Refuting 4 Top Pay-Per-Call Misconceptions

Many local search advertisers today want performance based ad programs and advertising providers are happy to be able to monetize the leads they are delivering via pay-per-click, pay-per-call or via another action-based lead activity.

The good news is that the quality of local search advertising leads is on the rise, as indicated by average call durations we recently evaluated on our network.

Mobile calls generate longer call durations than any other media at an average of 3.5 minutes/call. This is followed by Internet Yellow Pages at 2.7 mins/call and paid search at 2.2 mins/call. The average call duration across media increased 20.1 percent from Q1 2011 to Q1 2012, thanks to advertising providers’ ability to refine their programs and optimize for higher quality calls.

While there is growing usage and interest in pay-per-call, advertising providers are still ironing out how they position and sell it to local advertisers unfamiliar with the model. This issue is compounded by the rise of local search advertising options, many of which rely on performance-based pricing. With BIA/Kelsey recently forecasting that mobile search will outpace desktop search in 2015, it is key for ad providers to educate advertisers on lead pricing.

Common challenges that advertising providers selling pay-per-call in local channels run into include local SMB advertiser concerns with variable advertising costs, the inaccurate perception that pay-per-call equals pay-per-conversion, advertisers’ subjective views on lead quality and the assumption that cost per call should be similar to the cost-per-click.

However, each of these concerns has a compelling counter argument that local advertisers and any one selling to local advertisers should understand.

Misconception 1: Variable Advertising Costs Will Break my Budget/the Bank

As local advertisers are most familiar with subscription or value-based advertising models, ad providers can help allay performance-based budget fears by setting monthly spending caps to ease the initial transition for advertisers. This ensures advertisers that there won’t be any big surprises on their bill.

Regardless of lead volumes the advertiser only pays for what they have budgeted. Another option is rollover pricing so any advertising lead overages can carry over to the next month.

Misconception 2: Pay-Per-Call = Pay-Per-Conversion

Many advertisers believe that pay per call equals pay per sale and incorrectly assume that they only pay for calls that result in a sale. Instead, it is important for them to understand that a billable call represents leads that have potential to convert. Pay per call advertising programs deliver quality phone leads but it is the advertiser’s role to convert the lead.

Misconception 3: Subjective Views on Lead Quality

It's important to make sure there is agreement on the billable call criteria (e.g., call duration, hour received, contact info collected), as there can be a lot of administrative headache spent debating each resulting call. Different categories of businesses will have different billable call criteria. A one-minute call to a pizza delivery service could be a valid billable call while a one-minute call to an attorney probably is not.

Review the category-specific sales process to determine the call length deemed to be lead worthy. Also, discuss repeat callers, which varies by category. Using the example above, multiple calls to a pizza parlor in one month makes sense but probably not for an attorney.

Misconception 4: The Price of a Call = the Cost of a Click

Pay-per-call pricing isn't the same as pay-per-click pricing. While the two approaches are complementary and can provide a more complete picture of lead generation’s impact online and offline, call data provides richer data and more actionable lead generation information.

Call data includes the demographic profile of the caller and the phone number they are calling from. This data is valuable for an ongoing marketing program and as such, calls demand a higher price.

Also the media channel should be considered when pricing calls based on the medium’s ability to deliver quality leads. Mobile callers are typically farther along in the purchase cycle so there is an opportunity to monetize mobile ad calls at a higher rate than other media. This opportunity is leading to a big jump in the number of pay per call ads being used in mobile programs. We have seen a 30x increase in mobile pay per call ads from Q1 2011 to Q1 2012.

Conclusion

The rise of mobile ad options is presenting a new opportunity for advertising providers to gain attribution and monetize mobile separate from desktop search. But before that ad providers need to ensure they educate advertisers on the key considerations in local pay per call.