For the small business without the time or expertise to set up a website, Internet advertising is pretty much a meaningless endeavor. The battles raging between Google (NASDAQ:GOOG), Yahoo! (NASDAQ:YHOO), AskJeeves (NASDAQ:ASKJ), and other search engines that offer advertiser-sponsored search results are an abstraction. The small business without a Web presence -- some 70% of all small businesses -- is more interested in getting a customer to call.
That's why pay-per-call is revolutionizing the search industry. It gives marketers a chance to reach out to that largely untapped demographic, providing a way for small businesses to reach the tens of millions of people who are online and in need of their products and services.
Rather than pay-per-click, where advertisers pay every time a customer clicks on an ad as it pops up in a search result, pay-per-call has the advertiser pay only when a customer calls a special telephone number. This provides advertisers a much more valuable service, since a customer who calls is much closer to being a customer who buys. It also helps paid search companies: They can charge a lot more for bringing that customer to the advertiser. Rather than pennies-per-click, they can charge dollars-per-call.
The latest marquee entrant into pay-per-call is Time Warner'sAmerica Online (NYSE:TWX), which partnered with privately held Ingenio to power sponsored search results. Ingenio owns the technology for pay-per-call. Last year, the small San Francisco-based company began distributing pay-per-call ads through FindWhat.com (NASDAQ:FWHT), which supplies paid search results though a network of websites.
The AOL deal is a boost to the model and to Ingenio simply because of the online giant's reach: 22 million subscribers. It already processes more than 700 unique searches a month from more than 35 million unique users. While most originate from within AOL itself, the new partnership is intended to enhance the relevance of AOL Search to all Web users. Although no date has been announced to indicate when the ads will start appearing in searches, the results returned will actually be a mix of paid listings from both Ingenio and Google. The AOL portal has featured Google-powered search results -- both paid ads and relevance-based ones -- since 2002, and in 2003 they inked a multi-year deal.
America Online has refined other aspects of its search tools as well. Users can more easily sort results into different categories using technology AOL originally launched with its Pinpoint Shopping site. It will offer its own "snapshots" of Google's results that link to relevant editorial content or information from other websites, similar to the AskJeeves "smart search" feature.
With small businesses finding pay-per-call an attractive option, that makes the model the next big thing in local search.
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Fool contributor Rich Duprey owns shares of FindWhat.com, but he does not own any of the other stocks mentioned in this article.
