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AT&T Dials Up Ingenio Buy

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Pay per call advertising firm Ingenio has been acquired by AT&T to boost the telecom’s search and advertising services.

AT&T Dials Up Ingenio Buy
AT&T Dials Up Ingenio Buy

When we reported on Ingenio riding the CPA wave, we didn’t know the wave would drop the company on AT&T’s shore.

The privately held Ingenio, which has Benchmark Capital as its biggest backer, joined up with AT&T. Bringing the pay per call technology Ingenio possesses will give AT&T the ability to promote leads across mobile, Internet, or print media as the advertiser desires.

AT&T already does local search advertising through the Yellowpages.com Network, AT&T Real Yellow Pages and 1-800-Yellow Pages. They cited a growing trend towards performance-based advertising as the motivation for making the Ingenio deal.

“As advertisers add performance-based advertising to their marketing mix, this investment makes sense for our business,” said Ray Wilkins, AT&T group president for Diversified Business. Yellowpages.com will be Ingenio’s destination within AT&T, which expects to keep the existing management in place.

Kevin Harvey, general partner at Benchmark and a member of the Ingenio board, could not comment on specifics of the deal. We asked what made now the right time for this deal, to which he averred the timing must have made sense to AT&T at the time.

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AT&T Dials Up Ingenio Buy
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  • http://www.ingenio.com ingenio user

    I have nine Ingenio sites and have been doing business with Keen/Ingenio/Ether since 2000 and the story of their performance based PPC advertising, or what Ingenio calls “LVS” as far as I know has not been told outside of the “hush hush” contract Ingenio has with it’s members threatening deletion of their web businesses if the details are revealed…

    The former PPC system, or what Ingenio called “Featured Listings” worked very simply, if you paid more for advertising than the next guy, your sites moved closer to the front of the list and they got more exposure. The new system called “LVS” is touted as being even more fair…the advertisers that “perform the best” get cheaper advertising and their sites get more exposure, so it is supposed to be a motivation for people to improve site/service quality and their advertising presentation. The major motivation for ‘helping their members help themselves’ is that Ingenio helps themselves to a minimum of 38% of every dollar earned by any of it’s members…added to that is account fees, fund transfer fees, and the PPC cost for advertising.

    The experience Ingenio members have had with the new “LVS” system thus far is alarming. Those advertisers who have the largest customer flow and have been with Ingenio the longest time, are seen as their “blue chip” members and not only get reduced fees for their PPC ads, in many cases they get LVS placement gratis, or what amounts to free advertising…with a 38% minimum house cut it benefits Ingenio to give advertising away to their biggest moneymakers. Those members who are brand new to Ingenio, also get a massive discount on ads, to pull them into the fold and help them become rooted at Ingenio.

    Unfortunately, for the 90% of Ingenio members “caught in the middle” of these two extremes, their advertising has universally doubled in cost. And paying double in advertising does not guarantee that you will actually get advertised…you may find yourself put to the “head of the list”, somewhere in the middle, or not show up in listings at all, and at the same advertising rate your position may change hourly…all due to the fluctuating changes dictated by what Ingenio calls the infamous “LVS algorhythym”. What the “algorhythym” Ingenio claims to use to determine an individual member’s advertising charges, they don’t care to share or reveal, other than to say it is affected by site appearance, the attractiveness of the business name and title descriptions of services, and attractiveness of the member’s personal photos (?!) since attractive people attract more business, they include that factor in their “algorhythym” (and in response many Ingenio members are substituting photos of professional models for their own member pics)…as well as the fluctuating market, customer frequency and retention…etc. But what it boils down to is a system that says “You pay double, we give you the amount of advertising that suits us, which may be more or less or none.” Since Ingenio has a virtual monopoly on this type of pay-per-call technology, they have no fear that advertisers will go elsewhere for a better deal…as yet there is no other competing organization with Ingenio’s facilities for them to go to.

    Confused? Ingenio complicated the matter still further! The advertising Ingenio does produce for it’s members only shows the top ten advertisers at one time…and there are over 20,000 registered advertising members at Ingenio. To see any advertisers other than Ingenio’s top tewn, people would have to go to Ingenio itself and leaf through the hundreds of listing pages…if you are not a “top ten” advertiser, your “pay per click” fees pay for your listing to move closer to the front of this pack, so people who go to the trouble of manually searching through Ingenio listings may find you somewhere near the front. Ingenio, however, offers a way to avoid the major costs of trying to bid in the “top ten” (whose pay per click costs range from $5 to $15 per click on average…no joke). You can join their “customers promotions group”. where Ingenio places special ads for that group, in exchange for the additional advertising you agree to give Ingenio *80% of you income* received from all customers contacting you through that group, not only on transactions received while advertising with them, but you surrender 80% of fees gained from any new customers you received from that Group for the following six months thereafter.

    The result is that Ingenio member’s prices at first, rocketed upwards as bidding wars resulted…and in response customer flow diminished. And then the present economic downturn depressed business still further, to the point where many Ingenio members have bottomed out their prices scrambling for what few customers are left, and others have gone out of business. Ingenio claims to be making more money than ever, but while squeezing blood out of the stone of it’s only paying proposition, expanding other business ventures and buying other companies without yet seeing a return on those investments, with the recent financial crisis the deal from AT&T let them shovel off an old draft horse they’d pretty much ridden into the ground.

    AT&T expresses a great interest in this performance based PPC system…which should be a signal for AT&T advertisers to be prepared to seek other venues. They also say that they want to leave Ingenio management in charge and let business run as usual…which could be calling the fox in charge of the henhouse. Ingenio will go from being a cash cow to a rotting corpse.

    AT&T advertisers should take Ingenio members’ experience with “performance based advertising” and prepare to diversify, or experience similar results. Hopefully AT&T will do a careful examination of Ingenio results and modify their application, as well as go through their corporate holdovers at Ingenio with a scythe.