Google Expands AdWords Service to Include Bidding for Phone Numbers
In a recent move, Google has extended their AdWords market to accommodate bids for phone number advertising, which they have pursued in a two-prong fashion:
- On non-mobile devices (i.e. anything that is not a phone), for each AdWord ad, Google can optionally append a toll-free, intermediary phone number that they provide, which tracks statistics about usage of the number (impressions, versions, click-through rate, etc). Google funds the call and subsequent connection to the actual advertiser’s phone number. On a similar basis to AdWords, these phone number ads only incur costs when they are called.
- On mobile devices, the number appears as a link that upon being clicked will trigger the device’s call functionality and dial the number (this is a standard mechanism on smart-phones). As these numbers appear as links, the same metrics that are normally applied to AdWords adverts will apply to these phone numbers.
My initial impression was that this was not a viable investment strategy for most companies, primarily because pulling yourself away from an internet browsing session to use your phone is an enormous user experience obstacle. Browsing the internet is mainly a passive experience – it requires little effort on the part of the user, and most of that user’s time is spent reading text. Contrast this with placing a phone call, where the user must suspend all other activities for the duration of the call, must actively listen through tens of seconds of ringing for a response, and must verbally engage the call recipient for a non-trivial amount of time. The sheer commitment of making a phone call should deter people from using this form of advertisement. The case is slightly different when a user is browsing the internet through a mobile device, as he/she needn’t switch devices; however, the same overhead associated with executing the call still applies. Additionally, most people make negative associations with phone numbers that appear in advertisements, primarily because of their prevalence in spam messages or uninteresting ads.
Contrary to expectations, the incorporation of this service has been met with rampant success. According to the accompanying TechCrunch article, Click-to-Call ads are responsible for millions of calls per week, with calls stemming from both desktop and mobile platforms lasting six minutes on average. Additionally, over 12 million calls have been connected by this service.
These statistics are actually unsurprising given the mechanics on which this service operates. From the standpoint of the companies, phone advertisements are ostensibly more valuable than written ones: as making a phone call is a larger commitment, consumers that use advertised phone numbers are probably closer to purchasing the advertised item, because if they’re willing to undergo that process, their motivation must be a desire to consider the product in earnest. Additionally, as the costs for the phone adverts exist on a pay-per-call basis, the companies only get charged for the phone traffic they receive, and as the expected revenue-per-call is high, this type of ad is certainly a good investment.
To explain this phenomenon from the consumer perspective, it serves to recognize the increased relevance and effectiveness of Google AdWords. In addition to the fact that adverts produced by AdWords are keyword-based, they are also formatted in a very intuitive manner, frequently including prices and other relevant shopping information. These features make such ads very compelling to users, such that calling a phone number becomes a realistic option. This is a very obvious reason. The more subtle possibility is that many consumers use Google to directly find the number of local services, e.g. ordering pizza, making reservations at restaurants, etc. This explanation is especially true with mobile devices, where people using them have much more incentive to execute the calls, as smart phones streamline the process of initiating a call from a link.
Furthermore, the addition of phone number advertising should not drastically affect the bidding dynamic. Under the Vickrey-Clarke-Grove principle, the price of an ad slot is determined by the harm it incurs to the other bidders. According to the system delineated in class and in the book, “harm” is a function of linear multipliers. If you add linear multipliers for expected revenue for phone call, and for call-through rates, the new price would remain in the same order of magnitude as the original price without phone-number advertising.
To see the original article, visit this link.