Local internet start-up ChaCha has run into some rough waters. Tech Crunch announced today that ChaCha has laid off a third of their employees and they claim, via a laid off insider, that the company’s future looks shaky at best. You can almost see the vultures circling waiting for them to fail. But I am not one of those vultures. I like their business model.
Maybe ChaCha is doing fine and the rumors are false. But if they are in danger I have some ideas. They just need to fix some things. But the fixes may not last.
On the surface the fix is simple. Bring down the cost of each answer and bring up the overall ad revenue. But getting there is a little tricky.
If you aren’t familiar with how ChaCha works, here is a simple explanation- a user texts a question to ChaCha, “Is ChaCha going out of business”- a real question I sent while writing this blog, a ChaCha guide does some research, probably on Google or using in-house databases and sends back an answer. Along with the answer “ChaCha is not going out of business….Get Fray tickets now!”- a paraphrase of what their actual response was. Or they send an ad before the answer. In either case, or both in my case, the sender gets a little text ad with a simple call to action (i.e. a keyword to text for a special or a phone number to click on). Money comes in from the advertiser and goes out via the “human guide”. Voila!
So how do you bring down the cost of the human guides and bring up the revenue via ads?
I have a couple ideas.
The first is on the revenue side.
ChaCha needs to introduce their version of Google AdWords immediately. I have heard rumors through the industry grapevine that this in development. If so, then get it in Beta mode asap! I would love to be a guinea pig for it.
My recent experience working with ChaCha for a client was clumsy at best. All I wanted to do was to log on to my dashboard, set up some test campaigns and tweak them based on results. Instead I was drawn through a near torturous quoting process that eventually ended with my client spending a considerable amount of money in very little time with no real metrics. Not good. Then we were told they couldn’t do any more business with us due to a national non-compete. I don’t think Google has said that to any client, ever!
If I could run real geo/demo targeted campaigns for specific keywords used in question queries I think I would find many uses for ChaCha. But as it stands it’s next to impossible to safely spend money with them. There are no real time metrics. Unacceptable in this world of Web 2.0 wonders!
So how about the “human guides”?
These are the real problem for ChaCha. They need real people typing out text answers. That’s their business model. So do they change their business model? I have an idea that might be a little out of the box. How about doing a Twitter/ChaCha mash up? Say they set up different ChaCha accounts based around different question categories. Surely they have this already- dining, nightlife, taxi phone numbers, bizarre, etc. Then create local filters and have Twitter post the question using # for categories. An example would be #diningindy where is a good sushi restuarant on the north side of Indy? ChaCha would filter the question to see that it is about dining “sushi” and about Indianapolis “indy” and then repost to the Twitter account ChaChaDining. All ChaCha “human guides” following that search #diningindy would be able to respond. The original Tweet and response would need to also have a unique code somewhere in it as well so that ChaCha could easily re-sync with the original question. That might pose the most difficult part of this whole deal. It also means you could start running out of room on both sides pretty quickly.
But you can see how getting a bunch of Twitter users answering questions might make sense. They are already doing it for their followers, why not do it for ChaCha and get paid. I think paying 10-15 cents an answer could be interesting to students and some active Twitter users. If you are charging 25-50 cents for each ad then you have a business model!
I know the Twitter solution is probably a tricky one to implement but there has to be a way to bring down the human cost. I would also expect that they now have a pretty nice database of questions and answers. Couldn’t they automate many of the responses and send the more complicated ones to their Twitterati?
On a higher level you have to wonder whether Twitter poses a real threat to the ChaCha business model. In some ways Twitter is doing what ChaCha is trying to do, but better just not faster. Who do you trust more? Your friends and associates or some anonymous “human guide”? The reality is that your Twitter followers aren’t being paid to answer your tax cab phone number question at 3am in the morning whereas ChaCha human guides are. They are there for you when others are not. That is the real service.
But ChaCha faces an even bigger, looming threat. As phones become smarter, faster and more connected many of us won’t the need to get this kind of quick response from a human guide. But we need to remember, those of us that are on the geeky side of things, that most cell phone users are not currently using their phones for local search. Calls and text are about as far as they get. Unless they are on a “smart phone” they have probably never even been to a website on their phone. How long this group of users stays away from mobile search may map one to one with how long ChaCha has a real business model. That is where I run out of ideas for how to save ChaCha.
