Jingle Networks Raises an Astounding $26 Million

Here's the release:

Jingle Networks, operator of the 1-800-FREE411 directory assistance service, announced today it has raised $26 million of Series B financing, led by Series A investor Liberty Associated Partners. Also participating in the round are Series A investors First Round Capital and IDG Ventures Boston, as well as new investor Comcast Interactive Capital.

Jingle, which uses a PPCall ad model, also operates a Web site, www.free411.com. I use Jingle as well as competitor 1800-411-Metro, which has an almost identical model. Both services are comparable and as good generally speaking as the DA services offered by the carriers. The sweet spot for these services is the roughly 35% of 411 calls made on mobile phones. (One can program these numbers once into the directory so they don't have to be dialed or remembered.)

There's immediate and obvious appeal to consumers, assuming they understand they're dropping between $1 and $3 or more every time they make a wireless DA call. However, the challenge is making these services viable as advertising vehicles. Obviously the VCs that plunked down $26 million think so. But there are a few fundamental challenges:

1. Getting enough ad coverage so that truly relevant ads can be played in response to user queries as opposed to random ads (e.g., a taxi service ad when I call for a pizza restaurant — that's a real example in my case)
2. An even more fundamental challenge is getting consumers who have been trained to "get in and get out" with DA (i.e., "what city, what listing") to start doing category searches (e.g., florists, plumbers, Indian restaurants), so that advertisers can get greater value from these services.
3. And there's also the challenge of working with operators to perform a category based local search. I've done it and it can work but it's not elegant. For example, how does one choose among several nearby businesses in a single category when one doesn't know anything about them? Say I'm looking for “Mexican restaurants," is the operator going to start reading reviews to me while I’m driving? Even if he does have that information available, it represents an awkward user experience.

When a user calls looking for a specific business, as she has been trained to do, what will motivate that person to choose the advertiser vs. the business she was originally seeking? (This obviously goes back to point #1 above about ad coverage.) If there's a comparable business or vendor and there's a discount on the service or product I'm after, I might well contact that advertiser.

From a consumer standpoint these free DA services are great. But there are some meaningful challenges in getting them to work as advertising/PPCall platforms — as branding/CPM vehicles it would be easier. I'm not arguing they can't but it's more difficult than it seems on paper.

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Miva has had some success with "pay per text" ads in the UK (in conjunction with the biggest DA provider there). I previously blogged about it here (scroll to the bottom).