The pay per click model (PPC) of advertising has been around since the 90s , and the concept is a fairly simple one: affiliate sites display ads containing links to merchant sites, and the merchants then compensate the affiliate sites based on how many people click on the given ads. There are many advantages to this model, as advertisers can set a wide range of budgets, and only have to pay when consumers actually perform a specific action (as opposed to paying simply to get their product or services noticed, which would be more akin to the CPM model).
In addition to the flexibility provided by the pay per click (or PPC) model, most businesses perceive PPC to be effective as a lead generation tactic. According to a survey from Marketing Sherpa, business rate PPC as the second-most effective tactic that their organization employs, ahead of email marketing, content marketing and social media, and behind only SEO.
Despite all of the virtues that the PPC model has to recommend it, many organizations have some concerns about the efficacy of converting clicks to sales. In fact, the same Marketing Sherpa study that indicated an increase in PPC spending for 2014, also found that 85 percent of the largest PPC spenders will be looking to focus more on conversion rate optimization in 2014. The fear of not being able to convert pay per click leads into sales is not a new one by any means. In fact, one of the first participators in PPC advertising (Director of Marketing at Specialized Bicycle Chris Murphy) had this to say back in 1996: “Clicks to my site [and] spending time there are two different things…If I’m paying for clicks, I’m not really into that.”
It is not hard to see why companies might have some reservations about paying for ad-clickers that may or may not turn into paying customers. Although cost per conversion numbers can vary by organization, last year Hochman Consultants found the average CPC to be $10.44 amongst a sample of 50 advertisers. While this may not seem terrible depending on the price of the good or service being offered, consider that the same analysts uncovered a much more unsustainable average CPC of $24.40 in 2012.
Many businesses may feel that a click directed to their website simply isn’t a large enough indicator of an intent to purchase. In part as a response to these concerns, the click-to-call model has emerged as a popular alternative in the past couple of years. In linking mobile consumers to a phone call with the advertised business, advertisers are delivering SMBs both more desirable leads, and leads that are likely to convert at a higher rate when compared with PPC. Although click-to-call campaigns generally carry a higher cost relatively speaking, business owners are often willing to pay more for what they perceive to be higher-quality indications of intent. Indeed, click-to-call usage is expected to grow in the future.
Click-to-call campaigns are oftentimes customizable, in that business owners can set a threshold on how long a phone call has to last for in order for them to consider it a valuable lead and pay for it. Although the ability to filter in this way certainly increases the likelihood that SMBs are spending their advertising money wisely, there is still some room for concern – many times consumers call businesses with a less than robust intent to actually make a purchase.
It appears there is an opportunity here for innovation, as marketers would likely prefer to engage in an advertising model that offers more consistency (and value). For example, in a “Pay Per Booking” model, advertisers will only pay an affiliate when a consumer has actually booked an appointment. This could be accomplished by adding a “Book Now” button onto digital advertisements, meaning that consumers would be immediately directed to a booking flow, rather than to the the advertiser’s website. Not only would this model increase the efficiency of each dollar spent on ads, as businesses only pay for consumers who have already committed to a purchase, but the user experience would be more seamless as well.
Although the pay per booking model is nothing more than a theory at this stage, it is only one example of how Pingup’s Booking API can be applied to bring about increases in conversion and and functionality in the world of local search and advertising.