NEW YORK (AFX) - Jingle Networks, a provider of free directory assistance supported by ads, has raised $30 million in new funding from a group of investors led by Goldman Sachs & Co. and Hearst Corp., the company planned to announced Monday.
Prior investors in Jingle, including the venture capital arm of Comcast Corp., also contributed to the new funding for the company, which launched its fast-growing 1-800-FREE411 service about a year ago.
Jingle, based in Menlo Park, Calif., said its service handled 13 million calls for directory assistance from 4 million customers in September, up from 3 million queries a month in early 2006.
That rapid growth briefly overwhelmed the young company back in March, with customers frequently getting busy signals. Jingle boosted its server capacity significantly a month later, at about the same time the company raised $26 million from a group led by Liberty Associated Partners, which also partook in this week's cash infusion.
To keep costs down, Jingle uses a speech-recognition system to field and process queries, though live operators come on the line if the request can't be understood.
With traditional phone companies now charging an average of slightly more than $1 per call to look up a residential or business listing, several free services supported by ads have been launched, including another named 1-800-411-SAVE.
Collectively, free directory services are expected to account for 1.8 percent of the nearly 6.5 billion directory assistance calls placed in 2006, according to the Pierz Group LLC, which specializes in research and consulting in this market. Pierz's clients include Jingle.
None of the ad-supported services appear to be profitable as yet, and at least one service ran out of capital.
'You have to be able to operate at a loss for a long time to change consumer behavior,' said Kathleen A. Pierz, managing partner of the Pierz Group.
Callers to Jingle's 1-800-FREE411 listen to one or two short commercials of 10 to 15 seconds each. The first may be played at the outset, while the second may be played while the listing request is being processed, often advertising a nearby business or related product.
The caller is given the choice of responding to the ad or continuing with the desired phone number lookup. Jingle says that one category that's produced a high-response rate for advertisers is taxi companies, with callers seeking to call one cab company readily ditching that request in favor of a discount from the advertiser. One local taxi company has seen an 8 percent response rate to its ads, Jingle says.
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