Yahoo! ( YHOO) isn't jumping on the pay-per-call ad bandwagon just yet.Some analysts see pay-per-call as an untapped and potentially lucrative market for Web companies. The concept got a high-profile endorsement Monday when Google ( GOOG) and eBay ( YHOO) said they would begin testing call services next year as part of their much-discussed advertising alliance. There seems to be little doubt that Google and eBay want to deploy the feature, in which consumers make Internet phone calls through icons they see on advertisements. The companies said they would use both Google Talk and eBay's Skype in offering "another innovative way to connect with customers," Google Chief Executive Eric Schmidt said Monday. But Yahoo!, which is already under pressure on Wall Street to keep pace with Google's ever-lengthening stride, wasn't ready Tuesday to commit. "As part of this ongoing testing, we are currently evaluating the advertising opportunity that pay-per-call presents," Dina Freeman, a Yahoo! spokeswoman, wrote Tuesday in an email. "Once our tests are complete, we will use the data to determine whether it makes sense to offer a pay-per-call service to our advertisers." She declined to be more specific. Yahoo!'s stance highlights uncertainties surrounding the level of demand for these types of ads. Yahoo! already has plenty on its plate, including a search-engine upgrade, dubbed Project Panama. The company's July decision to push back the overhaul unnerved investors and sent shares reeling.
"It doesn't hurt to experiment with it," says Darren Chervitz of Jacob Asset Management, which owns shares of Yahoo! among $70 million under management. "Over time, it will occupy a decent niche, but I don't think it's going to revolutionize the search business." Still, some online merchants have found click-to-call useful -- particularly on transactions involving high-end items. Consumers typically have a lot of questions before they make such purchases, says Craig Smith, who runs Trinity Insights, an e-commerce consulting firm based on Conshohocken, Pa., outside Philadelphia. "When it's a straightforward purchase, it doesn't make sense," he says. Click-to-call is the latest in a long line of potential bright spots that bullish investors hope will boost the lackluster performance of the Internet sector. Shares of Yahoo! are down 26% this year, and eBay is off 37%. Even Google is weak, down 9% after doubling in both 2004 and 2005. "It's premature for people to get excited about click-to-call-related announcements," says Standard & Poor's analyst Scott Kessler, who rates Yahoo! a hold, in an interview.