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Saturday, September 08, 2007

Thud! (2)

Bill Caswell of Caswell Corporate Coaching Company (CCCC), our business consultants, says he has signed up for the Canwest go! Local directory. He paid a set up fee of about $700 for a couple of listings and ads with the special phone numbers. How much will he pay if anyone calls? "Hundreds of dollars per call," he says.

"Hundreds of dollars?" I asked incredulously. Yes, it seems the publishers have developed a formula based on the estimated value of services and the overall closing rate expected on inquiries. Different standards apply for different industries. For example, a pizza restaurant would not pay as much per lead. He also noted there is a cap on the cost -- if for some reason the ad is exceptionally successful, the fees stop.

The directory had been out -- at least to my home -- for about a week so I asked him if he had received any calls. "Not yet," he said. We agreed that the call volume should be highest when the directory first appears -- given the novelty value and immediate response -- but would presumably taper off.

We didn't address how go! Local will deal with "call fraud", that is the strategic or malicious calling of businesses by people who have no real interest in purchasing anything -- but just want to run up the charges. (In this case, a call to Bill's number would be very expensive; this is one 'ad' I would not want to post the number anywhere but its intended place).

Overall, the jury is still out on this business model. I notice lots of very big ads from Realtors -- they presumably love the model because they, themselves, are only paid for performance, so a lead generation system that only 'costs' if real leads are generated would be of interest to them. A few residential service contractors are also using the book.

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