Google took the next step for AdWords this past Wednesday with pay-per-call. The industries where this will have the most immediate impact are your traditional businesses that really prefer the consultative sale over the telephone. Mortgage lenders, insurance sales and floral ecommerce players are the first to come to mind.

Google’s Pay-per-call model is simple. When you do a search, you may get some AdWords results that offer up a green telephone logo. You will also see a box to type in your phone number. Within a few minutes, your phone should ring and you will have the opportunity to talk to a sales rep from that company. The system works much in the same was an the Ingenio powered FindWhat.

In theory, the conversion levels of a Google pay-per-call campaign should be compelling enough to generate a higher click price. But our initial research is showing a lot of people playing with the system, and not really converting into customers. I believe this will change over the next few weeks.

There is also the fairly big issue of click fraud. In theory, click fraud should be less with Google Pay-per-call. But, the technology that makes it more difficult to de-fraud the system (the fact that you have to now provide a phone number), may add more trouble to the program. Imagine getting a call at 3 am from Lending Tree that you supposedly just asked for. There is little doubt that this will be used for crank calls. But there are many ways to fix this problem, and Google is a very smart company. For example, Yahoo could pull this off with me because they already know my phone number. If Google only offered this service to people who were logged in, they could easily weed out many of the people with no intent of making a purchase.

That being said, crank calls and click fraud are not the only issues the pay-per-call raises. The operational costs of most ecommerce sites are based on the premis that a majority of the transactions will take place through the Web, without the interaction of an employee. Obviously Google’s Pay-per-call is going to make some businesses have to re-think this assumption and could throw off the operational costs of doing business on the Web. What happens when an ecommerce floral company that experiences 85% of their conversion from search through their website now has to plan on 50% of their search traffic converting with live customer service reps.

I don’t believe that automated voice response systems are the answer. If a person wanted to interact with the machine, they would have used the website. When given the choice, I think most people will chose to talk to a person. Whether it’s the perception of increase security with your credit card number, or the added assurance that you package will arrive on time, people still prefer to deal with people.

One thing is for certain; Google has made one small change that could affect a lot of business on the Web.

This entry was posted on Wednesday, November 8th, 2006 at 10:47 amand is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.