• by Mark Walsh  @markfwal, November 20, 2007

AT&T said Monday it plans to acquire advertising company Ingenio and integrate its technology into the carrier's online Yellow Pages and other services.

Ingenio's service lets advertisers place pay-per-call ads online, on mobile phones and in print. Marketers don't pay unless they receive a customer call through an ad. Ingenio issues the numbers to advertisers and then tracks calls for billing and reporting purposes.

The acquisition highlights growing interest in mobile advertising by wireless carriers and online companies alike. Earlier this year, AOL bought mobile ad platform Third Screen Media for an undisclosed amount. Google's recent plan to create a new mobile operating system, meanwhile, could help the company expand its ad services to cell phones.

AT&T will incorporate Ingenio's pay-per-call services into its local directory services including YellowPages.com, AT&T Real Yellow Pages and 1-800-Yellow Pages. "As advertisers add performance-based advertising to their marketing mix, this investment makes sense for our business," says Ray Wilkins, AT&T group president for diversified business, in a prepared statement.

A selling point of performance-based models such as pay-per-call is that they generate higher-quality leads and better return on investment because marketers only pay when consumers take an action (beyond just a click).

"AT&T probably looked at the future of online advertising and said 'this is an important method of connecting customers with businesses and we want to have this as a core capability,'" says Greg Sterling, founding principal of Sterling Market Intelligence. For the phone giant, it was probably easier to buy than build the type of pay-per-call service Ingenio offers, he adds.

Founded in 1999, Ingenio has developed a pay-per-call ad network that includes publishers such as MSN Mobile, AOL and AOL Mobile, Mapquest and JumpTap.

An AT&T spokesman says Ingenio will continue to operate its business as usual until the deal closes. Over time, AT&T will evaluate the Ingenio's existing relationships with other companies to determine how to proceed.

Financial terms of the deal were not disclosed. But Ingenio board member Kevin Harvey, who is also a general partner at Benchmark Capital, the company's largest shareholder, described the terms as "attractive" to Ingenio.