How to Figure out the Cost of Pay per Call Advertising

Pay per call advertising is still a relatively new form of advertising. But, it’s extremely valuable in your ad campaign, and it’s on the rise. However, there are only a few companies who actually offer this type of advertising.

So how do you know where to start with pay per call advertising? How much should you pay for each call? How many calls should you make per day? How do you even get started with this?

So, Why Calls?

Calls are worth more than, say, a billboard advertisement, because customers who are calling are already interested in what you have to offer. Essentially, pay per call agencies have the means to help you advertise to customers who are already nearing the end of that sales funnel and ready to make a purchase.

Calls are more likely to convert to sales, since the people calling are already past the awareness and interest stage and are ready to take action.

Say your toilet decides to suddenly spew water everywhere. When you search for a plumber, you’re going to call the one that’s easiest to reach. You’re long past the awareness and interest stage, and it isn’t a desire; it’s a need. So you take action and call the plumber.

You’re an example of why many calls convert to sales. You only took action due to an immediate need, so you were already further down the sales funnel.

How Does It Work?

There are two sides in the process of call advertising: the clients who have the means to generate phone calls and advertisements to sell, and the clients who need phone calls to generate new business. A pay per call agency takes the two and consolidates them.

Think of a grocery store. You go there to buy your milk because it’s easier and more convenient than getting it directly from a cow, and you know you’re getting exactly what you want. Pay per call agencies work the same way. Just, you know, with advertising. Not milk. Check out the infographic below. Which option would you rather choose?

Determining the Number and Cost of Calls Infographic

Option two sounds easier, doesn’t it?

Picture a homebuilder. They’re likely really good at building houses, but can they market their own company? Probably. Will they be successful at it? Maybe not.

Now think of an ad agency. They’re probably really good at advertising and marketing their products, but would they be able to build a house? Maybe, but would you want to live in it? Most likely not.

Pay per call agencies take that homebuilder and connect them with call supplier, who has the advertisements ready to generate the phone calls that the home builder needs to generate new business.

How Much Do I Spend per Call?

That depends on your budget.

It’s easiest to think of the process backward. Say you make $2,000 profit on each sale. Taking marketing costs into consideration, you decide you’re willing to spend $500 in advertising costs to bring in that customer.

Now to determine your bid per call, you’ll have to figure out how many calls it takes to make one sale. This is reflected in your conversion rate.

Say you get one customer every five calls. This gives you a 20% conversion rate. If you’re willing to spend $500 to bring in one customer, and it takes five calls to get one customer, this means you’re willing to spend $100 per call.

That’s the same as your budgeted ad spend per sale multiplied by your conversion rate ($500 x 0.20).

Determining the Number and Cost of Calls Infographic

Is That It?

You establish your own maximum cost per call in the end. Now, there’s no magic number that will definitely equal sales. The volume of calls you receive is dependent on who else is competing for the same call ad space. The price you’re willing to pay may still be too low to compete with others bidding for the same types of calls. It might also be unnecessarily high.

How much you’re willing or able to spend per call also determines the method you can use to bring calls in. For example, generating calls off of a TV commercial is beneficial, but it’s going to cost you more per call because generally, the cost to produce a TV ad is high.

Warm transfers can also carry a higher price tag, because it requires the help of a call center. Click to call and placement on abandoned phone lines usually carry a smaller price tag since they cost less to generate.

The benefit of incorporating a pay per call ad agency into your advertising campaign is that you’ll get a dedicated sales account manager to help you crunch the numbers and make the process easier overall. Your account manager can recommend a competitive call price based on your sales quota, preferred call channels, and competition; and you can adjust your bids from there.

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