The nascent pay-per-call ad industry gets another boost today with Citysearch's announcement that it's offering the service as an
option for advertisers — with the technology of a new Silicon Valley company.

Less than a year old, pay-per-call is an alternative to the pay-per-click ad model popularized by Google and Overture. With pay-per-
call, the merchant-advertiser only pays for its ad or listing after someone has picked up the phone and called them. Because phone
calls are often considered better sales leads than someone clicking on your web site, advertisers will usually pay more for them,
typically a few dollars per call. It's an ad model that's being marketed especially hard to local merchants.

Citysearch's offering is being powered by CIRXIT (pronounced "circuit"), a Los Altos company started by Rajiv Gupta. Gupta's a 12-
year veteran of HP, where he ran the web services division. In 2002, he started Confluent Software, and then sold it to identity
management software supplier Oblix earlier this year.

Gupta wouldn't tell us much about CIRXIT, which is just now coming out of stealth mode — how many employees, how it's funded or
much about its technology. The company doesn't even have a public web site yet.

Gupta described CIRXIT as a "web telephony company." Its technology allows Citysearch to offer its customers a unique customer
phone number that CitySearch can monitor. When a call comes in to an advertiser, Citysearch can charge the merchant for the call.

"In some sense, what we're doing here is web services,'' Gupta said. "If you take a step back, we've had two separate islands:
telephony and the web. What we're doing is integrating the web and telephony in a new platform. This is our first (partnership). You'll
be hearing more from us.‘

Gupta said the technology has a wide variety of possible applications, such as on online dating sites. There, it could allow potential
daters to make that first phone call through the dating site without having to reveal their phone numbers to each other.

CIRXIT is joining a small, but rapidly growing field of companies in the pay-per-call space. Just up the road in San Francisco,
Ingenio essentially launched the concept in April, quickly inking a deal with FindWhat.com. Last month, it announced a partnership
with online yellow pages provider go2. Ingenio differs from CIRXIT in that it pulls together its own stable of pay-per-call advertisers
and offers them to search engines and other business partners. CIRXIT only provides its technology to companies.

For Citysearch, the technology allows the city guides web site to prove that its advertising brings in customers, company CEO Briggs
Ferguson said.

For many businesses, a phone call is still how they close a sale with a customer. And there are plenty of businesses — higher-end
restaurants, hotels, spas and attorneys — that can all afford the $3-$5 that a pay-per-call costs. Most importantly, they appreciate
being able to track the effectiveness of their ads by linking the phones calls directly with their online listings.

"When you're in the local space, a click isn't necessarily paramount to transaction,'' Ferguson said. "Someone calling is very
concrete to them. It's something they understand.“

Pay-per-call is one way that search companies and online directories are trying to lure more local advertisers online. Local online
advertising is seen by many as the next big growth area for search companies. But, as we noted in this story, it's proving to be a
tough nut to crack.

In a recent report, the Kelsey Group found that 61 percent of small and mid-sized businesses believe the Internet is an important ad
medium, but just 14 percent made any online media buys in the last year. Just 5 percent of small or mid-sized businesses
purchased search listings; and 5 percent reported interactive Yellow Pages buys in the last year.

"You have to have a fair amount of patience operating in the local space,'' Ferguson said. "You're changing 100 years of history, of
people advertising in the Yellow Pages and newspapers. And you're talking literally going to door-to-door to roll out these concepts.
It takes time.''

Posted by Michael Bazeley on December 6, 2004 12:30 AM | 0 Linking Posts