• by Laurie Sullivan  @lauriesullivan, June 19, 2012

Businesses spent $132.8 billion in the U.S. last year on local ads and about $68.4 billion -- or 46.5% -- aimed to drive telephone leads, according to a BIA/Kelsey report that highlights the trend toward call-based ads.

Fueled by mobile devices, U.S. small businesses spent $41.1 billion on local advertising. Of that, $24.7 billion -- or 60.1% -- of all SMBs earmarked budgets for generating telephone leads, said BIA/Kelsey analyst Matt Booth.

About 11% of companies now use call tracking to follow leads from the Web, up 5% in one year.

"Call conversion from a local search on a desktop local is 7%, once the landing page is viewed, compared with 57% from a mobile device," Booth said. "Mobile applications can drive up to 62% of telephone calls."

By 2015, the number of local search queries on desktop and mobile devices will "equal each other." Booth forecasts call volumes from search -- organic and paid traffic --will pale in comparison to calls generated from mobile devices by 2016. BIA/Kelsey forecasts 70 billion calls from the Internet and mobile to all U.S. businesses that year, with most of them coming from mobile devices.

The report, titled "Call-Based Ads: Eliminating the Unknown From Advertising," provides a historical context, explains the foundation for growth and provides market forecasts. It also highlights data from BIA/Kelsey's ongoing "Local Commerce Monitor" study, highlighting that small-business advertisers report a phone call, even more than a personal visit to their store, can become the most valuable new business lead.

The research firm expects to release the full report next week at a conference in San Francisco.

The report also suggests that query volume will enable downstream businesses to sell product and services, as well as generate telephone calls. Booth said call-based advertising businesses need the ability to redirect calls, enabling the growth to parallel the paid-search market. This media grew supported by queries or searches on categories, such as cars or plumbing. He estimates that about 22% of all call traffic will flow through paid-search listings.

Booth said that in time, mobile searches will reflect city site, local and offline. The conversion of category calls will grow from 6% to 12% by 2016. Google will also drive growth.

Earlier this year, Google began offing a service that splits the keyword bid between calls and clicks. The bid per call allows marketers to bid for phone calls, as well as clicks, when Google serves search ads on computers and tablets. Booth said the algorithm enables marketers to optimize performance across leads. "With this service, I expect Google to drive this call-based ad market," he said.

The average U.S.-based business received 10.9 calls per month from desktop search last year and 34.7 calls per month from mobile, including mobile search. In 2013, the average U.S.-based business will receive 13.8 calls per month as a result of desktop search and 80.9 calls from mobile, according to the report.

An influx of calls will create challenges. While the research shows that between 10% and 30% of calls are high-quality lead-based calls to a business, the massive amount of incoming calls -- combined with a high percentage of unwanted calls -- opens up issues related to analytics and call quality.