Text Answer Services Look for Their Piece of Mobile-Search Pie

Start-ups Such as 4Info, Chacha Tout Ubiquity, Ease of SMS as Reasons Advertisers Should Get Onboard

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SAN FRANCISCO (AdAge.com) -- For anyone away from a computer looking for a pizza shop, SMS, or texting, is often the quickest path to pepperoni heaven. Text "pizza" plus a ZIP code to a text-based-answer company, and it'll return listings. And, increasingly, texting also answers trivia queries, such as who won the Best Actress Oscar in 1992.

The CEO of 4Info said its search ads outperform those on mobile-ad networks.
The CEO of 4Info said its search ads outperform those on mobile-ad networks.
It's the latest wrinkle in the mobile-search game. And for advertisers, it's not hard see the value is in such transactions.

"The ubiquity of text messaging, coupled with the intent-driven nature of search, is a very powerful combination for marketers," said Jamie Wells, director of mobile at OMD's Ignition Factory.

ComScore data suggest mobile users still seek experiences that replicate the familiar PC desktop: 31 million people, or more than 10% of mobile users, searched the mobile web in March. But not everyone has access to the mobile web, and for those who do, searching can be a clumsy and time-consuming process. However, about 60% of cellphone users text on a regular basis, and nearly all cellphones are SMS-capable.

Yahoo and Google offer free text-answer services, but neither loudly touts them, leaving a handful of upstarts to prove SMS can be parlayed into a money-making platform. One of them, 4Info, is seeking its Google moment by bringing the search giant's monetization model to SMS.

The 5-year-old company hopes to collect fees from advertisers that want their ads served in the free text responses 4Info sends to users. Next quarter it will launch a self-service cost-per-click ad platform that lets advertisers bid on keywords against search queries. The company says it has 23 million unique users and delivered more than 100 million messages last month, with queries accounting for 30% of traffic. (Most traffic comes from users signed up to receive alerts such as stock prices and horoscopes.)

Human touches
CEO Zaw Thet said 4Info's search ads outperform mobile-ad-network ads by three to four times. ComScore confirms that: SMS ads average a 16% response rate, outperforming typical 1%-to-3% click-through rates for mobile display ads.

Unlike 4Info, SMS-based answer service KGB -- launched by a former Yahoo Mobile exec -- and ChaCha, the text-search field's leader (per ComScore), employ people who field SMS queries. ChaCha employs 55,000 work-at-homers to handle its average monthly 650,000 questions from 4 million unique users. While ChaCha is ad-supported, KGB costs 99 cents a query, similar to All Questions Answered, a popular service in the U.K. and Ireland.

"The mobile-advertising space is so new that everyone lumps everything together, but it's not all created equally," said ChaCha CEO Scott Jones. "ChaCha is not pushing something; people are coming to us and asking questions in real time, and we're trying to get advertisers in front of them for something that they may actually want."

Neil Strother, a Forrester analyst, said he wonders how profitable the SMS-search business is and if enough users will use it. "It's a viable business, but the margins may not be that huge," he said. "You need a big audience to drive enough traffic to make it worthwhile." He said consumers need to be trained to search by text -- one of the reasons KGB has been busy with TV and outdoor ads.

OMD's Mr. Wells gives the edge to human-powered search. He said most users don't have the patience to keep texting until they hit on a satisfactory result. But when people guide the query, they're more likely to hit the "right" answer immediately.

Phuc Truong, U.S. managing director of mobile marketing at Mobext, who has purchased ad inventory from ChaCha and 4Info, said texting's popularity means these services will have longevity.

But Mr. Truong said for his money, Twitter would have the best shot at owning the SMS search space if it were to open up its platform further. He said he sees a scenario in which he could post a tweet like "When's the next 'Star Trek' movie playing at Theatre Z?" and his followers could text their replies. "This would build on top of the human connection," he said.

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