I’m just getting started on a research project on alternative forms of pay per performance advertising such as pay per click or pay per call. I’m trying to identify companies or business models that have successfully built (or are trying to build) on pay per click/call/acquisition, etc. and would like to ask for your advice and opinion on this business segment.
The most common Internet-based advertising is now Pay Per Click. It’s the foundation of advertising systems like Google’s AdSense program, Yahoo’s Overture, etc. I also believe that PPC is a logical reaction to the 90’s “bubble” pay for impressions world, a model created when advertisers realized that a million eyeballs didn’t necessarily translate into any sales at all.
Pay per acquisition is also widely used and is known in the online world as an affiliate program. For example, Amazon Associates, which has over 100,000 members who are including special links back to Amazon sales pages, but they aren’t paid until the customer actually buys the book and completes the transaction.
Pay per call is the least common of the three, I think, but there are examples, including TrackTheCall.com, Ingenio and even Yahoo itself, apparently: Yahoo’s Pay Per Call System.
In terms of other pay-per-call services, there’s certainly a case to be made that the multi-billion acquisition of Skype by eBay is for just this purpose. It’s logical to have a “click here to talk to the seller” and to then charge the seller on a per-completed-call basis in addition to the existing charges.
Here’s a good article that talks about the pros and cons of Pay Per Call too: Search engine advertising that makes the phone ring.
I have a colleague who has a range of 800 numbers for his business that he ties to specific advertising campaigns: it’s not much of a leap for him to have a pay-per-call (or, more accurately, pay per lead) mechanism in place if each affiliate, say, was given a different phone number for potential leads.
The original question continues: In TV, there’s per inquiry advertising, e.g., Revshare TV. I also recently came across another interesting company (they have a few competitors) Free 411.com, which allows consumers to call 411 for free from their home or mobile phones as the calls are paid for by local and national businesses.
That’s the tip of a big wave of information products, I expect, and the telcos have only their own greed to blame with $0.99 per 411 call.
Two examples: Google’s working on a very stripped down geolocation-smart Web and SMS interface for cellphones, etc., and I know of other people creating custom Web interfaces that allow you to bury the search query into the base URL itself.
Revenue sharing is, of course, affiliate marketing, just with TV.
In fact, if you’re interested in learning more about affiliate marketing as part of your project, there’s a splendid conference coming up in January, in Las Vegas, focused just on this topic: The Affiliate Marketing Summit. I’ll be offering a workshop and speaking too, actually.
I’m interested in this for two markets. Small/micro local businesses as well as a larger company that typically relies on affiliate marketing and direct marketing, e.g. credit card issuer.
For smaller companies, being able to only pay based on results is obviously a winner. Factor in the cost of paying for leads and it can be quite profitable and certainly more constrained an expense than traditional advertising. However, the onus is then shifted onto the merchant and away from the advertising venue: if you have a highly visible advertisement that leads people to call, visit a Web site, whatever, but the product itself isn’t compelling and the sale is never “closed”, you won’t get paid. Not good.
Interestingly, Google’s worked on that problem under the aegis of its AdWords program (the advertiser side of their AdSense pay-per-click system). AdWords will automatically display high-performing ads more frequently, and if your ad produces below a certain click-thru rate, it’ll be automatically suspended and turned off.
Anyway, I hope this material is helpful to you!