Commentary

Local Search: The Next Big Ring

Don't ever accuse the dot-com hype machine of taking a nap.

During lunch last week with a friend of mine and public relations pro, he said, "You know that rich media's the next big thing, right?"

Okay, so he said it to provoke a reaction, and it did. Rich media advertising dollars are rising, along with the search engine marketing sector and several others. The press will undoubtedly root for rich media. There are only so many stories about Google and Overture any reporter can take.

I'm just waiting for the day when my mother reads the inevitable story in Time magazine and calls me, saying, "David, I hear search engine marketing is yesterday's news. If you need to move back home for a while, I understand." Mom, trust me, I'm alright.

Even if PointRoll and Eyeblaster both go public and their stocks soar into the triple digits next year, it's wise to keep an eye on some of the next big things that are emerging in the search space. While the entire online advertising industry is new and search engine marketing is far from sprouting wrinkles (let alone from getting its driving license), developments such as local search, international search, wireless search, shopping portals, desktop search, and multimedia search are just now taking their first steps.

Local search in particular brings out some contenders claiming they're the next big thing. Ingenio's one such company, and it makes an impressive case.

To be fair, Ingenio CMO Marc Barach is anything but a hype-pusher. Throughout the conversation, he proved to be uncharacteristically grounded for a dot-com officer, except for two caveats: 1) He spouted some growth projections that made my head spin, and... 2) He might speak conservatively, but he passionately believes - whether or not he says it aloud - that he really is working for the next big thing.

The two obvious questions are: What's so hot about Ingenio, and why is it so hot?

Ingenio's the pay-per-call company. Right now, they can rightfully be referred to as the pay-per-call company since it's the only known entity in the space, outside of FindWhat, which is a distribution partner of... Ingenio. Ingenio isn't only a pay-per-call company - it's been in business since 1999 and has a number of other technology solutions, platforms, and services. According to Barach, pay-per-call is now the locomotive powering Ingenio, and everything else is along for the ride.

The premise behind pay-per-call is that not every company is prepared to measure clicks. Some that currently participate in search engine marketing are in over their heads, some are too intimidated to begin with, and others still don't have a Web presence to speak of.

Barach knows he's not targeting businesses that have avoided going online. However, based on figures he cites from sources such as InfoUSA and The Kelsey Group, he's licking his chops over the 4 million businesses that have basic 'brochure-ware' sites and some of the 250,000 companies with a more developed Web presence.

Here's the gist of how it works. An advertiser enrolls online, listing their phone number, description, market (e.g., city, miles from ZIP code, national), categories where the ad should appear, the bid price-per-call, and daily budget. Ingenio assigns a unique toll free number to each advertiser, and this number is displayed prominently in the paid search ad. Calls are forwarded to the advertiser's original number. The highest bid nets top placement in search results.

What's appealing to advertisers is that they tend to have a good sense, if not detailed metrics, on the conversion rate for incoming calls. Consider a flower shop that receives 100 calls per week with 20 callers placing orders for an average of $50 apiece. The shop may be comfortable bidding $3 per call, for a cost of $300 and gross sales of $1,000.

This is presumably more helpful to the florist than directing people to the Web site built on Geocities. Consider scenarios with higher conversion rates, higher sales, and an emphasis on customer retention and customer lifetime value - any of these will give advertisers reasons to dramatically raise the bid price above that hypothetical example.

Ingenio's not out to destroy Google's paid search model. Barach doesn't believe one innovation must replace the prevailing standard. There's room for pay-per-click and pay-per-call in search engine marketing, along with pay-for-performance deals and other models.

What Ingenio does want to do, is prevent anyone in the search engine marketing space from getting too complacent. It has a real answer that addresses real concerns. Coming up with such answers is what has made Google and Overture the powerhouses that they are. Ingenio's fight against complacency allowed it to change its business model - not out of desperation, but by realizing an opportunity.

If that's why we're still high on hype, then keep it coming.

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