The people ServiceMagic serves are busy folks: carpenters, contractors, landscapers, plumbers, dry wallers, house cleaners and other home-improvement professionals who want to reach homeowners in their service areas.
To do that, ServiceMagic has called on the marketing help of Jingle Networks, the company that operates the Free411 mobile directory service. In return for free lookups by dialing 1-800-FREE-411, mobile users listen to ads.
Those ads can be of two types. The first, a simple sponsorship ad, plays while they're being connected to the automated voice-recognition directory system. The second spot runs when users have identified the business or category they're looking up, and it's most often a pay-per-call ad. If Jingle has an advertiser relevant to the user's search, it'll serve that ad and offer to connect the user to that advertiser with the press of a button. The advertiser only pays if a customer chooses that option, clicks through and completes the call.
That mobile directory business has kept the year-old Jingle Networks as busy as ServiceMagic's customers. The company now reportedly handles 3% of the total U.S. market for directory calls — something on the order of 450,000 a day. In September, ServiceMagic took 13 million calls from 4 million users, up from a rate of 3 million calls a month earlier.
Marketing vice president Lyn Chitow Oakes said Jingle's service appeals to two groups: users who formerly paid for directory assistance but disliked the cost (an average of $1.25 per call), and a new group that used to shy away from dialing 411 services on the phone even when no phone book was handy.
“We've tapped into a very strong consumer preference, which is that information should be free,” she said.
Jingle has proven appeal with another group, too: venture capitalists. In October the company announced its fourth round of financing, with a $30 million infusion from Goldman Sachs and Hearst Corp. An earlier $26 million round of funding was used to build out the company's server infrastructure.
CALL WAITING
That was a necessary expense, since its almost instant popularity had threatened to overwhelm Jingle's system in March. For a while, so many users were calling that they were getting busy signals — something you really don't want to have happen in the mobile directory business. And if you're running an ad-supported service, the ability to handle large crowds is a must.
“One of the reasons we're prepared to handle high traffic now is that we experienced that period of huge growth earlier and built out the system to accommodate a larger number of users,” Oakes said.
When it comes to pay-per-call ads, Jingle serves up ads from third-party pay-per-call networks such as Ingenio and also sells its own ads. In fact, the company makes a point to contact businesses that are queried through its directory but don't advertise on the network, offering to set them up with ads. The ads usually are priced higher than sponsored search listings, since someone dialing directory assistance for a plumber is likely to be more highly qualified than someone Googling for one.
That's what got ServiceMagic interested in running pay-per-call ads on 1-800-FREE-411. The service, a division of IAC/InterActiveCorp, offers a nationwide Web-based clearinghouse for the more than 40,000 home-repair businesses in its network. Visitors go to the Web site, fill out a short questionnaire about their home repair project, where they live and how ready they are to do business, and submit their request to ServiceMagic. The company sends that information out to the right business category in that ZIP code and then sends contact information for the first three respondents to the homeowner.
ServiceMagic “eliminates the frustration of trying to track down a contractor that you hear is good but who's not available to take on new work,” said Craig Smith, senior vice president of ServiceMagic's consumer division. “The folks in our network are pre-screened for their quality and have signaled that they're ready to accept new jobs.”
ON THE GO
While ServiceMagic's initial customer contact may be online, much of the rest of the transaction travels via phone. The site gets over 2.5 million unique visitors to its Web site every month, generating more than 200,000 customer requests for its clients. But much of the information is passed around via mobile phone, either through text message, voicemail or Blackberry.
“These service professionals are always out in the field, and hardly ever in the office,” said Smith. “So our communication to them goes out over cell phones; that's how we notify them of the lead. And the actual conversation is initiated by the homeowner over the phone. People don't want to hire a contractor without talking to them first.” In fact, ServiceMagic gets some smaller portion of its leads through calls to a toll-free number listed on the Web site.
Those phone contacts involve running a 40-rep call center that handles about 20,000 calls a week. With that expense already in place, running pay-per-call ads on 1-800-FREE-411 seemed like a natural to tap into a broader customer base.
“We were one of their first advertisers a year ago,” Smith said. “We're an online company and advertise through paid search and Internet Yellow Pages, as well as some limited offline efforts. And paid search was such a great medium for us and converted so well that we started looking for other channels that would drive a similar high-quality direct response consumer inquiry. When you get a search click, you've got a highly motivated customer. And [directory advertising] is really the offline equivalent to that.”
The ServiceMagic ads on Jingle target specific professional categories, but since the company is national and calls connect to a central facility, they don't segment geographically. Jingle is able to focus on a caller's home area, however, and to serve up ads for local businesses that want to find customers in that region.
As for results, Smith said the calls his company gets through Jingle convert to leads about 50% of the time, while the cost per acquisition is in line with what ServiceMagic pays through search marketing. “I look at the world through paid search. The parallels are there, and the economics are very similar,” he said.
Smith manages the call center as head of ServiceMagic's consumer operations team, and reported that among the 30 different customer channels it interfaces with, ServiceMagic's call reps like seeing the Jingle name appear on their inbound screens. Mostly it's because those calls convert so well — although “it might just be because it's a fun name,” he said.
Oakes said pay-per-call marketing in the mobile directory medium is particularly engaging because customers are listening, not skimming a text ad. “They have to listen briefly, and then you get to connect with them in real time if they click through,” she said. “It gives you a tremendous opportunity to close the deal quickly.”
It's also an uncluttered ad environment compared with a search results page, with at most two short ads, each played in a different portion of the call. That makes each advertiser's message more prominent. In fact, Oakes said, the average Jingle caller hears 1.2 ads per call, since some query categories don't have a relevant ad message to deliver.
Building that ad inventory will be an important task for Jingle, because as its call volume continues to grow, supporting that service with ad revenue will become more crucial. At least one other mobile directory start-up, InFreeDA, has shut down operation of its 1-800-411-METRO service because demand grew but funding didn't.
VOICES CARRY
As for competitors in the space, Jingle faces one other independent, but its main rivals are most likely the voice carriers themselves, for whom directory assistance is a $7.4 billion industry.
“They're watching our model and how it's affecting them, and I'm sure that at some point, they will address that,” Oakes said. But she believes phone companies will face a couple of pretty large barriers if they try to get into the ad-subsidized directory business. For one thing, they will probably be wary about cannibalizing all that paid-directory revenue.
And for another, Oakes said, the telcos aren't well schooled in helping marketers design and mount ad campaigns. “They don't have the advertising expertise that the team at Jingle has amassed in bring consumers and advertisers together. For example, Verizon just spun off its Yellow Pages business. Given that, how the directory assistance group and the Yellow Pages group would interact there is very unclear.”
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