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For small or local businesses who want to get contacts from their Web presence rather than clicks, there’s pay-per-call. If those same small businesses want to get customers in their doors, there’s online couponing through companies like the newly launched Zixxo.

Zixxo founder and CEO Mike Hogan is full of statistics about couponing and online commerce, but they boil down to these: There were 335 billion coupons distributed in the U.S. in 2005, according to coupon tracker CMS, but less than 1% of those were delivered over the Internet. Meanwhile, The Kelsey Group has determined that more than 35% of all searches are local, and that 45% of those local searches are based on a buying intent.

Hogan and company actually set out about three years ago to create an online portal for college students, and visualized revenue for the site coming from classified ads and coupons. Eventually that morphed into a decision to focus on the ads and coupons. The focus was further sharpened when, within a few weeks of the beta launch of Zixxo, a raft of other online classified sites such as LiveDeal and Oodle appeared too.

“We said, ‘Let’s not spend all this time, effort and money doing the classifieds and trying to become a destination site when we could partner with these folks,’” Hogan says. “Google has shown that the big revenue is in the syndicated advertising anyway, so we chose to get into the online coupon syndication business, where we’re unique.”

Not that there aren’t other companies offering online coupons: There are, including Coupons.com, CouponSurfer and the CoolSavings portal from Q Interactive. But those focus largely on consumer packaged goods, where Zixxo is going to for the small local services and merchants. Still other online coupon companies are exploring the outer reaches of the tech frontier: Cellfire offers coupons sent to mobile phones, and Zimini uses a software download on which users create their buying profiles, and then draw coupons to them online.

Zixxo’s centered on paper coupons and small to mid-sized local businesses, with some differentiating advantages: Merchants can design the coupons themselves online, and Zixxo will syndicate them to Web sites in its ad network and to subscribers within those local markets via RSS feeds. Distribution costs are kept low enough for small businesses to really get into couponing.

Even here, there are other RSS coupon feeds, such as Monkey Bargains and the Cost Savings Network. That’s where the self-serve advantage kicks in. “We make it incredibly simple for advertisers to create their own coupons via a self-service Web interface,” Hogan says. “We’re appealing to merchants who may find it too confusing to set up a Google AdWords account. But my mother could easily go online and design her own coupon using our interface.”

Zixxo advertisers can import their own creative, if they already have any, or can use templates to set up their designs and create their offers. Zixxo’s “one-click couponing” can auto-generate offers according to the business goals the advertiser sets. “If your average transaction value is $100 and you want to build that, you can automatically generate a coupon that will give customers $20 off if they get their purchase up to $200,” Hogan says. “All you the advertiser have to do is select your category and goal, and then approve the end result before it’s syndicated.”

Right now, Zixxo is offering its service for free to get merchants to sign up and try it. But the company will start charging after the end of this year, on a basis that Hogan says is intended to be small-advertiser-friendly. “We’ll charge 50 cents per printed coupon,” he says. “Everyone else is charging you for clicks. We’ll give you as many clicks as you can get, in that users will be able to see the coupon, read it, get all they want to know about it. We will only charge when they hit that ‘print’ button to produce a watermarked paper coupon, which is far more valuable to a local businessperson than a click or a page view.”

The coupon revenue will be shared with the syndication network of Web sites that bring in both the advertiser and the customer. In its startup mode, the company will also do direct selling of its service to local merchants—something Hogan says Zixxo got good at doing back in its college-portal days.

Users can find and print the Zixxo coupons in three ways. They can go directly to the Zixxo site, enter their location and access a directory of coupons targeted to their area and organized by product or service. (They can also register at the site with their e-mail, which preserves their information and also gives access to some high-value coupons for which advertisers want controlled distribution.) Users can also link to the coupon directory from the advertiser sites, if any.

It’s the third method of distribution that Hogan thinks will be another differentiator for Zixxo, and eventually the driver for 99% of its business. Zixxo is making its application programming interface available to developers, making it easy for any Web publisher to sign up as an affiliate and mash up a program that will put Zixxo coupons on their Web site.

“Right now in online advertising, you’ve got the text ads from the search-engine guys, and those all reside in the gutter of the page or across the top or bottom,” Hogan says. “They’re outside the body of the page content, and consumers are increasingly becoming trained to ignore those edges. With our API you’ll be able to build the coupons right into the content.”

In other words, if you’re a Web publisher offering local maps on your site, you can design a program that will include coupons as part of that mapping feature. Local search will be able to offer not only addresses and phone numbers for auto repair shops in the neighborhood but coupons for discounts or services on those merchants. “Just use our API to pass us a phone number, address, business name or any identifying information on the merchant, and we’ll throw back a link to the coupon,” Hogan says.

“We think that by having our coupons as part of the content, by being there where 97%-plus of the clicks are happening, that we can really change the game,’ he says. “This can turn out to be a core offering for Internet Yellow Pages, search engines, local search, and newspaper Web sites. Blogs can go in and say, ‘Hey, this is a great place for pizza,’ and include a hyperlink to a coupon for that pizza place. The blogger will then earn revenue from whoever prints out that coupon.”

Moving coupons online has a couple of other advantages. It can promote the creation of rich user content, for example; registered Zixxo users are able to rate and review the coupons, setting up an interactive community network that could boost a good offer with viral marketing. It can also lend itself to behavioral targeting. “If you have a pizza coupon for Domino’s in your favorites folder and you use it three times a week, the local Pizza Hut franchise might be pretty interested in pushing you a high-value coupon to try and convert you,” Hogan says.

Zixxo isn’t relying on the couponing universe picking up and moving to the Web. “You’ll still see coupons delivered via direct mail, although it’s becoming incredibly expensive,” Hogan says. “You’ll still have the free-standing inserts and newspaper distribution. But online will become a really important part of couponing for advertisers, especially the local ones.”