• by Steve Smith , Staff Writer @popeyesm, February 22, 2007

The time is right to advance the mobile search model

Pay-per-call seems to be the performance ad model that mobile has been waiting for, and some think mobile is the platform PPCall needs in order to take hold. After all, when your busted jalopy languishes on the roadside, a quick mobile search produces the nearest tow service and a link to dial. Shouldn't that advertiser be ready to pay handsomely for that call?

"When I'm searching for a dentist on a mobile device, I really need one," says JumpTap's general manager of search services Adam Sorroca. JumpTap pushes PPCall links from online providers Ingenio and Idearc (SuperPages) onto the Alltel network, and is close to announcing search deals with other carriers. The model continues to make sense on paper, because a dialing link in a mobile search ad is the shortest distance between an advertiser and a highly motivated customer.

But PPCall on mobile continues to stall. Why? The field is waiting for wireless carriers to get their search strategies in place, for consumers to embrace mobile queries, and for advertisers to buy the concept. "It has a lot of promise going forward," says Julie Ask, JupiterResearch's mobile analyst.

Google and Yahoo expanded their cost-per-click inventory into the mobile arena recently. Sprint became the first Tier 1 carrier to integrate a major search brand, Windows Live Search, into its platform late last year, and it now runs PPCall links from Ingenio. "We have seen consistent growth on two fronts, the advertiser side and the distribution side," says Mark Barach, chief marketing officer at Ingenio.

Ingenio serves PPCall ads in 1 billion searches per month across both online portals and mobile for brands such as Allstate and Home Depot. For now, PPCall networks such as Ingenio and Idearc don't distinguish between online and mobile inventory, but the ads appear on msn Mobile, SuperPages Mobile, AOL Mobile, JumpTap, and go2. Ingenio's average bid price across categories is $8 to $10 per call, with some categories like mortgage consultants averaging from $33 to $54.

Consumer habits may be accommodating the PPCall model, as Ingenio finds that

70 percent of searches from the platform are for service providers, while 30 percent are mimicking desktop searches for real estate and financial services. "It shows how consumer behavior is starting to shift and people are using their devices as mobile computers," says Barach.

For advertisers, a mobile PPCall link doesn't even require a mobile Web presence - ideal for local service providers. "Where mobile becomes interesting is the way people use the phone," says Matt McMahon, vice president for products and services at Fathom Online, which uses PPCall. "It's a way to reach an audience on the go ... for entertainment, lifestyles, and travel," McMahon notes.

Ingenio says that calls convert to sales up to eight times more often than a click-through off a search ad. And McMahon agrees that the cost per acquisition beats other direct response methods handily.

The most common "impulse buy" categories for mobile search are auto repair, hotels, florists, locksmiths, and taxi services. But this means that the market will be driven by the same local service categories that have been slow to make digital buys. "Local businesses are not buying paid search, let alone paid mobile search," says Jupiter's Ask.

Distribution, inventory volume, and consumer behavior will have to come together to make the PPCall model work for content as well.

"The call-through rates are not that high to generate enough revenue," says Lee Hancock, CEO of go2, which uses PPCall in its popular mobile directories. For now, it is a seller's market for mobile display advertising, so performance models just don't pay off for publishers the way CPMs do. Until the market becomes flush with online banner inventory, Hancock would just as soon avoid CPA deals.

But while volume and audience remain scarce for mobile PPCall, this means that advertisers willing to experiment with the platform are getting a buyer's-market deal even at $8 to $10 a call. Extending an online PPCall ad into mobile might access a customer at his greatest point of need - when the car breaks down, the pipes are leaking, when a toothache is unbearable. "The pricing is incredibly efficient. In some cases one-tenth the price per call you get from other media," says Fathom's McMahon. "There is a clear opportunity for first-movers."