I’m slowly getting around to catching up with all of the local search companies that received accolades at the TechCrunch50 show earlier this month. Rounding out the list is Yext, a company that characterizes itself as a “pay per action” provider.

Essentially what this means is that it has a dashboard for advertisers to organize quality calls from bad calls (wrong numbers, telemarketers, etc.). This comes down to the longstanding issue that pay-per-call providers often charge advertisers for all of the above.

Discerning the quality of calls is accomplished through a patented voice processing technology that picks out keywords that advertisers specify they’re looking for. An auto mechanic might identify words like “transmission” or “brakes” and pay for those terms through an AdWords-like bid system.

Transparent Intentions

From there, the system does its work, weeding out good calls from bad. The main point is that advertisers are only charged for the “good” calls. The system also accomplishes a feedback loop where good sources of calls are identified and future ad placements (where those calls generated) can be optimized.

A question of transparency came up when talking to the Yext executive team — fresh on my mind from last week’s DMS discussions around YPs moving toward more transparent lead-based pricing. The question, as it applies here, is how only charging advertisers for good leads affects top-line revenues and ARPA, if negatively.

“As we pushed towards letting people bid on certain actions, our research shows that it’s going to drive prices up, not down,” says Yext CEO Howard Lerman. “Yeah, people might bid down ‘oil change’ from $10 to $8, but it’s offset by bidding up ‘transmission repair’ from $10 to $30.”

Good answer. Meanwhile Yext will scale by working with publishers that wish to attract advertisers with this pay-per-action model. They do this by integrating Yext numbers into their media, such as an IYP, thereby channeling calls into the Yext system.

Yext then splits the revenues with the publisher partner. For larger publishers, there is a sales cycle and a handshake, but smaller publishers can also plug right into its system and are encouraged to do so. So far it works with Topix and Yellowpages.com and serves about 20,000 advertisers and growing.

Making the Phone Ring

Eventually, a third dimension will arise where Yext licenses out this call management dashboard to businesses of all sizes that want to automate quality control. There are lots of enterprise or customer service applications that come to mind.

But for now it’s all about driving leads to SMBs. Its top categories are service-based businesses for the obvious reason that they value calls most (as opposed to clicks). These are also categories that have a corpus of “conversations” that are easier to process and define. But it’s mostly about the higher yields.

“The verticals we’re going after first is actually a pretty simple formula,” says Lerman. “We look at Yellow Pages spend.”

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Related: Speaking of TC50 companies, Peter Krasilovsky and I also had the chance to speak with grand prize winner Redbeacon. Peter has a report coming out on the subject and we’ll provide info here as well.