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Google, Yahoo Test New Online Ad Model

Posted on: Wednesday, 30 November 2005, 18:00 CST

By DAVID KOENIG

DALLAS - Internet giants Google Inc. and Yahoo Inc. are testing a new form of online advertising that encourages people to pick up the phone rather than click on a link, lending credibility to the "pay-per-call" ad model.

Most search advertising currently uses an approach called pay-per-click. Google and other sites auction the right for a company's ad to appear next to search results when somebody enters keywords, such as "flowers" or "digital cameras." Advertisers pay the search engine each time someone clicks on the ad link.

With pay-per-call, users are instead directed to call the advertiser, who is billed for each phone referral.

At some sites, including Time Warner Inc.'s America Online Inc., the customer must pick up a phone and dial the number.

Google is testing a variant in which users click on a phone icon and type their number into a box. Google then dials the user, who hears ringing until the merchant answers. Google says the service is free for callers even on long-distance calls, and it promises not to divulge the caller's number to anyone.

Calling the test "limited," Google spokesman Mike Mayzel declined to offer more details.

Yahoo spokeswoman Gaude Paez said the company also was testing pay-per-call but had nothing else to announce yet.

"If Google or Yahoo or both adopt this - and if one does, the other will too - it blows the market wide open," said Greg Sterling, an analyst who tracks search advertising for The Kelsey Group. "Quite a few advertisers will try it out because these two generate enormous search volume."

Online auction site eBay Inc. is also considering getting into the business, using technology from its recent purchase of Internet phone provider Skype Technologies SA, eBay spokesman Hani Durzy said.

Advocates of pay-per-call, including some merchants who have tried it, say customers who call are ready to buy and aren't just browsing the Internet; thus, search engines can charge more - $2 to $10 or even more per call, compared with less than $1 per click.

Source: Associated Press/AP Online

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