Mobile is the hottest thing in advertising. Turns out, getting people to make a phone call can be very lucrative.
By Sierra Jiminez, contributor
FORTUNE — Companies diving into mobile advertising have found success getting consumers to do something unusual with their smartphones: make calls.
It’s no surprise that the mobile space has become one of the hottest areas in advertising. According to research firm Nielsen, smartphone ownership in the U.S. has more than doubled in the past two years, climbing to 44% of mobile users in 2011. Sophisticated handsets have created a surge in data consumption as well. According to Google GOOG , 69% of American smartphone users access the Internet every day. Data usage in the U.S. was up 89% in 2011. By the end of 2012, U.S. mobile ad spending is expected to reach $2.61 billion — up from $1.45 billion in 2011 — according to digital marketing firm eMarketer.
That growth has created a heated race. Google leads thanks to its powerful search franchise and its Android devices. The company beat out Apple in a deal to acquire AdMob in 2010 for $750 million. That same year, Apple AAPL launched its iAd network, which allows advertisers to place rich media ads that include video and animations in iOS apps. While the mobile advertising business has had muted results so far, the company recently hired former Adobe ADBE executive Todd Teresi in an effort to revamp it. Even Facebook is looking to get a piece of the pie. The popular social network recently hinted to moving into the mobile ad space in the IPO it filed last week.
So it may seem odd that what has taken centerstage for early mobile marketers is not a new breed of flashy advertisement but something rather more analog, making calls. Google is dominant in mobile advertising. Last year, the Internet search leader occupied more than half of U.S. mobile ad revenues, accounting for some 95% of the mobile search ad market and 25% of the mobile display market last year. In 2010, the company enabled ads that could be tapped to make a call, speed dial in disguise. Now, Google ads generate more than 10 million calls a month.
Naturally, the approach has proved popular with firms that have long relied on call centers to generate new business. Take Esurance, the San Francisco-based auto insurance firm that provides services online. The company says that click-to-call ads have improved the efficacy of its marketing campaign some 25%. While it won’t release specifics, it says calls coming from such ads were more likely to result in sales than typical phone inquiries. “So many people want their final transactions to be over the phone,” says Esurance Director of Online Marketing Tolithia Kornweibel.
1-800-Flowers FLWS is another example. The company says it’s customers were two or three times more likely to click to make a phone call from a handset than to click on anadvertisement on a desktop computer. Cable provider Comcast CMCSK has found the same to be true. Since starting to use mobile ads in June last year, the company says it has seen a surge in mobile sales, with 270% greater click-through rates on mobile than desktop devices. Mobile advertising now drives more than 10% of the company’s online sales, up from virtually nothing last year. “Sometimes customers can do all the research, but they’ll still have questions they want to talk to someone about,” says Joshua Palau, vice president of digital sales and marketing at Comcast cable, another company.
The hitch? Figuring out how to track the impact mobile advertising has on consumers. Currently, there’s no way for advertisers to track if a customer starts their purchasing experience on one device and moves to a different platform to finish. For example, a Comcast customer could research the deals the company has to offer through the company’s mobile site or online but, ultimately, end up walking into one of its satellite stores to complete the purchase. Google says it is working to fix that. “Your mobile phone is really becoming a tool to navigate you through the physical world,” says Jason Spero, head of global mobile sales and strategy at Google. “Right now, we’re not doing a great job of tracking digital in the physical world, but we’re very close.”