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Return on investment for advertising is generally measured by local businesses in terms of phone calls generated, call duration and/or store visits. That isn't changing soon. But for local ad sellers and their advertisers, it remains a challenge to figure out where calls are coming from, the conversion rate of calls, and the viability of Web-related tie-ins such as click-to-call and pay-per-call.

Few executives, if any, have more firsthand experience in these matters than Richard Rosen, who led development efforts at CallSource and more recently, at Jambo. Rosen, who just launched consulting firm Calling Strategies, says it is “inevitable” that there will be converging interests among the vested parties. These include local ad channels, like Yellow Pages and newspapers; enhanced phone service providers, like Jambo, Ingenio, eStara, Voicestar and MediaTraks; and the telecom providers that lease the lines.

Call tracking is highly desirable to both advertisers and publishers, says Rosen. But the economics of the issue will determine how it is done. Basically, “you have call measurement or pay-per-call,” he says. Call measurement requires an investment in dedicated phone numbers and some type of usage charge in order to prove ROI to an advertiser. Pay-per-call requires an entrepreneurial investment by providers in the phone lines in hopes of generating a premium “per call” fee to recoup those costs.

That's problematic in itself. “Some merchants will have zero billable calls,” says Rosen. Compared with cost-per-click, advertisers are also choosier about the calls for which they are willing to pay.

In this regard, companies like Citysearch and SuperPages typically pay call measurement vendors a monthly fee for every reserved number. These rates have been falling, and with enough volume, can be in the single digits. “Given the advances in IP communications, pay-per-call is a viable business model on a broad scale,” says Rosen.

But publishers need to protect themselves by mandating minimum fees and implementing advertising rates to cover the expense of the tracking phone numbers and usage minutes. Citysearch charges monthly minimums of $9.95, while SuperPages charges $15. For this reason, Rosen expects to see some “build or buy” activity next year as the ad channels either acquire vendors or build capabilities internally.

“Publishers also have an opportunity to prove value to non-advertising local merchants. Call measurement can be a great lead generation channel for ad sales. But first, publishers need to educate local merchants on the idea that their phone calls can be measured and used to prove ROI,” says Rosen. “At the same time, we have to ask ourselves whether the wholesale changing of phone numbers is really the best strategy to insure a great consumer experience.”

To Rosen, this is where click-to-call comes in. “Click-to-call solves the issue of rotating unique tracking phone numbers between merchants (which increases wrong number calls). However, consumers will need to adopt the idea of clicking to place a call rather than dialing a phone number. Not everybody is ready to do that.” The conventional wisdom in the industry is that consumers will click to call as little as 2 percent of the time. The other 98 percent just pick up the phone.

“Our challenge is to sell the benefits of click-to-call to the consumer,” says Rosen. “Too much emphasis of pay-per-call and call measurement is on the advertiser and merchant. Publishers need to focus on the consumer benefit first and foremost.”

Despite such complications, Rosen emphasizes that the benefits of pay-per-call will ultimately prove themselves as the core connector in local search is established as the phone, rather than e-mail or e-commerce. “At Jambo, I jumped to a business development, rather than consultative approach. In hindsight, that was the wrong approach. Before calls can be monetized, publishers need to begin testing adoption of click-to-talk and/or call tracking numbers; measure response rates, test whisper branding, create baselines, etc.

“This needs to be done shoulder-to-shoulder with product development, not a biz dev deal,” adds Rosen. “Once we know we can connect and measure phone response at scale, we will have access to tremendously valuable data that will take local search to the next level. Only then can we find a path to monetize these calls.”

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