How To Optimize Pay-per-lead Revenue

Search providers and online publishers pursuing pay-per-lead advertising revenue can learn lessons from the past and begin optimizing their revenues now.

There was a day when pay-per-click ad placement was a simple function of who bid the most. The advertiser with the highest bid for a given keyword could count on their ad being served at the top of the sponsored listings. And the publisher/search provider could count on revenue, of course, but there was doubt about whether such a simple mechanism was optimizing publisher revenue. And to make a long story short, the doubt was well-founded. Google, Yahoo and others proved that they could better optimize revenue using a more sophisticated algorithm. Bid price remained a consideration, but not the only consideration, and although the algorithms remain highly proprietary, the positive impact they’ve had on revenues is no secret.

The “next wave of online advertising” is pay-per-lead advertising – a.k.a. “pay-per-call” (a self-serving term created by the providers of telephony switches, limiting because consumer use channels other than voice calls to interact with merchants). It remains a nascent field, but the Kelsey Group projects that it could grow to be a $4B market by 2009. Instead of paying per click, advertisers pay per lead (i.e. per call, or per interactive conversation with a prospective customer).

Ironically, the early providers of pay-per-lead advertising (e.g. AOL & Miva) are repeating the mistakes of the past. Ad placement is strictly a function of the highest bid.

How can a publisher optimize pay-per-lead advertising revenue? By determining placement with an algorithm that considers which advertisers are most likely to answer, because an unanswered consumer contact is lost revenue, no matter the bid.

With real-time monitoring of the “presence”, or “availability” of an advertiser, combined with historical data concerning an advertiser’s track record for promptly answering leads, a publisher can optimize their pay-per-lead revenues.

The “winners” in pay-per-lead advertising will optimize their revenues – the losers will likely become desperate and try to charge advertisers for leads even when the advertiser wasn’t there or wasn’t available to answer – evil – and self-defeating.

ContactAtOnce! customers are winners…