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Skype has an interesting business model. The wildly popular internet phone and video service lets people call other Skype users for free, and pay a small fee to dial terrestrial phones. But if everyone started using Skype, the company could put itself out of business. Before that happens, Skype is trying to increase its advertising options.

This week, Skype announced Click & Call Advertising, which converts business phones numbers online into free call links when companies advertise with Skype. Skype might be on to something here.

Skype now has 560 million registered users worldwide. And now businesses that pay for the priviledge, will enable Skype users call them for free. From Skype's blog:

"Click & Call Advertising with Skype works simply by allowing participating advertisers to have their phone number highlighted with a blue Free Call button anywhere online that their numbers are displayed. When the button is clicked, the Skype software launches and the call is connected – at no cost to the caller."

Currently, the ads are only viewed by PC users, but they will soon be available on Mac screens as well. 

The move is interesting because it enables the company to continue what it does best — offer free calls online — while bringing in some revenue. Skype currently handles about 12% of all long distance calls.

The new feature is also a good deal for advertisers who are competing for business with similar companies nearby. Search results display the numbers for various results, but if someone happens to search for pizza, chances are they will call the free number rather than another they haven't heard of.

One slight glitch could be the way that phone plans have changed in recent years. For many consumers, mobile and even landline phone calls are included with monthly bills. Unless searchers are coming up on reaching their allotted monthly minutes, free individual calls may not rank as important in their decision making factor.

However, it's a smart move by Skype. As the company writes, "Advertisers are now able to acquire new customers using Skype to drive calls in a highly efficient and measurable way."

But so is Skype. The company has plenty of name recognition at this point, but for web surfers with mobile phones and no international friends, Skype's business proposition may not be immediately obvious. However, if you're online and see Skype enabled numbers popping up every time you do a search, the idea of creating a Skype account may seem more beneficial.

And if Skype can keep coming up with new ways to get advertisers to pay for its services, the company might have a winning business model very soon. It's not too far of a jump to go from advertisers paying for calls to their own businesses to having them foot the bill for other paid calls (after showing a brief ad).

Meghan Keane

Published 21 July, 2010 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

721 more posts from this author

Comments (2)

John Courtney

John Courtney, CEO and Executive Chairman at Pay on Results SEO, Content Marketing, Social Media, Digital PR, PPC & CRO from Strategy Digital

What an interesting twist in internet marketing! Interesting to see if Skype makes this work.

about 6 years ago

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Bangalow Accommodation

I knew that "free" skype could not last forever :)

about 6 years ago

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