From Clicks To Calls

As 2010 closes, I believe we are seeing the beginning of a transformation in digital marketing: what we at Marchex call “the call economy.” Although built on the backs of established online marketing tactics, the advent of a market for leads delivered through phone calls under a performance-based model represents a massive shift in how advertisers can efficiently acquire new customers.

For a very broad range of search advertisers, both large and small, the targeting of search terms and purchase of clicks is mere prelude to what they consider the ultimate outcome, and the one over which they have the most direct influence when converting a lead: a phone call. Whether the advertiser is a SOHO accountant or a national insurance giant, the clicks they drive are generally rendered valuable only in the context of their ability to lead to actual conversation.

Historically, the market for clicks took hold where it mattered most: for advertisers looking to drive revenue or attention proximate to the click event, primarily e-commerce or other online monetization regimes (such as, ironically, re-selling the same click). But what’s so exciting about the emergent call market is that it’s inherently cross-channel: a web or mobile search, map query, or other digital (as opposed to online-only) event yields a durable, intimate, person-to-person connection in the form of advertiser and prospect actually speaking… and transacting.

In the transition from display to search marketing, we saw advertisers gravitate to a market that provided both better performance (intent was arguably clearer given specific search terms at a moment of consumer need, and generally higher conversion rates), and greater transparency (the ability to measure correlations between a stated consumer need and a desired advertiser outcome at scale). As the market for calls develops, necessarily piggybacking on other established means of generating leads, the same propensity for increased performance and transparency is expressed pretty dramatically:

Performance. Any company, of any size, that secures new customers over the phone will tell you that calls sit far deeper in the conversion funnel than any impression, search, or website interaction ever could. Our own data suggests that in certain categories, phone-based conversions can reach double digit multiples of click conversion rates.

Transparency. Actual voice dialogue with prospects is invaluable, since inference is kept to a minimum. You can literally hear what’s on the mind of the customer: why they called, what they’re looking for and what hooks will get them to convert. Compare this intimate window to the evanescence of a click.

When we look to 2011, here are some of the macro trends we believe will help establish and grow the call economy.

Phones are becoming computers. According to Forrester, 23% of 18-44 year-olds already own a smart phone. On both smart phones and even a broad range of simpler mobile devices, access to information is greater than ever before, and the friction between finding a number and dialing it is as simple as a button press.

Computers are becoming phones. Every desktop and laptop running a copy of the over 500 million downloads of Skype is capable of turning a search for a product or service into a seamless conversation with an advertiser. A consumer can research auto insurance, come to a conclusion, click on a number and instantly speak with an agent without ever picking up a physical telephone.

When you can buy calls, clicks seem exorbitant. If an advertiser needs to buy 50 clicks at $5 apiece to generate a single call, a market that provides a qualified call at the rate of anything less than $250 will quickly cannibalize click budget.

Phone calls convert well, and put the advertiser in direct control. Beyond the notes above on the typical conversion performance of a call, the context—direct conversation with a potential customer—puts the advertiser in the driver’s seat with respect to conversion. As opposed to generally calcified landing pages or web sites, which otherwise would need to mediate between a purchased click and a call, being able to pay to actually speak to a prospect means access to all of the closing tactics of a live sales person.

Phone calls yield intelligence. Even when calls don’t convert, they can be data mined in the aggregate to surface everything from products of interest to knowledge of competitors, to sensitivity to features or price points, to the efficiency of the IVR (interactive voice response) or call center.

The supply/demand equation is solvable. On the demand side, analysts like BIA/Kelsey estimate is that advertisers already spend in the region of $30B annually to drive phone calls. On the supply side, new sources open up every day, from mobile applications to Skype.

To be clear, our belief in the ascendancy of the call economy isn’t without very specific costs, since the barriers to entry are quite high. By way of example, here’s a tiny sample of the challenges of participating in the call economy: having a telecommunications infrastructure that can scale to hundreds of millions of calls a month; being able to data mine audio; securing and homogenizing fragmented sources of supply; educating advertisers about the benefits of purchasing calls directly, as opposed to trying to drum them up themselves; being able to split run test IVRs to optimize for qualified callers; providing direct hooks into large call center workflows; understanding how to automatically recognize a pocket dial on a mobile phone; and a thousand other tricks which are found in no other field of marketing we have yet seen.

Since the turn of the year is a great occasion for shifting from navel gazing to star gazing, I’ll leave the reader to consider this vision: turning every single phone call between a consumer and a business into a monetized event, aligned along the axis of a newly-conceived, efficient marketing economy.