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AOL goes live with pay-per-call ads
By Juan Carlos Perez

America Online Inc.'s search engine on Friday began displaying text ads that provide a phone number to reach the advertiser, a twist on the conventional approach of having these ads link to advertisers' Web sites.

Text ads that are contextually relevant to search-engine queries and that run along with search results have become immensely popular among online advertisers. This type of ad has fired up the once lethargic online advertising market and turned Yahoo Inc.'s Overture unit and Google Inc. into cash cows.

These ads are described as pay-per-click because the advertiser pays the search engine company only when someone clicks on the ads. Advertisers bid for placement on the list of text ads; the higher the bid, the higher an ad's placement on the list.

These text ads have featured mostly live links to advertisers' Web sites. But now AOL has partnered with Ingenio Inc. to give advertisers the option of having this type of ad run instead with a toll free phone number.

Advertisers pay whenever someone calls. Since Ingenio provides the phone numbers to the advertisers, it knows when a call was made as a result of seeing the ad displayed on a search engine. Ingenio automatically routes the call to the advertiser's regular phone line.

Ben Harrison, a commercial real estate broker in Oakland, California, has been testing Ingenio's pay-per-call service for several months and is excited about its possibilities.

Harrison, who works at Colliers International Partnership, has, like his broker peers, a Web page hosted by the company but the IT set-up doesn't allow the brokers to track incoming traffic, he said. Consequently, he hasn't spent money on pay-per-click ads. However, the Ingenio service gives him a control panel to review call statistics and patterns and adjust his bids accordingly, he said.

This capability is important, particularly since Harrison envisions using these ads to not only promote his services in general but also possibly specific locations in his portfolio of properties, he said. How much he's willing to bid for an ad will depend on what his fee is for the specific property. With fees sometimes in the range of US$50,000 to $100,000, it wouldn't be out of the question for him to spend $1,000 on an Ingenio ad. "A good call is worth a lot of money for me," he said.

Harrison advertises in newspapers and via signs, but advertising online makes sense for him, because clients for commercial real estate in the San Francisco Bay Area tend to be tech-savvy Internet users. Harrison is particularly interested in using his online ads to reach potential clients located outside of the Bay Area before his local competitors. "The edge will come from [being the first to reach] tenants exploring opportunities before they come to the Bay Area," he said.

Ingenio is betting its service will attract advertisers which either lack a Web presence altogether or for whom customer leads are more valuable and effective if they arrive by phone than through their Web site, said Marc Barach, Ingenio's chief marketing officer. Ingenio estimates there are about 13 million businesses in the U.S. that fit that description, he said.

"We offer the advantages of per-per-click but we deliver [customers] to businesses whose first contact is typically made by phone," Barach said. So far, Ingenio has had the most success attracting service companies, in industries such as finance, insurance, real estate, home improvement and health care, Barach said.

AOL and Ingenio announced their partnership in January, and the first so-called pay-per-call ads began running on AOL's search site (http://search.aol.com) on Friday.

It isn't possible for an ad to feature both a phone number and a Web site link, nor does the service allow users to click on the phone number and generate the call from the PC, said Gerry Campbell, vice president and general manager of AOL Search and Navigation. However, he acknowledged that there are a number of ways in which the Ingenio service could be extended, he said, without speculating how.

Ingenio and AOL don't have an exclusive deal but AOL's deployment of the Ingenio service is the first by a major search engine, Ingenio's Barach said. Likewise, AOL will continue to deliver pay-per-click ads, which it gets from Google's ad network, Campbell said.

In addition to distributing ads to partners such as AOL, Ingenio also licenses its platform to companies that want to use it to sell their own pay-per-call ads, an Ingenio spokeswoman said.

Posted April 18, 2005 03:35 PM |