What’s a Call From a New Customer Worth to You?

Google wants to know what a phone call from a new customer is worth to your business. The internet giant has added a feature to its AdWords program that allows companies to bid on phone calls generated by their ads on Google’s search results. Bid-per-call is a significant addition to Google’s ubiquitous online advertising product, even playing into the algorithms that determine the company’s all-important ad rankings.

How it works: Users set a bid for how much they are willing to pay each time one of their Google text ads inspires a customer to pick up the phone and call the business. Google tracks the call by assigning a forwarding number that patches through to the business’s primary phone. Users set an advertising budget as well as the price they are willing to pay per phone call, and Google charges accordingly. The minimum bid is $1 per call. If no one calls, you pay nothing. If you go over budget, your ads stop running. The service is available only for users in the U.S. and U.K.

What rings true: It’s relatively easy to start bidding on calls; apply for a Google forwarding number on the AdWords control panel you already use to manage your various campaigns. There are also some nice built-in analytics: Google tracks details for each call made to your business, including the time placed, length of call, caller area code and the ad that generated the call.

What isn’t so clear: Managing a Google AdWords campaign is rarely easy, and bid-per-call is just another puzzling piece of the online advertising world. Businesses will need to figure out what they can earn from a Google-generated call, how much they’re willing to pay for those calls and, most important, their markup on the deal.

Bottom line: No question, businesses that sell over the phone will appreciate the lead generation–but they’ll face some seriously gnarly number crunching.

This article was originally published in the February 2012 print edition of Entrepreneur with the headline: Dialed In.

What’s a Call From a New Customer Worth to You?