbers, electricians, some service providers like lawyers and mortgage brokers, too. Whichever segments take up most of your Yellow Pages are the ones that are probably spending the most in pay-per-call. For businesses that can transact online, there's not so much of a value proposition.

When I think of pay-per-call, I immediately think of Ingenio, which pioneered and trademarked pay-per-call in 1999. Since that long-ago year, Ingenio has partnered with AOL, Smartpages.com, The InfoSpace sites, including Switchboard.com, and Yahoo in building a serious business. Let's just say that nobody is doing more in pay-per-call than these guys. And while the average price per call was $5.50 as recently as a few months ago, Ingenio is expressing it as a range between $8 and $10 per call today.

"Compare that to 55 cents per click, which is the average among search engines, and you'll see how we can know how much more valuable this service is, especially when you consider that both are managed completely via automated bidding software so you know that these are not artificially inflated prices," said Marc Barach, Ingenio's CMO.

Barach is one of the guys who would have been tabbed an "evangelist" back when that was a cool title to have, you know, before there was such a thing as "revenue" in our business. I say that only with admiration, because this guy has been tireless in selling pay-per-call to a not-always-so-receptive audience.

So, pay-per-call really has arrived now. Where is it going? We've already established it's going up. But how will it get there? Ingenio's announcement two week ago that it had entered its second partnership with a free 411 service, through which it'll serve text pay-per-ads to mobile phone users, should accelerate its arc. As my colleague, OnlineMediaDaily reporter Shankar Gupta reported on May 4, pay-per-call text ads will be displayed when a user searches for a local business using the SMS 411 service, and if the user wishes, he can highlight and click the number to automatically call. When the call is made, the advertiser is billed for the ad.

Seems almost like a no-brainer, as long as Ingenio's taxonomy sees to it that the most relevant ads get served every time. If you've been following this company, you know that such will certainly be the case more often than not. After all, they've not only been building a company, they've been building an entire segment.