FindWhat Starts Pay Per Call has launched its pay-per-call search advertising platform aimed at local businesses without Web sites, the Fort Myers, FL, paid search provider announced yesterday.

FindWhat uses technology developed by Ingenio, San Francisco, to power the service, which works like paid listings except the billing event happens through a phone call. Ingenio creates unique toll-free numbers for advertisers that are displayed in their search listings. Searchers calling the numbers are routed to the advertiser's business phone. Advertisers pay only if a call is made.

The PPC2 platform aims to overcome a major hurdle to the widespread adoption of local paid search: Most local businesses do not operate online.

As a further enticement to small businesses, FindWhat will operate a separate auction for pay-per-call listings not based on keyword bidding. Instead, advertisers choose from 1,000 categories for their listings, with the option of targeting their ads to a city, region or state.

“[Small businesses] spend the majority of their advertising dollars in a Yellow Pages environment in many cases,” said Rick Szatkowski, senior vice president and general manager of FindWhat's private-label business. “To the extent that keywords are more complicated, categories is a very familiar environment for them.”

In this system, a dentist in New York City can bid on the “dentist” category and narrow the listings to New York, instead of bidding on every keyword a searcher might use when seeking a local dentist. FindWhat's pay-per-call system will match keywords to their appropriate category to find relevant listings.

Pay-per-call listings are much more expensive than regular search listings. FindWhat set a $2 minimum bid for pay per call, as opposed to 5 cents for search listings. It also carries a $10 annual service charge.

Szatkowski said the higher cost would pay off for advertisers because phone calls represent more qualified leads.

“A call typically comes later in the buying cycle,” he said. “When people are starting to narrow down and convert into a purchase, that's when a call is going to occur.”

FindWhat plans to offer pay-per-call listings to all 350 sites in its publisher network in addition to private-label partners like Lycos, Thomas Register and Verizon's has a deal with Ingenio competitor eStara to provide advertisers with a click-to-call option that searchers can use to connect with advertisers using Internet telephone services. A Verizon spokeswoman said the company would evaluate the offering before deciding whether to implement it.

Szatkowski predicted the higher click prices would entice many to display the pay-per-call listings, which he expects will warrant more prominent placement on publishers' results pages due to their higher revenue potential.

According to The Kelsey Group, local search marketing could reach $2.5 billion in 2008. Jupiter Research, however, thinks the market will grow much more slowly, anticipating $824 million in 2008.

A Verizon study in late 2002 estimated that 63 percent of small businesses lack Web sites. Yahoo's Overture Services has sought to address this in its Local Match product through a business locator page that is shown when users click on a local listing. Local Match is available only to businesses with a physical location. Google's local advertising product still requires businesses to have a Web site. Neither offers pay-per-call options.

“If this proves to be successful or moderately successful, I think you'll see other providers offer it,” said Greg Sterling, a local search market analyst with The Kelsey Group.

Another issue for paid search providers is selling to small businesses not versed in the typical self-service search marketing sales model. Szatkowski said FindWhat would look for partnerships with small-business aggregators, such as chambers of commerce, to build awareness of the pay-per-call platform. It also will sign up businesses online and through its direct sales force.

Paid search providers see the local market of 23.7 million U.S. small businesses as a huge opportunity. Google and Yahoo have developed local search engines to encourage more users to turn to them for finding local information. Google yesterday tweaked its local search engine, Google Local, including an improved mapping capability and expanded business content.

Sterling said Google and Yahoo still needed to strip out many of the complexities of search marketing for it to appeal to a broader range of businesses.

“I'm skeptical in the short term that traditional keyword bidding will be successful for true local businesses,” he said.

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